The C-band 5G spectrum auction has been driven to record spending levels of $93.5bn, by the intense bidding from wireless carriers Verizon, AT&T, and T-Mobile. After 97 rounds of bidding, the C-band auction has generated $80.9bn in gross bids, which are payable to the Federal Communications Commission (FCC). Additionally, total auction payments rise to $93.5bn, after including $12.6bn of transition and relocation payments to the incumbent satellite operators of the spectrum.
Overall, this makes the C-band auction, the largest spectrum auction in U.S. history, surpassing even the most optimistic expectations. Specifically, in total, C-band has reached over 2x the previous record spectrum auction spend held by AWS-3, from 2015, which brought in $44.9bn for the Federal Communications Commission (FCC), at the time.
The C-band spending equates to $0.94 per MHz-PoP for gross bids, paid to the FCC, and $1.09 per MHz-PoP total spend. Following the completion of 97 rounds of bidding, over 80% of total auction spend has come in the top 50 Partial Economic Areas (PEAs), by population. Specifically, these Partial Economic Areas (PEAs) include New York City, Los Angeles, Chicago, and San Francisco.
C-band 5G Spectrum Auction – Overview
C-band Auction 107 offers 280 MHz of spectrum in the 3.7 GHz to 3.98 GHz range. Specifically, C-band Auction 107 represents three blocks of spectrum: A Block covers 100 MHz from 3.7 GHz to 3.8 GHz, B Block covers 100 MHz from 3.8 GHz to 3.9 GHz, and C Block covers 80 MHz from 3.9 GHz to 3.98 GHz.
As part of the continuing roll-out of 5G networks, in 2021, in the United States, the Federal Communications Commission (FCC) is freeing up C-band spectrum, for 5G use. C-band is mid-band spectrum, which is known as “backbone spectrum”. Indeed, this mid-band spectrum is in the “sweet spot” for providing both good coverage and capacity for 5G services. Specifically, mid-band spectrum has good transmission distance and fast speeds of 300 to 400 megabits per second.
Indeed, all of the major wireless carriers including Verizon, AT&T, and T-Mobile bid in the C-band 5G spectrum auction. Elevated bidding activity clearly illustrates how important the wireless carriers view mid-band spectrum in the context of their 5G roll-outs. Additionally, cable companies, Comcast and Charter, and future wireless carrier DISH Network, also took part in the C-band auction. However, final bidder identities will not be released by the FCC until late February or early March 2021.
Aside from C-band, there is little future 5G spectrum coming to the market in the United States over the next few years. Therefore, the C-band auction plays an important role in determining which U.S. wireless carrier will win the 5G race.
C-band 5G Spectrum Auction – Spend Breakdown
Below are Dgtl Infra’s estimates of C-band auction results for the top bidders. Specifically, these C-band spectrum auction bidders include Verizon, AT&T, T-Mobile, Comcast, Charter Communications, DISH Network, amongst others.
Verizon – C-band Auction Spend
Verizon will be the top bidder in the C-band spectrum auction, with $47bn of total spending. Indeed, this includes $40bn of gross bids to the FCC, to secure 140 MHz of national average C-band spectrum depth.
Verizon is the wireless carrier that needs the most mid-band spectrum. In mid-band, Verizon holds only 84 MHz of spectrum depth. This is much less than T-Mobile, which holds 256 MHz of mid-band spectrum depth and AT&T which holds 93 MHz of mid-band spectrum depth. Therefore, the C-band auction is crucial for Verizon to secure mid-band spectrum. In turn, Verizon will ensure its 5G network has the proper balance of low-, mid-, and high-band spectrum.
We anticipate that Verizon will secure 80 MHz of national average C-band spectrum depth in Block A (out of a possible 100 MHz). Specifically, Block A will be clear for use by Verizon in December 2021.
AT&T – C-band Auction Spend
AT&T will be the second most active bidder in the C-band spectrum auction, with $22bn of total spending. Indeed, this includes $19bn of gross bids to the FCC, to secure 65 MHz of national average C-band spectrum depth.
AT&T has more mid-band spectrum than Verizon. However, the company only has ~1/3rd of the mid-band spectrum holdings that T-Mobile holds. Indeed, mid-band spectrum will add to AT&T’s 5G capacity and ensure it can stay competitive with Verizon and T-Mobile in 5G.
We anticipate that AT&T will secure the remaining 20 MHz of national average C-band spectrum depth in Block A (out of a possible 100 MHz). Specifically, Block A will be clear for use by AT&T in December 2021. The remainder of AT&T’s spectrum winnings will be in Block B and Block C, which will not be clear for use until December 2023.
T-Mobile – C-band Auction Spend
T-Mobile will be the least active of the three largest wireless carriers in the C-band spectrum auction, with $12bn of total spending. Indeed, this includes $11bn of gross bids to the FCC, to secure 40 MHz of national average C-band spectrum depth.
T-Mobile currently has over 250 MHz of mid-band spectrum. Specifically, T-Mobile has 150 MHz of depth in the 2.5 GHz frequency band. Therefore, the company’s need for more mid-band spectrum is not as acute as Verizon and AT&T. Indeed, T-Mobile is already deploying this mid-band 5G spectrum in Philadelphia, New York City, Atlanta, Chicago, Dallas, Houston, Los Angeles, and Washington, D.C.
We anticipate that T-Mobile’s spectrum winnings will be entirely in Block B and Block C, which will not be clear for use until December 2023.
Cable Companies (Comcast and Charter Communications) – C-band Auction Spend
Cable companies will have $7.7bn of total spend in the C-band auction. Indeed, this includes $6.7bn of gross bids to the FCC, to secure 20 MHz of national average C-band spectrum depth. Comcast, which owns Xfinity Mobile and Charter Communications, which owns Spectrum Mobile are bidding as one joint venture entity.
Rather than spending to acquire a nationwide portfolio, the cable companies will be more targeted on spending in the top 50 Partial Economic Areas (PEAs). Indeed, this where the majority of Comcast and Charter’s wireless traffic is occurring.
Significant spending from these cable companies in the C-band auction will demonstrate that they are aggressively growing their wireless business. Indeed, the C-band auction may be a catalyst for cable companies to compete more intensely with Verizon, AT&T, and T-Mobile.
DISH Network – C-band Auction Spend
DISH Network will have $3.0bn of total spend in the C-band auction. Indeed, this includes $2.7bn of gross bids to the FCC, to secure 10 MHz of national average C-band spectrum depth. Historically, DISH Network has been an aggressive bidder in previous spectrum auctions.
However, DISH Network already has over 90 MHz of mid-band spectrum. Moreover, the company is currently not using its existing spectrum, since DISH has not yet built out its 5G network. Therefore, DISH will only purchase a modest amount of C-band spectrum to help accelerate its greenfield 5G network build plans.
U.S. Cellular – C-band Auction Spend
U.S. Cellular will have $900m of total spend in the C-band auction. Indeed, this includes $815m of gross bids to the FCC, to secure 3 MHz of national average C-band spectrum depth. Notably, in December 2020, U.S. Cellular raised $500m of debt for possible C-band spectrum purchases.
Other Bidders – C-band Auction Spend
Other bidders will have $770m of total spend in the C-band auction. Indeed, this includes $677m of gross bids to the FCC, to secure 2 MHz of national average C-band spectrum depth. Other bidders include private-equity backed entities and smaller wireless carriers. For example, private equity firms Columbia Capital and Grain Management are registered C-band bidders. Additionally, regional wireless carrier C Spire is another possible C-band bidder.