Please ensure Javascript is enabled for purposes of website accessibility

What T-Mobile, DISH Network, and Comcast Plan to Do With All the Wireless Spectrum They Just Bought

By Adam Levy - Apr 18, 2017 at 2:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The three big winners from the FCC's recent spectrum auction have widely varying plans for their spectrum.

The FCC just announced the results of its incentive spectrum auction. The auction reallocated wireless spectrum from television broadcasters to wireless companies to use in their wireless data networks.

Maybe I should say potential wireless companies. Two of the three biggest bidders in the auction are actually pay-TV companies -- DISH Network (DISH 0.10%) and Comcast (CMCSA 1.13%). The biggest bidder, T-Mobile (TMUS -0.85%), spent $8 billion. DISH spent $6.2 billion, and Comcast spent $1.7 billion.

It's pretty straightforward how T-Mobile will use its new spectrum licenses. But DISH and Comcast still have a few question marks surrounding their plans.

Cellphone and broadcasting towers shot from below.

Image source: Getty Images.

T-Mobile bolsters its low-band spectrum

T-Mobile's spectrum haul of 31 MHz more than quadrupled its low-band spectrum holdings. With a smaller customer base than its major competitors, T-Mobile now holds more low-band spectrum per customer than any other major provider.

A map of T-Mobile's 600 MHz spectrum holdings.

T-Mobile's 600 MHz spectrum holdings following the auction. Image source: T-Mobile.

Low-band spectrum is particularly good at covering large areas and penetrating buildings. That means T-Mobile will be able to expand its coverage in rural areas while improving in building reception in the metro areas in which it already operates.

Additionally, the wireless carrier expects to put its new spectrum licenses to use right away, deploying at least some of it by the end of the year. It's worth noting that broadcasters have up to 39 months to transition the spectrum licenses to T-Mobile. Management is betting broadcasters will want to get paid sooner than that, transitioning the spectrum much faster.

DISH Network adds to its trove

DISH Network has opportunistically acquired boatloads of wireless spectrum over the past decade. It's been a big spender in previous FCC auctions, and this one was no different, with the company spending $6.2 billion.

Dish Network logo

Image source: DISH Network.

The only problem is, DISH doesn't have any significant plans to deploy the spectrum. It's already missed one deadline imposed by the FCC, with plans to make up for it by deploying a network by 2020. That network will be specifically geared toward Internet-of-Things devices, which will be less expensive for DISH to deploy than a full-fledged mobile telephone network.

DISH is constantly rumored as an acquisition or merger target for someone in the wireless industry. But there's no clear answer as to who would actually buy the company. Every major player in the industry now seems pretty happy with their current spectrum positions, and the company's pay-TV business isn't particularly appealing.

Comcast is juicing its big bet

Comcast just announced its new wireless service, Xfinity Mobile. The service will rely on an MVNO agreement with Verizon (VZ -0.13%) to use the company's wireless network. It will also supplement the network with its 16 million Wi-Fi hotspots.

Xfinity Mobile logo on a smartphone.

Image source: Comcast.

Xfinity Mobile will serve as a test for Comcast. If it's successfully able to sell wireless phone service to its customers, Comcast may make a bid for T-Mobile or another wireless carrier. In that case, the $1.7 billion it just spent on wireless spectrum will go to good use.

Comcast doesn't need to sell very many wireless subscriptions to consider Xfinity Mobile a success considering its low overhead costs. It already has over 20 million customer relationships to sell the service to, and it won't see much increase in customer service or billing costs.

If Xfinity Mobile falls flat with customers, though, Comcast may find itself in a similar position as DISH. Granted, Comcast's holdings are significantly smaller, but the cable company doesn't really have much use for them if it's unable to attract wireless customers. It could end up selling the spectrum or leasing it at a bargain.

There were a few surprises in the FCC auction. DISH Network's decision to spend $6.2 billion is hard to explain. T-Mobile has a solid plan to deploy the huge trove of spectrum it just won, and Comcast may have been conservative with its spending, as it could be very useful in the future.

Adam Levy owns shares of Verizon Communications. The Motley Fool owns shares of and recommends Verizon Communications. The Motley Fool recommends T-Mobile US. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

T-Mobile US, Inc. Stock Quote
T-Mobile US, Inc.
TMUS
$143.61 (-0.85%) $-1.23
Verizon Communications Inc. Stock Quote
Verizon Communications Inc.
VZ
$44.78 (-0.13%) $0.06
DISH Network Corporation Stock Quote
DISH Network Corporation
DISH
$19.37 (0.10%) $0.02
Comcast Corporation Stock Quote
Comcast Corporation
CMCSA
$39.40 (1.13%) $0.44

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
390%
 
S&P 500 Returns
125%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/11/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.