As anticipated, Verizon came out well on top in the FCC’s latest spectrum auction that raised just over $81.2 billion, with the company’s spend put at $45.5 billion. AT&T came in second, with $23.4 billion, followed by T-Mobile with just over $9.3 billion.
Some of the smaller winners included US Cellular ($1.28 billion) and New Level II L.P., a private equity group focusing on broadband networks ($1.27 billion.)
The outcome reflects the fact that Verizon was very much more in need of mid-band spectrum.
The C-band auction involved 280 MHz of C-Band spectrum, originally used for satellite communications, split into fourteen 20 MHz blocks in the 3.7GHz to 4.2GHz range.
The winning bidders are also obliged to pay almost $13 billion in clearing costs to the operators of the satellites, who will now have to move to different spectrum ranges. Those in line for pay-outs include Intelsat, SES, Eutelsat and Telesat.
One reason given for the US falling well behind other territories in rolling out 5G networks is that these frequencies were not available to the carriers earlier. This will now be corrected, but at a huge price, for which the winning bidders have almost all had to tap the markets for loans and will now have to spend as quickly as possible to deploy the necessary services.
This could have repercussions for other areas where the operators need to spend to roll out 5G networks, such as cell towers, antennas and other infrastructure gear.
The first 100 MHz, known as the A-Block of the C-Band, should be cleared by the end of 2021, but the important 100 MHz B-Block and the 80 MHz C-Block are only expected to be ready for deployment until late 2023
The FCC said 21 bidders participated in the auction, whose assignment phase concluded last week.
Verizon’s haul (the company bid as Cellco Partnership in the auction), comprises 3,511 licences, AT&T got 1,621 licences and in third spot was US Cellular’s acquisition of 254 licences.
Perhaps the biggest surprise was that pioneering operator Dish Networks hardly showed up: bidding as Little Bear Wireless, it spent just below $3 billion. Comcast and Charter did not see much of the action either.
Analysis by Sasha Javid, COO at BitPath, who has been following the auction closely from the start, suggests that AT&T and Verizon both collected licenses in all 406 markets that were up for grabs, with Verizon acquiring more of the spectrum. T- Mobile’s 142 licenses are said to cover a population of 207.7 million, with US Cellular’s population coverage put at 31 million.
Javid, a former senior data officer at the FCC involved in previous spectrum auctions, said he was surprised that Comcast, Charter and Dish did not gain more in the auction.
In a recent interview with the Financial Times, Javid noted the carriers had little option but to spend big on the spectrum because the alternative was worse — “becoming an also-ran in the race to 5G.”
Commenting on the outcome, the CTIA stressed the huge amounts raised reflects the critical need for mid-band spectrum throughout the country.
“Today’s announcement marks the culmination of years of hard work from Congress, The FCC and industry. These record-breaking results highlight the demand and critical need for more licensed mid-band spectrum and demonstrate the importance of developing a robust spectrum auction pipeline” said the Association’s President and CEO Meredith Attwell Baker.