The FCC's upcoming incentive auction of TV broadcasters' 600 MHz licenses is likely to fetch only $25 billion to $35 billion in total winning bids, or roughly $1 to $2 per MHz/POP, according to J.P. Morgan. That's far below the $2.68 MHz/POP generated by the landmark AWS-3 auction that ended a year ago with almost $45 billion in total bids. It's also less than half of some analysts' estimates for the upcoming 600 MHz auction.

"While some reports have used this number (from the previous auction) to estimate auction proceeds of $70 billion or even $80 billion, we believe their analysis ignores a number of differences between the auctions," J.P. Morgan analysts wrote. "First, this spectrum will not be usable for 3-4 years, and some of it will be permanently impaired. Second, while the lower frequency spectrum does propagate farther, making it optimal for a carrier like T-Mobile which needs better coverage, that propagation makes it less useful for AT&T and Verizon which need tight spectrum re-use and have much bigger budgets.

"Finally, and perhaps most importantly, we expect lower demand in this auction, as carrier balance sheets are stretched by the last auction and recent acquisitions -- we don't expect Dish to be a substantial bidder, and private equity demand will be lower due to restrictions on Designed Entity bidding and the long time to usability."

Verizon, AT&T and T-Mobile are all expected to participate in the auction, while Sprint has said it will take a pass. And two major cable companies have recently deflated hopes of what FCC Chairman Tom Wheeler has predicted will be a "spectrum extravaganza:" Charter Communications last week said it is unlikely to participate, and Comcast said it is "taking a paddle" but isn't planning on spending much money on airwaves.

Some dark horses still exist, however, indicating the auction may still provide a path to market for a new entrant in wireless. The Washington Post reported this week that Columbia Capital is one of a handful of investment firms looking to participate, and investor Chamath Palihapitiya is behind a company that plans to spend as much as $10 billion at auction.

But J.P. Morgan analysts said they don't expect companies outside the current mobile landscape to outbid carriers at auction.

"We expect that AT&T, Verizon and T-Mobile will be the biggest bidders ($21 billion to $30 billion cumulatively), that Sprint/SoftBank will not register, and Dish will at most be an opportunistic buyer," the analysts wrote. "We estimate Comcast, potentially in partnership with other cable companies, could spend $3 billion to $5 billion, and private equity funds in aggregate could spend $1 billion to $2 billion…. We do not expect digital economy players like Google or Amazon to bid, though they can never be ruled out."

However, even if the upcoming 600 MHz auction generates $25 billion in bids, that would still be more than any other spectrum auction aside from the AWS-3 auction. It would surpass the $13.7 billion raised during the AWS-1 auction in 2006, and the $18.9 billion raised during the 700 MHz auction in 2008.

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