“Band of Gold” Auction Shows Cable Companies’ Ambitions

Verizon splurges, other bidders reveal the shape of things to come

Last week, the US Federal Communications Commission (FCC) announced the results of the auction of priority access licences to Citizens Broadband Radio Service (CBRS) spectrum. This is spectrum in the 3.55 GHz to 3.65 GHz range, sometimes simply called band N48. The FCC raised close to $4.6 billion in the auction and says the spectrum will further boost the deployment of 5G network services throughout the US.

The start of the auction, dubbed Auction 105, was originally planned for earlier in 2020 (see Band of Gold) but was delayed by Covid-19. More than 270 bidders qualified to take part, including Verizon, Dish Network and Charter Communications, as well as several regional carriers. In the end, the big winners were a mix of cellular, satellite and cable companies, highlighting the trend of convergence of once-separate communication services. Despite the excitement that some industry players, especially Verizon, have created for high-band spectrum, in reality it’s mid-band spectrum like the N48 band that will be critical in the deployment of widely available 5G services in the near term.

Verizon was the biggest winner in the CBRS auction, splurging almost $1.9 billion for 557 licences, covering 157 counties in the US. Dish Network was the surprise number-two winner; it acquired spectrum in more markets than Verizon and spent $913 million for 5,492 licences, covering 3,128 counties. Dish Network recently bought assets and spectrum as a remedy to the merger between Sprint and T-Mobile. Added to its existing spectrum, Dish Network has the resources to become an important long-term rival in the mobile market, and has committed to covering 70% of the US population by June 2023 with its standalone 5G network. Dish Network had made its long-term ambitions clear, seeing entry into cellular 5G services as a way to disrupt the market for communication services.

AT&T watched from the sidelines, taking zero licences, and T-Mobile won only eight. AT&T is expected to participate in the FCC’s upcoming C-band spectrum (3.7 GHz to 3.98 GHz) auction beginning in December, in what’s likely to be an even more competitive tender. And T-Mobile is already sitting on “beach front” 2.5 GHz mid-band spectrum that it grabbed through the merger with Sprint.

It’s notable that three of the top-five bidders in the auction were cable companies. Charter Communications, Comcast and Cox Communications, all eager to offer more services to their subscribers and to counter the growing encroachment of cellular providers, spent $464 million, $459 million and $213 million respectively. In addition to offering mobile services, these cable companies are looking to expand into the area of fixed-wireless access using 5G to skip the last-mile costs of bringing broadband to households in far-flung areas.

The FCC is managing CBRS spectrum in a tiered format, providing what it calls Incumbent Access to current and long-term users of this band, particularly the US Navy as well as several fixed satellite service providers. The second tier is the Priority Access granted in this auction, providing the winners with a right of first access of open bandwidth, similar to the concept of priority boarding. The third CBRS tier is General Authorized Access, which allows other service providers the opportunity to exploit unused spectrum.

This mix of bidders in this auction is a reminder that the trend of convergence between fixed-line and mobile connectivity is developing, creating a telecommunication environment in which the distinction between wireless and fixed access becomes seamless. There’s encroachment both ways, as fixed service providers offer mobility, and mobile service providers offer fixed broadband services as well content bundles that were once only associated with cable providers. More immediately, the auction begins to address a very real need for prime mid-band spectrum.