The C-band auction began on December 8, 2020 and is anticipated to conclude in approximately 90 days, in Q1 2021. Specifically, C-band Auction 107 represents three blocks of spectrum: A Block will cover 100 MHz from 3.7 GHz to 3.8 GHz, B Block will cover 100 MHz from 3.8 GHz to 3.9 GHz, and C Block will cover 80 MHz from 3.9 GHz to 3.98 GHz.

Overall, the C-band represents 280 MHz of spectrum from the range of 3.7 GHz to 4.2 GHz. However, Auction 107 is only offering spectrum from the lower portion of the band. Specifically, Auction 107 is offering 280 MHz of spectrum in the 3.7 GHz to 3.98 GHz range. Indeed, the upper portion of the C-band will be part of a separate auction, at a later date.

C-band is an important band for the United States because there is no other mid-band spectrum available offering similar bandwidth (i.e., 280 MHz) to C-band. Additionally, C-band is clean spectrum that has not been placed in-service in the United States. Therefore, smartphone users are not currently benefitting from the capabilities of C-band.

C-band Spectrum Availability Post-Auction

C-band spectrum is currently held by satellite operators and thus must be cleared, prior to its use by U.S. carriers. Indeed, the incumbent satellite operators of the spectrum have elected an accelerated clearing process, which affords them financial compensation. Therefore, the first tranche (i.e., A Block) of C-band, a 100 MHz block of spectrum, in 46 of the top 50 United States markets, is expected to be available for use by December 2021. Indeed, the remaining licenses (i.e., B Block and C Block) are expected to be cleared by December 2023.

C-band Auction Results

Overall, the C-band Auction 107 will draw significant gross bids (including incentive and reimbursement payments), which we estimate to be $45bn, at prices of $0.48 per MHz-PoP. Both the value of bids and pricing is expected to be significantly higher than the CBRS auction, which concluded in September 2020. In comparison, the CBRS Auction 105, drew $4.6bn of gross bids and prices of $0.21 per MHz-PoP.

Of the $45bn in total C-band spend, $32.5bn is anticipated to be gross bids paid to the Federal Communications Commission (FCC) and $12.5bn is projected to be incentive and reimbursement payments made to the incumbent satellite operators. Indeed, this increase is driven in-part because C-band Auction 107 will offer 280 MHz of spectrum, compared to just 70 MHz offered in CBRS Auction 105.

Dgtl Infra Estimates of C-band Auction Results from Top Bidders

  1. Verizon: $25bn spent to secure 125 MHz of national average spectrum depth
  2. AT&T: $10bn spent to secure 60 MHz of national average spectrum depth
  3. T-Mobile: $5bn spent to secure 35 MHz of national average spectrum depth
  4. DISH Network: $1bn spent to secure 20 MHz of national average spectrum depth
  5. Other Bidders: $4bn spent to secure 40 MHz of national average spectrum depth

Bidders Positioning Themselves for C-band Auction

In November 2020, Verizon raised $12bn of debt for possible C-band spectrum purchases. Specifically, Verizon notes in its use of proceeds that funds are for “the acquisition of spectrum licenses”. Additionally, in December 2020, U.S. Cellular raised $500m of debt for possible C-band spectrum purchases. Specifically, U.S. Cellular notes that funds are for “the purchase of additional spectrum”.

Finally, other bidders for the C-band auction beyond Verizon, AT&T, T-Mobile, and DISH Network include Comcast and Charter Communications through their C&C Wireless joint venture.

C-band Auction Notable Qualified Bidders

While initially the C-band auction had 74 potential bidders, only 57 Qualified Bidders formally entered the C-band auction. Therefore, 17 potential bidders, including Altice USA and FiberLight, did not qualify to bid. Notable Qualified Bidders for the C-band auction include:

  • Telecom: Verizon, AT&T, T-Mobile, DISH Network, U.S. Cellular
  • Cable: C&C Wireless (Comcast and Charter Communications joint venture), Cox Communications
  • Other: Radius Capital Partners, Starwood Capital Group, Wisper Internet (40% owned by Cable One)

C-band – Global Roaming Standard for 5G

C-band is global spectrum, meaning it is the global roaming standard for 5G. Ultimately, all handsets, equipment and applications will be developed on C-band spectrum. However, currently, only the iPhone 12 and Google Pixel 5 smartphones have the capability of using C-band spectrum.

Indeed, for the United States, it is particularly important to be using the C-band. This is because the global telecom industry is pushing to reduce prices of handsets and chipsets, related to this band. Lower prices of handsets will drive further consumer adoption of 5G. In turn, developers will build more applications on the 5G standard, creating a virtuous cycle.

Furthermore, 5G allows U.S. carriers including Verizon, AT&T, and T-Mobile, to start using C-band’s large, 100 MHz channels. In comparison, 4G/LTE channels are only 20 MHz wide. Therefore, given the large volume of C-band available at auction (i.e., 280 MHz), a U.S. carrier (e.g., Verizon) could conceivably acquire a 100 MHz block of C-band spectrum.

C-band – Global Perspective of Mid-Band Spectrum

Mid-band has been the spectrum of choice for 5G deployments outside of the United States. Specifically, these mid-band deployments have been predominantly on similar frequencies to C-band. For example, South Korea has proven the capabilities of mid-band spectrum. Specifically, South Korea’s strong initial 5G performance is a result of the country using 3.4 GHz to 4.0 GHz mid-band spectrum.

Globally, carriers who have launched 5G services with mid-band spectrum typically have significant spectrum depth. Indeed, allocations of between 80 MHz to 100 MHz of spectrum, in the 3.5 GHz band are available in markets like South Korea and China.

United States to Auction 100 MHz of Additional Mid-Band Spectrum in 2021

Beyond C-band, an additional 100 MHz of 3.45 GHz to 3.55 GHz, will potentially go to auction in December 2021. Specifically, in August 2020, the White House and Department of Defense announced the 3.45 GHz to 3.55 GHz band would be made available for auction by the Federal Communications Commission (FCC).

Presently, the FCC has yet to establish the service rules for the band. However, the White House is pushing for these frequencies to be available for commercial use by mid-2022.

Adam Simmons is the Founder & CEO of Dgtl Infra. He started his career with an S&P 500-listed big box retailer, in an operations management role. Adam's entrepreneurial "itch" led him to start a 5G-driven company, focused on innovative retail solutions using augmented reality and shoppable videos, which was eventually sold to an advertising and consulting group. After, realizing the potential of 5G, Adam shifted his efforts towards investing in the "building blocks" of 5G - known as digital infrastructure, completing a number of strategic investments, buying cellular towers, data centers and fiber networks.

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