Editor’s Note: This article is part of our 2018 Preview feature, which looks at the big topics facing the industry next year. Click here for the 2018 preview in wireless, click here for the 2018 preview in cable and video, and click here for the 2018 preview in the wireline industry.
Next year may not bring the spectrum feeding frenzy among carriers that 2017 saw, but it will see operators begin to experiment with new models and strategies as they look to increase capacity.
And spectrum-based M&A will almost surely continue—although perhaps on a smaller scale—as operators prepare for 5G.
U.S. carriers once again made very big investments in spectrum in 2017: Among other developments, T-Mobile and Dish Network were the two top bidders in the FCC’s incentive auction of 600 MHz airwaves, which generated $19.8 billion in bids; Verizon agreed to acquire Straight Path for $3.1 billion, ending a bidding war with AT&T; and AT&T quietly acquired FiberTower for an undisclosed sum to bulk up its high-end spectrum holdings.
Those moves came as carriers prepare to deploy 5G services over the next few years and scramble to meet consumers’ ever-growing demand for mobile data. That demand is largely being driven by consumption of mobile video and the increasingly popularity of unlimited data plans, said Brendan Gill, CEO of the network-testing firm OpenSignal.
“Absolutely operators know that by having unlimited plans, they’re going to be challenged to offer capacity” to deliver data services, Gill said. “What we saw on some networks (in 2017) was that the speeds we were recording in August were a lot slower than what we recorded” before some carriers launched unlimited plans.
There are multiple ways to add capacity, of course, but spectrum is a crucial asset. Many major mobile companies—and some potential newcomers--are eyeing 3.5 GHz Citizens Broadband Radio Service (CBRS) airwaves, which could come to market sometime next year. But the fight over rules addressing that spectrum is expected to drag on into next year, and it’s unclear when those airwaves will become available.
The National Telecommunications and Information Administration (NTIA) several years ago identified the 3.5 GHz band as suitable for shared use between government and commercial interests as long as incumbents including the DoD and fixed satellite services were given protection. The idea, of course, is to make the most of a finite resource—spectrum—to capitalize on 5G deployments as fully as possible.
But CBRS alone won’t be sufficient as the industry enters the 5G era, according to Jamie Fink, Mimosa Networks’ chief product officer.
“While the CBRS deployments scheduled for mid-2018 are unquestionably a good start, CBRS spectrum will not completely solve our broadband problems. Let’s be honest, the 10 MHz and 20 MHz maximum channel aggregation in CBRS will at best be able to offer 10 and 25 Mbps services, and most people expect this band to be used for additional 5G cellular capacity in urban areas,” according to Fink. “In 2018, I predict we’ll see the fixed wireless broadband, 5G mobile, and satellite industry working together to share the satellite C-band 3.7-4.2 GHz to introduce shared spectrum for fixed, mobile and satellite providers in the areas we need it most.”
Meanwhile, Dish, which is beginning to build out an NB-IoT network to meet the FCC’s deadline for its spectrum, might still be a target for acquisition by a deep-pocketed operator, although the satellite TV provider may insist on going it alone. But carriers will almost surely continue to acquire smaller companies to expand their spectrum portfolios in 2018.