Spectrum Valuation ($SATS) - Part 4
Part 4 of a multi-part series on the economics of spectrum and EchoStar’s spectrum portfolio
Part 1, 2 and 3 are here. These are the appetizers.
Today we will focus on EchoStar’s AWS-3 block, the pasta prior to the main course.
AWS-3 Block
2 x 25 MHz (paired)
1755-1780/2155-2180 MHz Bands
1 x 15 MHz (unpaired)
1695-1710 MHz Bands
History
The AWS-3 auction (FCC Auction 97), conducted between November 2014 and January 2015, was one of the largest auctions in U.S. history, raising nearly $45 billion in gross bids. The auction offered 65 MHz of spectrum - 50 MHz of paired mid-band spectrum (1755–1780 MHz uplink / 2155–2180 MHz downlink) and 15 MHz of unpaired uplink spectrum. The 50 MHz block was segmented into G, H, I, J blocks (no substantial differences among the blocks). Average prices reached approximately $2.71 per MHz-pop for the paired spectrum. The unpaired spectrum sold for much less, averaging around $0.52 per MHz-pop (DISH took down the vast majority of this unpaired spectrum). DISH was an aggressive “bad actor” in this auction, pushing prices up substantially. The pricing in this auction was a clear outlier as some licenses in major markets went for 4x the price in the AWS-1 auction. Then again, no one held a gun to AT&T and Verizon’s heads. So why the high price for AWS-3? It be like that sometimes for auctions of scarce assets.
The largest bidders included AT&T ($18.2B), Verizon ($10.4B), T-Mobile ($1.8B), and DISH, which bid approximately $13.3B through two designated entities (DEs) - Northstar Wireless and SNR Wireless. Thanks to a small business discount, DISH’s net payment obligation was approximately $9.995 billion. However, the FCC later ruled that DISH exercised de facto control over both DEs, rendering them ineligible for the bidding credits. In addition to forfeiting 197 AWS-3 licenses, DISH became liable for any deficiency payments. Under FCC auction rules, bidders that default must pay the difference between their original winning bids and the final proceeds the FCC receives when the licenses are re-auctioned, plus a 15% interim default penalty. Collectively, Northstar and SNR paid approximately $516 million in interim payments, reflecting 15% of their ~$3.4 billion in defaulted bids. The full deficiency, however, will not be known until the FCC re-auctions the licenses, expected by the end of 2025. In hindsight, DISH drove up the price for this auction, creating a big hole for itself that it’s been trying to dig out of for the last 10 years.
AT&T - Spent $18.2B in net bids. Acquired 251 paired-block licenses (mostly 2×10 MHz “J Block”) covering ~96% of the U.S. population. AT&T paid an average price of approximately $2.88 per MHz–POP.
Verizon - Spent $10.4B in net bids. Won 181 paired-block licenses, covering about 192 million POPs. Verizon paid an average price of approximately $2.92 per MHz–POP.
DISH - Spent $13.3B, or $10B after the small business discounts, which was later revoked. Won 505 licenses with an average price of $1.43 per MHz–POP. This was consisted of $2.82 per MHz-POP (2.8B MHz-POP) for the paired blocks and $0.52 per MHz-POP (4.3B MHz-POP) for the unpaired blocks.
DISH has integrated AWS‑3 paired spectrum into its operational mid-band portfolio, deploying it as part of Band 66 (AWS‑1/2/3) across its 5G network. As to the AWS-3 unpaired spectrum, DISH created Band 70, which combines three spectrum blocks encompassing DISH’s current AWS-4 spectrum as downlink (2000-2020 MHz), DISH's H-block downlink spectrum (1995-2000 MHz), and unpaired AWS-3 uplink spectrum (1695-1710 MHz), giving Dish 15 MHz of uplink and 25 MHz of downlink midband spectrum (more on this in the next part of the series).
There’s currently approximately $10B of debt secured by AWS-3 and AWS-4 spectrum assets.
