Will carriers bet big at the third mmWave 5G auction?

AllNet Insights & Analytics' President Brian Goemmer thinks demand could be lower as carriers still work to put existing millimeter wave spectrum holdings to use. (Getty Images)

Later this year, the FCC will offer up the largest amount of wireless spectrum it has ever sold at once in the country’s third 5G auction scheduled for December, but whether U.S. carriers will spend big for more high-band millimeter wave licenses remains to be seen.

The FCC this week released names (PDF) of 39 companies that have applied to participate in the third mmWave spectrum auction and all four major U.S. carriers appear to be taking part.

At the December auction, 3,400 MHz of spectrum will be on the table, with licenses in the upper 37 GHz, 39 GHz and 47 GHz bands up for grabs. The previous two 5G auctions for licenses in the 28 GHz and 24 GHz bands raised about $700 million and $2 billion, respectively, though Verizon notably already occupied much of the 28 GHz airwaves.

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According to FCC documents, AT&T, Sprint, T-Mobile and Verizon apparently will all participate in the upcoming Auction 103, as will Dish Network, but most will bid through affiliated entities under different names.

The U.S. has moved quickly to get millimeter wave spectrum into the market, but Brian Goemmer, president of AllNet Insights & Analytics, told FierceWireless he thinks there could be lower demand for mmWave spectrum than in earlier 5G auctions as carriers still work to put their current holdings to use.   

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“There’s so much of it [millimeter wave spectrum] that’s already been brought to the marketplace that hasn’t even started to be used yet,” Goemmer noted.

AT&T and T-Mobile emerged as top spenders at the 24 GHz auction, where AT&T spent around $980 million on 831 licenses covering 383 partial economic areas (PEAs) to bolster its mmWave holdings. On average AT&T has about 600 MHz of mmWave spectrum nationwide, executives have said. T-Mobile, meanwhile, bid about $800 million for spectrum licenses in the 24 GHz band and also scooped up 28 GHz spectrum for about $39 million. Verizon itself spent about $505 million on additional 28 GHz licenses and also won 24 GHz spectrum.

RELATED: AT&T, T-Mobile lead bids in 24 GHz auction

AT&T and Verizon already are also operating on temporary licenses in the 39 GHz band, unlike the 37 GHz and 47 GHz bands, which are unencumbered. While T-Mobile and AT&T have already acquired high-band licenses, Goemmer said Verizon is still the clear leader in terms of mmWave spectrum assets. In that sense, he said the case could be made that companies like T-Mobile or AT&T might try to close the mmWave gap by accumulating more spectrum at the upcoming 5G auction.

However, it’s still very early days for 5G networks, he said. Specifically, in terms of how networks using mmWave are being deployed, and even to what extent consumers want services that high-band spectrum with massive capacity can provide.

So near-term, there’s not necessarily a need for more millimeter wave spectrum, according to Goemmer.

AT&T, T-Mobile and Verizon have all launched initial commercial 5G networks in areas of select markets using mmWave spectrum, leaning on either 28 GHz or 39 GHz frequency bands.

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“Even where AT&T and T-Mobile have 50% of the spectrum assets, roughly, that Verizon does, is it enough for them to offer that type” of 5G services like VR/AR, gaming, and super-fast movie downloads with the spectrum they already have and grow that?, he posited. “The answer is probably yes.”  

The ecosystem to support certain millimeter wave spectrum still needs to develop, with Goemmer noting that current networks and handsets are being built for the 28 GHz and 39 GHz frequency bands. The 24 GHz band, meanwhile, which represents the vast majority of millimeter wave spectrum T-Mobile has accumulated, is still a ways out from being put into use.

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AT&T in August just sought a Special Temporary Authority (STA) to conduct drive testing in the 24 GHz band to help calibrate its propagation models for 5G deployments.

He estimated the industry is still nine to 12 months away from handsets that can support 24 GHz. Add to that an estimated 18 months from the end of the upcoming third 5G spectrum auction until network equipment and smartphones for 37 GHz and 47 GHz are available, according to Goemmer.

So while this is the largest amount of mmWave spectrum the FCC has auctioned, bidding might be tempered as carriers lean on their current holdings.

For the third 5G auction, Goemmer anticipates seeing bidding “that reflects the fact that this is going to be an asset carriers expect to use at some point in the future, but they’re not going to essentially sell the farm to get this spectrum asset.”

U.S. Cellular, the nation’s fifth-largest wireless provider, participated in the 24 GHz and 28 GHz auctions and also plans to get in on the action this time around. The carrier recently announced plans to launch 5G in Iowa and Wisconsin using 600 MHz spectrum in the first quarter of 2020. U.S. Cellular has said it will add a millimeter wave 5G layer down the line “as the technology and use cases continue to evolve.”

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In the 28 GHz auction, more narrow geographic license areas meant some carriers could more precisely target locations and smaller providers didn’t have to pay big bucks for more populous cities. In Green Bay, for example, Verizon plans to bring 5G to the NFL stadium, but it isn’t a market where Verizon has mmWave spectrum, according to Goemmer. But Nsight Spectrum, part of regional operator Cellcom, was able to win both of the 28 GHz channels in Green Bay (offered by county) to offer services, which Goemmer said provides some picture into the type of strategy smaller carriers might use for mmWave.

In December, like the 24 GHz auction, licenses will be designated by partial economic areas (PEA)s, which represent larger coverage areas appealing to some, but won’t allow smaller players, as Goemmer noted, to be “nearly as surgical.”

He expects U.S. Cellular to bid in places like Oregon, Iowa, and North Carolina that are contiguous with its existing footprint, to ensure it “can service the larger cities in those markets with millimeter wave.”  

While much mmWave spectrum has been freed up in the U.S., a lack of mid-band spectrum still poses a challenge. The FCC recently voted to seek comment on bidding procedures for an auction of the licensed portion of the shared CBRS 3.5 GHz band, which will take place next year and has garnered interest from a variety of players. The industry is also eyeing coveted C-band spectrum, which the agency is hopeful to take action on at some point this fall.

Editor's note: This article was updated to accurately reflect that Nsight Spectrum, not U.S. Cellular, owns both 28 GHz spectrum channels in Green Bay. 

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