Sorry, not interested: Sprint bows out of the PCS spectrum auction

The Federal Communications Commission plans to hold its first auction of mobile airwaves in half a decade in January, and Sprint(s s) was widely expected to be the auction’s main bidder as it looked to bulk up its LTE capacity. But that’s no longer the case.

Sprint said on Wednesday that it has decided not to participate in the auction, which would parcel out a single 10 MHz block of 1900 MHz PCS airwaves known as the H block. The H block sits right next to the G block, which is where Sprint’s principal LTE network now resides. If Sprint gained the H-block, it would be a simple of matter of adding those airwaves to that 4G network, effectively doubling its capacity. But in a statement Sprint said it has decided to focus its spectrum-hunting efforts elsewhere:

“Sprint is focused on gaining access to more low-band spectrum to add to the company’s spectrum portfolio, so we have opted not to participate in the upcoming H Block auction. With the launch of Sprint Spark, Sprint is working to deploy its 2.5 GHz licenses along with licenses in 800 MHz and 1.9 MHz to provide customers greater network speeds and capacity. We expect to offer Sprint Spark in approximately 100 of the largest U.S. cities by the end of 2016.”

By low-band spectrum, Sprint is talking about the upcoming incentive auctions, which the FCC hopes will convert dozens of megahertz of 600 MHz TV spectrum into new commercial 4G airwaves. Low band spectrum is important because it propagates further than higher band spectrum, allowing carriers to build networks with much better coverage, particularly indoors. Most of the low band spectrum in the U.S. is controlled by Verizon Wireless(s vz)(s vod) and AT&T(s t).

Sprint LTE logoIn addition to the upcoming auction, some recent developments appear to have shaped Sprint’s thinking about the H-block. With its new high-capacity Spark network coming online – albeit slowly — Sprint no longer faces as many LTE capacity constraints. And while Sprint’s LTE network may be on one side of H-block, Dish Network(s dish) sits on the other. When and how Dish builds its own planned 4G network could determine how valuable the H-block airwaves are for mobile broadband services.

Sprint’s withdrawal, however, raises questions as to whether the auction will get enough bidders to meet the reserve price of $1.56 billion. Those proceeds are earmarked for the construction of a nationwide public safety communications network. (Update: Satellite broadband analyst Tim Farrar noted that that Dish has committed to paying the minimum reserve price for the PCS airwaves if it takes the FCC option to reband its own nearby spectrum. Farrar has been predicting since October that Sprint would drop out of the auction.)

PCS spectrum is still valuable to all the mobile carriers, since they all run their 3G networks in those frequencies and most have plans to use it for future LTE networks as well. But Sprint would have gotten more benefit out of those airwaves than most. If it’s lost interest, that’s not a good sign.