Compliance of Build-out Requirements
From 2015 through 2024, DISH's plans for its AWS-3 spectrum evolved significantly. Initially, DISH aimed to deploy a narrowband IoT (NB-IoT) network. However, by 2020, the company had abandoned the NB-IoT strategy entirely, writing off $253 million in related assets and instead pivoting toward a full 5G buildout.
In 2024, DISH requested and received an extension from the Wireless Bureau that pushed out the compliance date to December 2026, with a further extension to June 2028, conditional upon meeting public interest commitments such as:
Achieve 80% population coverage with Boost Mobile by December 2024 and accelerate and expand milestones for over 500 licenses,
Deploy 24K towers by June 2025,
Offer $25/30GB low-cost plan, and
Provide spectrum-leasing access to Tribal and small carriers.
Based on FCC filings, it looks like 92% and 46% of the AWS-3 paired and unpaired licenses has met the 80% coverage threshold, respectively.
Spectrum Characteristics
AWS-3 paired spectrum offers better coverage than high-band (like C-band) and more capacity than low-band (like 600 or 700MHz). This makes it good for urban and suburban deployment, providing both capacity and building penetration. AWS-3 is also compatible with Band 66, which aggregates AWS-1, AWS-2, and AWS-3 into a broader channel. This compatibility makes AWS-3 relatively easy to integrate into existing LTE and 5G networks, and it is supported by most modern handsets.
The unpaired AWS-3 block (1695–1710 MHz uplink-only) is tricky. The FCC’s decision to leave the 1695-1710 MHz unpaired when auctioned destroyed a lot of value for tax payers. It is not only unpaired, but also uplink only - AIN’T nobody got time for that!…except DISH. I will go into more detail in the next piece regarding how EchoStar remedied this by creating Band 70, incorporating this uplink-only slice with their double downlink AWS-4 asset.
The AWS-3 licenses were acquired through DEs that ultimately failed to qualify for small business credit. The FCC rescinded 197 licenses, roughly $3.4 billion worth, leaving DISH with a patchy AWS-3 portfolio.
Recent Valuation Comparables (All Mid-Band Transactions)
Verizon bought AWS-1 spectrum from cable operators (2011)
AWS-1 encompasses the 1710-1755 MHz and 2110-2155 MHz bands. Verizon announced that it will pay $3.6B to buy the 122 AWS-1 spectrum licenses held by SpectrumCo, a joint venture of cable companies Comcast, Time Warner Cable and Bright House Networks, covering 259 million POPs at an average price of $0.67 per MHz-POP. SpectrumCo paid $2.4B for these licenses in the 2006 FCC auction.
T-Mobile bought AWS-1 licenses from U.S. Cellular (2013)
In June 2013, T‑Mobile US agreed to purchase 10 MHz of AWS‑1 spectrum from UScellular, covering 29 regional markets in the Mississippi Valley region. The deal closed by the end of 2013 at a price of $308 million in cash, which equates to about $0.96/MHz‑POP.
Verizon bought Cincinnati Bell’s AWS-1 licenses (2014):
Verizon purchased Cincinnati Bell’s AWS-1 licenses for $210M. The deal was part of Verizon’s broader effort to enhance its LTE capacity. The $1.19/MHz-POP price reflects solid demand for AWS-1, which was widely deployed and already device-supported at the time.
AT&T bought Aloha Partners’s AWS-1 licenses (Jan 2014):
AT&T’s acquisition of AWS-1 licenses from Aloha Partners aimed to fill coverage gaps and bolster LTE deployment. The $1.30/MHz-POP valuation was consistent with rising demand for mid-band assets with nationwide footprint and device ecosystem support. It was part of AT&T's broader mid-band accumulation strategy in the early 2010s.
