A massive infrastructure bill that’s making its way through the U.S. legislature includes a section on spectrum auctions, including pre-auction funding for the Department of Defense to research sharing and commercial use in the 3.1-3.45 GHz band.
The section on spectrum auctions says once the bill is enacted, $50 million from the Spectrum Relocation Fund would be transferred to the DoD for research, planning and other activities for efficient spectrum use for the purpose of making the band available, including reallocating spectrum for shared federal and non-federal licensed users and conducting an auction.
Identifying and determining which frequencies in the band could be used on a shared basis between federal and non-federal commercial users under flexible-use service rules would happen within 21 months of the bill signed into law, with a report submitted to the president and FCC.
The Secretary of Commerce would work in coordination with the Secretary of Defense, Director of the Office of Science and Technology and congressional committees including House and Senate Committees on Armed Services, Senate Committee on Commerce Science and Transportation and the House Energy and Commerce Committee.
Once identified, the FCC would start an auction process no earlier than November 30, 2024, to grant new spectrum licenses. It cites May 31, 2025, as the earliest the president would modify any federal station assignment of the frequencies identified to accommodate shared federal and non-federal commercial licensed use.
Mid-band frequencies are a prime target for 5G services because they provide a sweet spot of coverage and capacity. The 3.5 GHz band is used by many countries globally for 5G, including Canada which just raised $7.2 billion for licenses in the band. Portions of 3 GHz band are occupied by federal users in the U.S., such as DoD radar operations, though the FCC has already auctioned spectrum in the 3.5 GHz (CBRS) and 3.7 GHz (C-band) ranges. However, the two auctions, respective proceeds, as well as rules for use of the spectrum differ on a number of fronts.
CBRS uses a unique sharing setup across three tiers of unlicensed, priority access license, and federal incumbents. The FCC PAL auction had 228 winning bidders, raising $4.58 billion, with non-traditional user and smaller providers also gaining access to spectrum. In contrast, C-band spectrum was auctioned on an exclusive basis, meaning carriers don’t have to share or potentially get bumped by federal operations. There was significantly more spectrum up for grabs at the C-band auction, along with larger geographic license areas. C-band generated more than $81 billion in proceeds, not including amounts winners are spending to clear and relocate satellite companies out of the band. Winners of C-band were concentrated to the major nationwide carriers Verizon, AT&T and T-Mobile (together making up 96% of auction spend), as well as US Cellular.
This October, the FCC is auctioning 100-megahertz in the 3.45-3.55 GHz band.
In relation to the infrastructure bill, New Street analysts led by Blair Levin pointed to “pay-fors” mentioned last week that would include $67 billion from the C-band auction and $20 billion from future FCC spectrum auctions.
In a July 28 note to investors, Levin wrote that the latter “is a win for the wireless industry as it will put pressure on the Administration to put pressure on the Department of Defense to free up more mid-band spectrum.”
The firm also felt it would put more pressure on the FCC to allocate spectrum based on exclusive licenses, which generate more proceeds than shared or unlicensed.
Roger Entner, founder and analyst at Recon Analytics, thinks exclusive use is always better than shared, saying onerous conditions deflate the value of spectrum.
From a spectrum use perspective, Entner said “sharing is like buying a house and your former landlord insists on continuing to live in the living room.”
“If you have exclusive unencumbered use of the spectrum that has the highest value. The policy makers and politicians can decide basically ‘how much money do we want from these auctions?’,” he said.