C-band 5G spectrum auction garners $1.9B on day one

auction bids
MoffettNathanson analysts told investors that "who 'win's the C-band auction will shape the competitive dynamics of 5G for a decade." (Getty Images)

The C-band auction kicked off with gusto on Tuesday, generating more than $1.9 billion in gross proceeds at the end of Day 1 as bidders compete for key mid-band 5G spectrum the 3.7-3.98 GHz band.

Two rounds were completed on the first day of the much-anticipated Auction 107. It’s the second mid-band spectrum auction this year, with significantly more spectrum is available and exclusive licenses offered on a larger geographical basis compared to the priority access license (PALs) CBRS auction.

The C-band auction offers 280-megahertz of spectrum, with 5,684 licenses available.

After Round 2, the average nationwide price per MHz-POP was $0.022438, according to auction results tracking by BitPath COO Sasha Javid.

At the end of Round 2, licenses (based on partial economic areas, PEAs) in New York had the highest bids at about $16.65 million for both category A and category BC. 

RELATED: Verizon to go big in C-band auction: analysts

Category A blocks include the first 100-meghertz tranche of spectrum in 46 of the top 50 markets that must be cleared by incumbent satellite operators by December 2021 if they want to receive the full amount of nearly $10 billion in accelerated clearing payments, Javid pointed out. The remaining blocks, which fall into the BC/ABC categories, have to be cleared by a later December 2023 deadline.

“Because of this time lag in clearing between the A blocks and the BC/ABC blocks, it is fully expected the Big 3 carriers will bid most aggressively for these A blocks,” wrote Javid in an analysis of round one results.

He noted that in all the 20 largest PEAs “robust demand exists for both the A blocks and the BC/ABC blocks.”

At the end of Round 2, the aggregate demand of 22 for NYC A blocks outpaced the supply of 5, as it did for BC blocks, of which nine are available and demand stood at 33.  

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Prior to auction results Wall Street firm MoffettNathanson emphasized just how critical the C-band auction is for carriers.

“Today opens what may be the most important wireless auction of our time. Who ‘wins’ the C-Band auction will shape the competitive dynamics of 5G for a decade,” wrote MoffettNathanson analysts led by Craig Moffett in a note to investors. “Yes, the stakes really are that high.”

There are 57 bidders qualified to participate in the clock phase, but who will win what remains to be seen.

C-band spectrum is viewed as key particularly for AT&T and Verizon to compete with T-Mobile on 5G, as the latter already has a head start and a deep arsenal of 2.5 GHz midband from Sprint.

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“Only T-Mobile currently has a large enough block of mid-band spectrum for a truly compelling 5G service. For Verizon and AT&T, and, more controversially, perhaps for Dish Network as well, getting a large block of C-Band spectrum is a competitive necessity,” wrote Moffett.

Verizon in particular has been widely expected to bid most aggressively, securing $12.5 billion in financing ahead of the auction.  

Estimates have varied as to how much the auction will ultimately end up raising, with analysts ranging from $26 billion to as high as $50 billion by some firms in October.

RELATED: Crown Castle could be first to see fruits from C-band – analyst

After Round 1, Javid, who keeps close tabs on spectrum auctions and tracks results with interactive data, wrote that his current guess for Auction 107 stood between $25 billion and $30 billion.

“But I have been consistently low in prior FCC auction forecasts,” Javid acknowledged.

 Three rounds are scheduled to take place Wednesday.