The FCC ended the citizens broadband radio service auction after the final bidding round Tuesday, with total bids of $4.585 billion, or just more than 21 cents MHz/POP. The auction offered the largest number of spectrum licenses ever in a single FCC auction and was the first FCC mid-band auction for 5G. Questions remain about who drove up the bids in the auction and the amount bid by wireless carriers, cable operators, Dish Network or companies planning to offer private networks. The next big mid-band auction of C-band spectrum starts Dec. 8.
Wireless Spectrum Auctions
The FCC manages and licenses the electromagnetic spectrum used by wireless, broadcast, satellite and other telecommunications services for government and commercial users. This activity includes organizing specific telecommunications modes to only use specific frequencies and maintaining the licensing systems for each frequency such that communications services and devices using different bands receive as little interference as possible.
What are spectrum auctions?
The FCC will periodically hold auctions of unused or newly available spectrum frequencies, in which potential licensees can bid to acquire the rights to use a specific frequency for a specific purpose. As an example, over the last few years the U.S. government has conducted periodic auctions of different GHz bands to support the growth of 5G services.
FCC Chairman Ajit Pai is expected to push forward an aggressive agenda on spectrum during the last part of 2020, which could be the end of his tenure as chairman depending on the results of the November election. The FCC will likely take up the 3.45-3.55 GHz NPRM at the Sept. 30 meeting, and 5.9 GHz at the Oct. 27 meeting. A follow-up order on 6 GHz rules would probably follow in November.
C-band incumbent earth station operators got more time to choose whether to take the lump-sum reimbursement option as part of the FCC's band-clearing, as some had expected. The Wireless Bureau's moving the lump sum election deadline to Sept. 14 in response to a Society of Broadcast Engineers (SBE) extension request left hanging a stay sought by ACA Connects and thus ACA's possible legal challenge to the FCC's lump-sum formula, we were told. ACA didn't comment.
MoffettNathanson’s Craig Moffett said wireless industry trends all tie back to a charging T-Mobile. “Whether it is Verizon buying spectrum, or the Cable operators attempting to reduce costs in order to (eventually) lower price, everyone is chasing T-Mobile,” Moffett told investors Wednesday: “Only three months into the merger, it is already becoming clear that T-Mobile is poised to pull away from an otherwise uninspiring wireless sector.” Moffett said cable operators, eager to cut their costs, are likely among the biggest bidders in the citizens broadband radio service auction. Based on numbers from BitPath, prices are as high as 91 cents MHz/POP in Orange, California, and 68 cents in San Diego, he said. “Cable needs CBRS to bring their costs down, particularly if they are to eventually have the ability to price competitively versus T-Mobile,” he said: “Verizon wants CBRS to augment their LTE network.”
Efforts to clear federal spectrum for commercial use can help government agencies revamp their wireless operations and adopt new technologies, CTIA said Tuesday in a report. The group cited the results of auctions of spectrum on the AWS-1 and AWS-3 bands, which gave federal agencies money to upgrade their wireless operations and improve spectral efficiency. CTIA believes relocating government operations on the 3.1-3.55 GHz band could provide a similar benefit to federal agencies. President Donald Trump's administration said Monday it reached a deal for DOD to hand off a 100 MHz portion of the band for commercial shared use (see 2008100038). "The federal government has long been the largest spectrum user in the U.S., and expanding commercial use of these airwaves would represent a spectrum management win-win outcome," said CTIA General Counsel Tom Power.
The C-band auction will likely generate $52 billion in proceeds, the citizens broadband radio service auction another $3 billion, with Verizon likely the biggest buyer of spectrum, followed by AT&T, T-Mobile, Dish Network and then cable operators and others, New Street Research's Jonathan Chaplin emailed investors Tuesday. The wireless carriers need as much C-band spectrum as they can get, but cable's needs are more modest due to its ubiquitous high-capacity fixed infrastructure, and 20 MHz-40 MHz of CBRS spectrum would constitute auction success, he said.
The potential departure of FCC Commissioner Mike O’Rielly may affect work to allocate part of the 3.1-3.55 GHz band for 5G, lawyers and commission officials told us. President Donald Trump’s administration said Monday DOD agreed to hand off a 100 MHz portion of the 3450-3550 MHz band for commercial shared use (see 2008100038). FCC work on the band isn’t as far along as some other frequencies and NTIA is raising concerns (see 2007070062).
The FCC approved rules for a C-band auction starting Dec. 8 as circulated, with the general approval of all five commissioners (see 2007280063). Jessica Rosenworcel partially dissented because of concerns about the approach on the C band approved 3-2 in February (see 2002280044). Geoffrey Starks also partially dissented, saying his earlier concerns remain. Chairman Ajit Pai announced the agency plans the next mid-band auction, of 2.5 GHz spectrum, in the first half of next year (see 2008060017).
Relatively low bidding so far in the citizens broadband radio service auction is in line with expectations and has no negative implications for the December C-band auction, observers told us. The auction hit $1.28 billion at the end of 19 rounds Monday, which translates to 6 cents per MHz/POP nationwide. FCC officials on Monday said bidding is about as expected at this stage.
The clock started ticking Thursday for incumbent C-band fixed satellite service earth station operators to decide whether to take the lump sum for spectrum clearing transition costs. Some expect relatively few to take that option after the agency made only some cost estimate changes sought by many MVPDs (see 2007060051). The Wireless Bureau public notice set Aug. 31 for the lump sum election and laid out the cost category schedule and dollar amounts. The FCC seems unlikely to budge on the deadline or inclined to hand out waivers, said broadcast lawyer Anne Crump of Fletcher Heald.