Long-Awaited Wireless/Wireline Conversion Is Happening

“Fiber tends to be a thread that runs through all of it,” Cankar said. Over the last year, the major wireless carriers have all invested in fiber, he said. “You’re starting to see the recognition that you can’t just be sort of a one-trick pony.”

Another trend is that over the next year, AI will move to the “edge” of the network and be part of smartphones rather than reside in data centers, Cankar said. “You gain a lot of efficiencies by moving that data out more to the edge,” but to do that, carriers need middle- and last-mile fiber and access to more spectrum, he said.

Analyst Carolyn Brandon, a senior industry and innovation fellow at the center, said venture capitalists are increasingly looking at the telecom industry. “Fifteen years ago, you couldn’t get them interested in telcos to save your life,” she said. “Now, folks are doing deals.” Cankar added that the level of interest is unlikely to slow.

“Wireless needs fiber, needs connectivity,” said National Economic Research Associates Director Hector Lopez. “We need to have connectivity, and we need to use the best … solutions,” he said. “Sometimes it’s fiber, sometimes it’s wireless. It all depends on the relative costs.”

The wireless industry is critical to the U.S. economy, Lopez noted. People use their smartphones constantly, and “everything that makes that experience better will have a huge impact” on the economy.

Brandon said that how the Congressional Budget Office scores the likely amount to flow to the government from spectrum auctions is critical to the success of auction legislation (see 2502260045). Except for the citizens broadband radio service auction, which offered licenses at “very low power” in “very, very, very small” geographic areas, CBO estimates “have consistently been surpassed by the actual monies raised.”

The likely outcome of future auctions is difficult to gauge, said Greenhill analyst Jennifer Fritzsche, who's also a senior industry and innovation fellow at the Georgetown center. Verizon and AT&T took hits on Wall Street after going big in the C-band auction four years ago (see 2103050049). The carriers “are very sensitive and have spent ... years repairing their balance sheets,” she said. “The spectrum is only worth what those carriers are willing to pay.”

Verizon

Verizon is well-positioned on spectrum and doesn’t need access to more frequencies, at least for now, Verizon President-Global Networks and Technology Joe Russo said Tuesday at a Barclays financial conference. “Several months ago, the story on spectrum was there was no story,” he said. “I'm super pleased to see the new administration starting to talk about how spectrum could be potentially auctioned for us to use.”

Verizon has “never been in a better spectrum position,” Russo said. “As we continue to deploy millimeter-wave and C band, we don't see in the short term any capacity constraints that will be driving us to need additional spectrum.” Proposed auctions “are probably several years out, which, I think, is probably the right timing.” Verizon is interested in the AWS-3 auction, which Congress has greenlighted, Russo said: “We're in that band today, and our radios support it.”

Russo also said all of Verizon’s C-band sites are ready for stand-alone 5G, which would allow network slicing and the launch of 5G-advanced. He added that offering satellite connections to its network is important to Verizon, so customers can connect everywhere. But satellite connections aren’t equivalent to what’s available on the terrestrial network, he said. “You can do calling and texting and video chatting, you could be searching the web, you could be streaming videos” on the terrestrial network.