Sprint has revealed that it will not be participating in next year's auction of wireless airwaves, a move that could save billions of dollars for the carrier but could also cause the company to lose opportunities to make upgrades to its network in the future.
The Federal Communications Commission has planned a major spectrum auction for March 2016, where the United States government will purchase airwaves from TV broadcasting companies and then resell them to wireless carriers.
Increasing spectrum allocation has become a significant objective for wireless carriers, as with more customers using bandwidth-intensive devices, companies need to be able to support them. Without significant spectrum allocation, subscribers of carriers would experience lots of dropped connections and buffering.
According to a press release by Sprint, the company believes that its spectrum holdings are sufficient enough to meet the demand of its current and future subscribers.
"Sprint's focus and overarching imperative must be on improving its network and market position in the immediate term so we can remain a powerful force in fostering competition, consumer benefits and innovation in the wireless broadband world," said Marcelo Claure, the CEO of Sprint, in a statement.
Sprint is about to start with another major overhaul to its network, which the carrier said will greatly increase data speeds for subscribers.
Sprint's decision to pass on the auction, despite its claims of having sufficient spectrum, can still be considered a gamble. This is because the airwaves that will be included in the auction are low-frequency airwaves described as premium property. Such airwaves are able to travel longer distances and penetrate structures better than high-frequency airwaves, which would allow carriers using them to cover bigger areas with fewer cellular towers.
Sprint is betting that it will not need more spectrum caused by a sudden demand spike, or that its lack of support for low-frequency airwaves will not cause performance or compatibility issues in the future, as majority of its spectrum are in the higher frequencies.
A spokesman for Sprint said that the carrier is only prioritizing to spend its financial resources for the near-term, as participating in the auction will not lead to any benefits to subscribers until by the year 2020 at the earliest.
Underlying Sprint's decision to bow out of the auction, however, could be the fact that the company is currently in financial trouble, with the carrier not having posted an annual profit since the year 2007.
Rival carrier T-Mobile CEO John Legere, of course, had something to say about Sprint's decision, claiming that Sprint is doing so because it has no money to participate in the auction and just masking the fact by stating that it does not want the spectrum.
