Outlook for July CBRS Auction Unclear Due to Credit Market Jitters

With the FCC citizens broadband radio service auction set to start, the agency is under pressure to further delay the auction because of credit market issues. Markets remain jittery due to the pandemic, a problem for small players that may need to raise the money to bid. The FCC postponed the auction in March to July 23, from June 25, because of COVID-19 concerns (see 2003250052).

"The spread of COVID-19 has led regulators around the world to postpone spectrum auctions that would support 5G deployment, and that includes the FCC,” Commissioner Jessica Rosenworcel told us via statement. “We are now anticipating a delayed CBRS auction in July. We also have C-band auction in December, but I am concerned that there are a mix of factors that could affect this timeline,” she said: “No one should be prevented from having their opportunity to participate in an auction as a result of this public health emergency.”

Commissioner Mike O’Rielly said he's aware of the credit issues. “The one piece that is important and probably significant is the credit market issue and the access to capital,” O’Rielly told reporters Wednesday, answering our query. “I will be monitoring that … to see where things lie and see where the commentary is. But I’d like to see us move forward.”

“Dislocations in the credit markets are part of a larger mosaic of uncertainty,” MoffettNathanson’s Craig Moffett told us. “Virtually every company in the S&P 500 has withdrawn guidance because visibility is currently so low,” he said. “It’s not so much that the credit markets are in a fragile state as it is that many would-be auction participants simply can’t forecast their needs for credit. And there are undoubtedly some who simply won’t be able to participate due to the pressures on their businesses.”

Others said the auction will likely start as planned. “I don’t think the current state of the capital markets, which are clearly not frozen, will have any impact on the auction,” said LightShed’s Walter Piecyk. “There is no reason to delay this any further,” he said.

Rural Wireless Association "members are ready to go,” said Carri Bennet, RWA counsel. Lawyers who represent carriers said they see no reason to further delay the CBRS auction.

CBRS and the C band have long-term value in providing a foundation for next-generation wireless services in the U.S., said New Street’s Philip Burnett. “Due do the historic actions of the Fed, the credit markets are not altogether closed, particularly not for assets with long-term value such as these,” he said. “Tighter credit standards will limit capital available to certain players, and wallets at the auction block will generally be lighter, but the opportunity costs to the U.S. associated with delays suggest the FCC would not want to push back freeing up these bands.”

At a MoffettNathanson conference this week, AT&T Chief Financial Officer John Stephens wouldn’t comment about the CBRS auction and raised questions about the December C-band auction. “Does it really get done this year and what happens to the satellite industry, what happens with the FCC, what happens with the ability to get an auction done and so on and so forth?” he asked.

Rosenworcel told us she continues to push for a delay in closing the 2.5 GHz tribal window (see 2004290055), which is to close Aug. 3. “This spectrum can deliver major benefits to tribal communities, and this action will ensure they have the time they need when we get through this crisis,” she said: “We need to extend this window and do it soon.”