What Telecom Investors Need to Know About Wireless Spectrum

The big telecoms are not afraid to spend billions on new wireless spectrum licenses. But the devil's in the details. Here's a spectrum primer for telecom investors.

Mar 13, 2014 at 3:00PM

Spectrum licenses are the lifeblood of the wireless industry. In 2008, the FCC auctioned off brand new licenses in the 700 MHz band, after kicking UHF TV stations off that band.

AT&T (NYSE:T) and Verizon (NYSE:VZ) walked off with the lion's share of winning bids while the FCC pocketed a cool $19.6 billion. The two telecom giants are still riding high on the competitive advantage provided by this big spectrum investment.

The next time, T-Mobile (NASDAQ:TMUS) and Sprint (NYSE:S) will fight for some table scraps in order to stay competitive. Or maybe they'll team up and go head-to-head with the two big guys as a third 100-million-subscriber giant.

Either way, there will be about 120 MHz of former TV spectrum licenses available when the FCC pulls the trigger, probably in 2015. Carriers might spend as much as $46 billion on these licenses. The outcome of this auction will reshape the American wireless industry for years to come -- maybe even decades.

So why do the carriers fight for their lives over certain scraps of wireless transmission rights? The infographic below lays out the basic facts.

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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