C-Band Auction (2021)
In February 2021, the FCC held its C‑band auction (3.70–3.98 GHz), offering 280 MHz of mid-band licenses, split into A, B, and C blocks. The auction raised approximately $94B in winning bids (including clearing costs). Both Verizon and AT&T were aggressive in this auction. Below are the average price paid, including clearing cost:
A-Block (big PEAs; usable early): Approx. $1.61/MHz-POP
BC-Block (big PEAs; cleared later): Approx. $1.34/MHz-POP
ABC-Block (small PEAs; cleared later): Approx. $0.62/MHz-POP
BC/ABC-Blocks (all PEAs; cleared later): Approx. $0.96/MHz-POP
Overall: Approx. $1.10/MHz-POP
3.45GHz Auction (2021)
In October 2021, the FCC launched Auction 110, releasing 100 MHz of mid-band spectrum (3.45–3.55 GHz) across 4,060 partial economic area (PEA) licenses, structured as ten 10 MHz blocks per market and capped at 40 MHz per bidder per PEA. This auction closed after 151 rounds with gross bids totaling approximately $21.9 billion. The spectrum fetched an average of $0.74 per MHz‑POP. Major participants, AT&T, Dish, T-Mobile, and some regional players, accounted for around 83% of MHz-POP awarded. AT&T paid roughly $9B for 40 MHz nationally, T-Mobile about $6.6B for 30 MHz, and Dish around $7.3B. Verizon mostly abstained after an aggressive showing in the C-band auction.
The 3.45–3.55 GHz band was reallocated from the DoD to commercial use through a cooperative agreement that preserves DoD radar operations via shared access. Spectrum sold in FCC Auction 110 comes with geographic and power restrictions in certain areas, requiring carriers to mitigate interference.
AT&T acquired 3.45GHz spectrum from U.S. Cellular (Oct 2024)
AT&T struck a deal with U.S. Cellular to acquire 1.25 billion MHz‑POPs of 3.45 GHz mid-band spectrum and an additional 331 million MHz‑POPs of 700 MHz B/C-block licenses for $1.018 billion in cash.
FCC auctions AWS-3 licenses from DISH (end of 2025)
The FCC is in the process of auctioning the 197 AWS-3 licenses given up by DISH’s Northstar Wireless and SNR Wireless subsidiaries. These licenses have been stuck in regulatory limbo for the last 10 years due to Ergen’s initial miscalculations in the AWS-3 auction. Ergen will likely not have the financial flexibility to bid in this auction. But it would be hilarious if he did.
Potential Bidders
Potential bidders for AWS-3 paired spectrum include a mix of traditional wireless carriers and emerging players like cable operators. The 3 major mobile carriers are all logical participants, especially if the licenses are in markets where they lack mid-band depth or need supplemental downlink. Verizon and AT&T are big owners of AWS-3 licenses, so are going to be natural bidders. T-Mobile is less likely given its strong position in 2.5Ghz and lesser position in AWS-3.
AWS-3 unpaired uplink spectrum needs to be evaluated alongside AWS-4 and Band 70. Please see next part for a discussion of this.
As to the cable players, I have the same commentary for this block as I had for the 600MHz block - they would be very interested if they want a real wireless business.
My Valuation
There’s a lack of recent transaction comparables for this block, although in a few months, we will have a very good data point from the re-auction of the 197 AWS-3 licenses given up by DISH. I think a reasonable valuation for DISH’s AWS-3 paired portion is $2.00 per MHz-POP, or a total of $5.6B. Yes, that’s a big step down from the initial auction price of $2.82 per MHz-POP. I will value the unpaired portion separately in the next section. Note that if the current FCC auction of the DISH’s 197 AWS-3 license transacts at this estimated price, DISH will need to make a deficiency payment - for you Ergen haters, ’tis a consummation devoutly to be wish’d.
My Key Takeaways
The key takeaways for the AWS-3 block are:
It’s a very useful mid-band block for all three mobile carriers and potentially new entrants into the spectrum market.
The paired block is much more desirable than the unpaired uplink-only block. Since it is used in Band 70, the unpaired block’s monetization will occur in conjunction with that of AWS-4 and H-block.
DISH (and everyone else) overpaid for the spectrum in 2015 and there’s likely a deficiency payment that DISH needs to pay when the confiscated licenses are reauctioned later this year.
Tomorrow we will dive into the main course - AWS-4.