The enthusiasm executives showed on stage during Verizon’s virtual investor meeting Wednesday? That’s cascading through every engineer working on the C-band deployment, according to Verizon's Adam Koeppe, senior vice president of Technology Strategy and Planning.
“It’s an absolutely game-changing outcome for our industry and certainly for Verizon,” he told Fierce. “The amount of bandwidth we’ve secured here and it’s contiguity across the mainland U.S… it fits perfectly well with the type of network we’re putting up in front of our customers.”
Verizon executives, like others involved in the record-setting $81 billion auction, have been under a quiet period for months due to the FCC’s anti-collusion rules. With that period ended as of Wednesday night, “now we can get out and talk about our plans and do our work,” Koeppe said.
Currently, the first tranche of spectrum will be available at the end of this year, and that’s where Verizon paid big bucks in order to access the spectrum sooner rather than later.
Questions have arisen about the 3.7 GHz portion of the C-band potentially interfering with the nearby Citizens Broadband Radio Service (CBRS) band at 3.5 GHz.
Asked about the proximity of the C-band to the CBRS band, “we’ve been on that train since the very beginning,” Koeppe said, back to the early days when the FCC and Department of Defense (DoD) started having discussions about CBRS at 3.5 GHz.
Verizon has since deployed thousands of General Authorized Access (GAA) unlicensed nodes for CBRS. Last year, it secured up to 40 MHz of bandwidth in major markets through the Priority Access License (PAL) auction, increasing its overall mid-band depth by up to 16 megahertz.
CBRS is a known entity, and it has an imminent path to 5G NR; all the radios out there now can be upgraded via software to take advantage of PAL and 5G NR capabilities in 2021, he said.
As for C-band, it’s used globally for 5G and has been for quite some time now, leading to economies of scale and global roaming opportunities. The equipment is on order and will be showing up next month, according to Koeppe. Verizon’s radio access network (RAN) vendors include Samsung, Ericsson and Nokia and it recently signed a large contract with Samsung.
The satellite operators are an integral part of the equation because they get paid based on how quickly they move. “We’ll be obviously working closely with the satellite industry as they move their services out of that band,” he said.
The auction was set up so the first 100 megahertz gets cleared by the end of 2021, and Verizon won 60 megahertz of that spectrum in the top 46 U.S. markets. Only one other operator bought spectrum in that space, with AT&T getting the other 40 megahertz.
Part of Verizon’s goal was to secure the A1 block in the band, which is the farthest away from the part of the band where the satellite operators are moving. Verizon will anchor itself in the A1 section, where it has less risk of interference or complications with the satellite industry.
The second phase of spectrum clearance will take more time, and that’s targeted by the end of 2023. It’s possible individual markets or parts of the country get cleared early, but those conversations weren’t able to happen until now due to the quiet period.
Where is the money coming from to pay for all this?
Verizon published an infographic explaining some of this. When the auction started winding down and the high prices were revealed, some folks questioned how the operators are going to have any capital left to finance their buildouts after spending so much on the spectrum.
In short, some of the Verizon’s key financial terms include a down payment paid with cash on hand, as well as a combination of public debt, bank facilities and other sources.
While it is a historic spectrum auction, it’s not a new process, Koeppe said. “Other operators that don’t have the balance sheet that we do probably couldn’t do what we’re talking about here,” he said.
Stepping back and looking at the capital guidance of $17.5 billion to $18.5 billion this year, that includes the millimeter wave (mmWave) build, fiber, Mobile Edge Compute (MEC) and 4G LTE capacity upgrades like CBRS. But the C-band is so important, it’s going to take an additional $10 billion in capital and layer that over a three-year period, which means the bulk of that could happen in the first year or not – it’s not obligated to a specific time in which it needs to spend that.
Macro sites or small cells?
Tower company executives have said in recent earnings calls or at investor conferences that they expect the first deployments will be on macro sites. But a lot of earlier speculation around mid-band spectrum centered around small cells. So, which is it?
The macro term gets thrown around a lot and you could probably translate that 25 different ways, but when an operator deploys a low band of spectrum, like 700 MHz or 850 MHz – the coverage layers of the network – “you’re targeting very large, high structures, and that’s where the original term ‘macro’ came from,” he said. It’s going to a tower on a hilltop in the middle of the country and using low band for coverage.
Macro can also mean a high-power transmit location. The difference in a band like CBRS is the power is limited. “You can only transmit that at a certain amount of power that results in a coverage circle that is relatively small,” Koeppe said.
For some, the macro terminology means a 250-foot lattice tower on a hill, or a high-powered node location.
Where Verizon has PCS and AWS spectrum deployed today, those are referred to as “macro” locations, and some are mono poles, rooftops or other structures for full-transmit power. C-band will go on those same types of locations to provide a higher band coverage layer. It can also be used on small cell locations, but it fits ideally with the PCS and AWS-style locations.
“We’re targeting our existing locations,” where it has PCS and AWS density and existing relationships with tower companies, building owners, municipalities and others, so the C-band equipment can go on those locations without the hassle of new zoning permits for new facilities. What often gets overlooked is much of the network is shelter based, he noted.
Laying the ground work
“We’ve done a tremendous amount of planning already,” Koeppe said. In fact, once the C-band initiative got under way, the planning stage started. Some of the benefits of that early work are showing up in how it’s going to market.
Verizon has been able to do network designs based on the expected outcome of the auction for quite some time. It has special temporary authority (STA) permits from the FCC to do field-testing in multiple markets, and that’s part of the normal spectrum acquisition process.
“Every ounce of pre-work that we’ve been allowed to do, following the auction rules, we’ve done, and now we can literally get to building in earnest across the network,” he said.
What about the L-band? That’s often tied to the C-band. Is there a possibility to use it?
That asset has been known in the industry for a long time, and “we have no plans” to use that, he said.