5G

Verizon reaches deal with satellite operators to deploy C-band in 30 more markets this year

Verizon is getting its hands on more C-band spectrum to deploy this year, securing agreements with satellite operators to clear out of the band in additional markets ahead of schedule.

Verizon spent more than $45 billion at the C-band auction for an average of 161 MHz nationwide, including 60 MHz in the top 46 markets – where it’s already deployed covering 100 million people. Additional markets covered by the first tranche (which cover so-called “A block” licenses in the 3.7-3.8 GHz range) weren’t expected to be ready until the December 2023 timeframe.

But now the carrier can utilize those A block licenses to deploy its 5G Ultrawide band service “on at least 60 MHz of spectrum and up to 100 MHz of spectrum in some areas” in at least 30 additional major markets. Those include large metro areas of Atlanta, Baltimore, Washington D.C., and Denver.

The second tranche of C-band, which is an additional 180 MHz of spectrum between 3.8 GHz-3.98 GHz, remains on track to be cleared in December 2023, according to a Verizon spokesperson.

On top of the amount for licenses, Verizon paid clearing costs to ready the band plus incentive payments to entice satellite operators to speed up the process and make the spectrum available earlier.

Following the auction, the FCC encouraged satellite players and license winners to negotiate for faster clearing times, which is exactly what is playing out, according to Roger Entner, principal and founder of Recon Analytics.

There have been hints that Verizon would be deploying more mid-band sooner than expected. During its recent Investor Day the carrier upped its coverage target for 2022 to 175 million for C-band – a year earlier than previously planned, but didn’t disclose the mechanism for doing so, he noted.

Verizon is still sticking to that target for now. However, the early clearance does allow the carrier to launch 5G Ultrawideband in both large markets and more rural areas.  

With the quicker schedule, Verizon is paying additional money to those like SES, according to Entner, although the carrier declined to disclose details on the contracts, such as how much or when payments will be made.

Entner likened spectrum clearing negotiations to wanting to move into a house quicker.

“You tell the current occupant, if you move out a couple of months earlier, we’re going to make it worth your while, and they’re like ‘ok let’s talk’,” he said.

And Verizon is also likely eager to get access to any A-block spectrum not covered by the current agreements.

“You can bet they are heavily negotiating with the other satellite providers to also clear that out and so that they can accelerate this even further,” Entner said, adding those payments would be less as there’s a time value component – say for six months early versus a year.

Verizon has been moving at a rapid pace to deploy C-band as soon as it’s available, increasing from zero to 90 million covered when it launched January 19, increasing by 5 million one week later, and now covering more than 100 million.

“This early spectrum clearance is just the latest development that allows us to bring 5G Ultra Wideband to our customers faster,” said Kyle Malady, EVP and president of Global Network and Technology, in the announcement. “We’ve been able to accelerate deployment because we’re driving more efficiency and coverage from the C-band spectrum, leveraging opportunities like the one we are announcing today, and leveraging our already in place infrastructure. In my career with Verizon, I have never experienced a network deployment move so quickly.”

A-block strategy comes to fruition 

During Auction 107 Verizon paid a premium to heavily focus on A block licenses, compared to AT&T which zeroed in on B and C blocks – which required a less, albeit still hefty, price tag but have a later clearing timeline as they’re in the second tranche.

“Their game plan is coming nicely to fruition,” Entner said of Verizon’s focus on those licenses. “They’re getting the markets faster.”

C-band is key to the overall 5G picture as it offers both coverage and capacity, with Verizon promising speeds up to 10 times faster than typical 4G LTE.

In places where Verizon is getting a full 100 MHz of C-band earlier than expected, it means consumers in some cities smaller than the top 46 PEAs could see faster speeds even sooner than those in the largest markets, according to Entner. That’s because in those 46 markets Verizon has 60 MHz while AT&T has 40 MHz of the earliest available A-block C-band  –  essentially sharing the 100 MHz A-block until 2023 once AT&T shifts to the B/C block license channels and Verizon can get its full amount of A-block spectrum in those markets.

But in any of the markets smaller than the top 46 where Verizon has A block licenses, it can negotiate to have full access to the amount of spectrum it owns, he noted. That can be seen by the full 100 MHz Verizon mentioned for some markets in today’s announcement.

And pushing up the timeline for additional C-band to match Verizon isn’t something competitor AT&T can do for its later available blocks, according to Entner, because BC block licenses are behind A blocks in the clearing queue.

“This only helps the A-block winner” (aka Verizon), Entner said of the accelerated clearing agreements.

*AT&T got back to Fierce, saying its phase one C-band holdings acquired in 2021 have already been cleared by satellite providers, which it began deploying in January.

"Our mid-band spectrum plans remain on track, including ramping up by the second half of the year our one-touch tower deployments with C-band and additional nationwide mid-band spectrum from the 3.45 GHz auction," an AT&T spokesperson continued. 

Speeding up C-band key for Verizon

Competition-wise, pushing up its C-band deployment to cover more people with mid-band 5G is key for Verizon.

“Verizon really needs this,” Entner said of the faster C-band deployment timeline.

Last year, the carrier grew subscribers but not net accounts, with growth essentially coming from existing customers adding new lines, he explained.  

“That is not sustainable, it’s like wringing water out of an already dry sponge,” Entner said.

It comes back to Verizon commanding a premium price for its wireless service based on consumer perception, and historical network superiority  –  a notion that’s become more challenged as third-party speed results continue to show rival T-Mobile as the 5G network leader for speeds and coverage.

“And when the claim and reality become divergent, you have a problem,” Entner said.

Consumer perception and lack of account growth is “why they [Verizon] really need C-band and C-band fast, so that they can close the gap with T-Mobile,” he continued. “So that T-Mobile can’t say ‘I have a faster network and I’m cheaper’ to consumers.”

Verizon’s speedier deployment of C-band helps could help catch up with T-Mobile, which has staked claims on coverage with plans to reach 300 million people with mid-band spectrum by the end of 2023. Verizon expects to cover 250 million by the end of 2024.

AT&T meanwhile is targeting 200 million people by the end of 2023 with mid-band 5G, including 3.45 GHz spectrum.

Entner doesn’t view AT&T in the same position as Verizon in terms of needing rapid pace deployment since it’s been growing subscriber relationships. AT&T’s made simplified pricing and aggressive promos a key part of its strategy to attract and retain customers.

“They have been growing faster than in a decade, so they can do this [5G midband] cheaper and slower” than Verizon, he said, adding that AT&T is “winning on good enough.”

*Article updated with comment from AT&T.