Verizon CFO Fran Shammo on Tuesday said the carrier would likely balk at sky-high prices for 600 MHz spectrum in the upcoming FCC incentive auction.
In remarks delivered during the 2015 Wells Fargo Securities Technology, Media & Telecom Conference, Shammo said though the carrier has yet to determine areas of interest based on what’s available in the upcoming auction, the 600 MHz band isn’t necessarily where the company wants to be as it looks to build capacity.
“This is low level spectrum, which is good for coverage but not capacity,” Shammo said. “600 MHz is not our top priority spectrum…For us it would be nice to have but not an absolute priority for us like AWS-3 was.”
Shammo said Verizon would be able to use the 600MHz spectrum to fill in coverage gaps but won’t allow itself to be “held hostage” by a third party demanding high prices.
“We went into the AWS-3 auction and we spent $10.2 billion,” Shammo said. “If I wanted more spectrum we would have bought it…but we walked away from Chicago and New York because the price got way too high…We forget that we still have PCS and 850…We have plenty of runway here for capacity purposes so I’m not in a situation where I have to be held hostage by anyone for any part of spectrum.”
In particular, Shammo said Verizon wouldn’t spend exorbitant amounts to acquire spectrum from Dish.
“(Dish Chairman Charlie Ergen)’s got great spectrum, but not at the price he paid for it,” Shammo remarked. “We’ve talked about this before, I’m not interested in Dish.”
In lieu of buying spectrum, Shammo said Verizon could build out its own small cell network to expand capacity as demand for data continues to grow.
Shammo said Tuesday Verizon’s data growth was 75 percent year over year on its LTE network. Though service revenues per megabit are going down, Shammo said costs to serve each megabit is also decreasing.
Though some carriers have tried to meet consumer demand with unlimited data buckets, Shammo said Verizon has no plans to take the same approach.
“At some point if you just give data away for free the cash flow is going to suffer and you need that money to invest in the network,” Shammo said, noting that networks need to prepare for increased data demand. “You need to be two years ahead of that demand or you’re going to be behind.”
Shammo said he anticipates that pricing in the market will stabilize as a result, but said he expects some competitive promotions to continue.
