So We Thought the CBRS Auction Was Big; Here Comes C-Band

K. Weldon
K. Weldon

Summary Bullets:

  • The C-band consists of 500 megahertz of mid-band spectrum between 3.7 and 4.2 GHz. The FCC will be auctioning off this spectrum beginning in December 2020.
  • This auction is especially important as mobile operators in the U.S. need mid-band spectrum to flesh out their 5G networks and consolidate their positioning to both consumers and enterprises.

The C-band consists of 500 megahertz of mid-band spectrum between 3.7 and 4.2 GHz. The FCC will be auctioning off this spectrum beginning in December 2020. Investment firms are betting that this auction will generate $25 to $35 billion, a significantly larger amount than the $4.6 billion that the CBRS auction brought in this past August.

Why Is This Important?

Mobile operators in the U.S. need mid-band spectrum to flesh out their 5G networks. The 5G networks of AT&T and Verizon are dominated by two spectrum types: millimeter wave (mmWave) spectrum, which has been rolled out in dense urban locations but does not propagate cost-effectively to rural areas; and low-band spectrum, which has been rolled out much more broadly throughout the country but has not achieved the kinds of speed and latency enhancements required to excite enterprises and developers looking to power new innovative use cases. T-Mobile inherited 2.5 GHz mid-band spectrum holdings from Sprint as part of the merger and has been using it to offer what the operator calls its ‘layer cake’ approach of low-, mid-, and high-band spectrum, designed to meet the needs of different target segments and use cases.

The CBRS auction in August saw bidding not only from mobile operators but also from cable companies and other wireline providers, as well as utilities and private companies seeking to deploy do-it-yourself private networks. The C-band auction, set for December 2020, is expected to draw bids from Verizon, and possibly from AT&T, and is expressly designed to help operators expand their 5G networks. The FCC will offer 5,684 licenses across 14 unpaired 20 MHz blocks in the 3.7 GHz band, for a total of 280 MHz. There are later phases of this auction planned for 2021, 2022, and 2023, which will likely attract other bidders, including T-Mobile, in spite of its significant existing holdings. Cable companies and Dish Networks are other likely bidders. The spectrum band is being ‘cleared’ by moving satellite operators that have been using the entire 500 MHz band to the upper 200 MHz of the band and incentivizing them with relocation payments.

How Will Operators Use This Spectrum?

The positioning of 5G benefits to the enterprise buyer or developer is all about high speeds, support for ultra low latency, huge capacity to accommodate massive numbers of IoT deployments, and the ability to power the kinds of innovative use cases that we can only dream about today, including truly autonomous vehicles and robots as well as remote AR/VR/AI-assisted surgeries. While the initial 5G launches of the three primary mobile operators are mostly aimed at the consumer, to drive use cases such as enhanced mobile broadband internet access, immersive gaming, access to real-time fan stats and HD feeds at stadiums, and real-time remote healthcare monitoring, the path to significant monetization down the road is likely to be for enterprise applications. This requires not only faster and more ubiquitous networks, but also enablers such as the use of edge computing to enhance and optimize processing and analytics of real-time video and data feeds. Ultimately, however, connectivity alone will not be the big differentiator it is today and for the next few years; operators are working on providing a slew of advanced capabilities with the help of strategic alliances to draw businesses to their new networks. These include connectivity and application enablement platforms; tiered professional, advisory, and deployment services; managed mobility services for device and lifecycle management; enhanced end-to-end security; custom dashboards and applications; and access to a marketplace of third-party applications. Private and hybrid public/private wireless networks for verticals such as manufacturing, retail, oil and gas, mining, ports, and transportation hubs are also seen as a significant opportunity for operators.

As always, the ecosystem of partners, resellers, and developers is key to operators’ success in the enterprise, but the operators face the well-founded worry that some of these partners may end up leading the big deals or taking the lion’s share of revenues. Nokia and Ericsson have been busily testing 5G performance on C-band spectrum, gearing up for a near future that holds revenue opportunities for them as well as their operator customers/partners. Ericsson reported peak download speeds of 5.4 Gbps in some of these tests, which is much faster than the current generation of early 5G buildouts. While the C-band auction is expected to be a big one, and will help the U.S. service providers reach parity across all three spectrum types, the road to monetization is complicated.

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