Sprint is already one of the largest owners of radio frequencies among cellular operators / Flickr.com

The U.S. government plans to buy up spectrum from TV broadcasters and auction it off to wireless carriers. The Federal Communications Commission (FCC) has scheduled a major auction for March 2016. Sprint announced Saturday that its existing spectrum is “sufficient to provide coverage to current and future customers.” The company is set to begin a major overhaul of its cellular network soon, with the goal of “dramatically increasing data speeds.”

The radio frequencies being auctioned are considered particularly attractive because they are in the low-frequency range. Waves of lower frequencies have better penetration through the walls of buildings, meaning that their owners can provide a larger coverage area with a small number of transmitting stations. This is very important in the current conditions of explosive growth in consumer demand for video transmission and Internet browsing via mobile phones.

The planned auction is one of FCC Chairman Tom Wheeler's flagship events, and Sprint's withdrawal means the field of major contenders is shrinking. Other carriers — AT&T, T-Mobile US and Verizon Communications — are almost certain to bid for the auction, which depends on carriers willing to pay large enough sums to make current spectrum owners willing to part with them.

The FCC is setting aside spectrum for auction that only carriers like Sprint and T-Mobile, which don't have any low-band spectrum, can bid on. Sprint's decision means T-Mobile's chances of winning the auction are increasing, though it's possible that other bidders, such as cable operators and tech companies, will also enter the wireless market.

An FCC official said Sprint's decision was not a surprise to the commission, given the company's statements in recent months. Sprint did not participate in the previous two auctions, but they were successful, the official said.

Sprint is already one of the largest owners of spectrum among wireless carriers, having acquired a significant chunk of it when it bought Internet service provider Clearwire in 2013. But that's mostly at the high-band end of the spectrum, while AT&T and Verizon have spectrum at the lower end. So to provide the same broad coverage as its leading competitors, Sprint needs to install more cell towers.

Perhaps the reason for Sprint's decision is its poor financial situation. In 2005, the company merged with Nextel, and the deal was unsuccessful. Since 2007, the company has failed to make an annual profit, and in the last quarter, its cash reserves fell by $2.2 billion. To finance sales of phones and the development of its equipment fleet, the operator plans to create off-balance sheet companies with the support of its parent company SoftBank Group. Sprint does not intend to use loans or stock market transactions to solve its problems. In September, Moody's lowered Sprint's rating by two notches to B3: analysts doubt the effectiveness of the operator's reorganization.

WSJ, 09.27.2015, Alexander Silonov

Sprint decided to save on development