FCC Auction 110 for mid-band 5G spectrum gets $21.9B in winning bids

The latest FCC auction (#110) of mid-band spectrum for 5G ended Tuesday with a total of $21.9 billion in winning bids.  That total is roughly in line with pre-auction estimates.

Auction 110 offered 100 megahertz of mid-band spectrum in the 3.45–3.55 GHz band (the 3.45 GHz Service) for flexible use, including 5G wireless. The 100 megahertz of spectrum available in Auction 110 will be licensed on an unpaired basis divided into ten 10-megahertz blocks in partial economic areas (PEAs) located in the contiguous 48 states and the District of Columbia (PEAs 1–41, 43–211, 213–263, 265–297, 299–359, and 361–411).  These 10-megahertz blocks are designated as A through J.

The clock phase concluded on November 16, 2021.  The FCC will release a public notice within the next few business days announcing details about the assignment phase, including the date and time when bidding in the assignment phase will begin.

See the Auction 110 website for more information.

Highlights:

  • Qualified Bidders (Clock Phase)= 33
  • Licenses Won=4041
  • FCC Held Licenses=19
  • Total Licenses=4060
  • Gross Proceeds as of Clock Phase=$21,888,007,794

Next up is the auction’s “assignment” phase, wherein winning bidders can select the specific frequencies they want to use. After that phase is over, the FCC will announce the identities of the winning bidders. That might not happen until December or January.

Major participants in the auction included AT&T, Verizon, T-Mobile, Dish Network, Grain Management and Columbia Capital.

The spectrum in this auction is ideal for 5G.  Mid-band spectrum is in high demand because it is widely viewed as providing the optimum mix of speed and coverage for 5G. Licenses in Auction 110 sold for an average of $0.666 per MHz per person (MHz pop) in the coverage area, according to Sasha Javid, chief operating officer for BitPath, who has been doing a detailed daily analysis of auction results.

Auction 110 winners will pay less per MHz pop in comparison with what Auction 107 (C-band) winners paid but more than Auction 105 CBRS band winners paid, according to Javid. Those other two auctions also included mid-band spectrum and the C-band auction was record breaking.

Javid notes that the CBRS licenses were subject to power restraints, making them less valuable. He didn’t offer an opinion on why Auction 110 licenses were less costly than Auction 107 licenses (on a MHz-pop basis), but perhaps the disparity is related to license size.

Winning bidders will need to purchase new radio equipment from base station/kit makers Ericsson, Nokia, and Samsung (but not Huawei or ZTE which are banned in the U.S.) to put their spectrum licenses into 5 commercial service.

Unlike past spectrum auctions, cable companies including Comcast and Charter did not participate in the auction. Based on Dish Network’s recent fundraising, the company appears poised to potentially account for as much as a fourth of the auction’s total.

Broadly, the FCC’s 110 auction of spectrum licenses between 3.45GHz and 3.55GHz can be considered a success. The auction started October 5, and bidding crossed the critical $14.8 billion reserve price October 20. That was a necessary milestone considering that reserve price is the cost to move existing, incumbent military users out of the band.

The auction was worth around $0.70 per MHz-POP. The per MHz-POP calculation is applied to most spectrum transactions and reflects the number of people covered compared with the amount of spectrum available, though it can be affected by a wide variety of factors.

In comparison, the recent CBRS auction of mid-band spectrum drew winning bids of just $0.215 per MHz-POP, whereas the massive C-band auction generated winning bids of $0.945 per MHz-POP, a figure that does not account for additional clearing costs.

This FCC auction is the agency’s third-biggest spectrum auction ever. As noted by Next TV, only the $45 billion AWS-3 auction in 2015 and the $81 billion C-band auction earlier this year generated more in winning bids. The auction earlier this month passed the FCC’s broadcast incentive auction of 600MHz licenses, which ended with $19.8 billion in winning bids in 2017.

The value of the spectrum licenses in this auction could rise if interference with aircraft concerns continue to drag on the C-band.  However, CTIA President and CEO, Meredith Attwell Baker in response to the bulletin maintained that 5G using C-band won’t cause interference and that timely deployments are key for 5G leadership. “5G networks using C-band spectrum operate safely and without causing harmful interference to aviation equipment.

References:

https://www.fcc.gov/auction/110

https://auctiondata.fcc.gov/public/projects/auction110

https://www.fcc.gov/auction/110/factsheet

https://sashajavid.com/FCC_Auction110.php

https://www.linkedin.com/pulse/clock-stage-fcc-345-ghz-auction-finally-endshow-do-prices-sasha-javid/

FCC Pockets Close to $22B in Auction 110 of 3.45 GHz Band Spectrum

https://www.lightreading.com/5g/andromeda-auction-for-midband-5g-ends-with-$219b-in-bids/d/d-id/773549?

https://www.ntia.doc/category/3450-3550-mhz

India’s 5G auction delayed again to April-May 2022 – Credibility Gap?

The long delayed auction for the 5G spectrum in India is now likely (???) to take place around April-May 2022, Telecommunications minister Ashwini Vaishnaw said on Thursday. While relief measures announced in September this year for telecom operators marked the first set of reforms, the government will bring out a series of further reforms and “telecom regulatory structure should change in coming 2-3 years”, Vaishnaw said at an event in India.

The Telecom Regulatory Authority of India (Trai) is working on the modalities of the auction. “Our estimate is by April-May. I think it will take time because Trai consultations are complex, diverse opinions are coming,” Vaishnaw said.

[Credibility gap When he announced the government’s big-bang telecom reforms in September, Vaishnaw had said the auctions would be held in February.]

The telecom department has approached Trai for its recommendations on pricing, amount of 5G spectrum for sale and other modalities.

“The (India) government had budgeted for inflows of nearly Rs 54,000 crore from other communication services for the current year, presumably boosted by the expectation of fresh auction inflows,” according to Aditi Nayar, chief economist, Icra.  “We now assess the inflows from the telecom sector into the government’s 2021-22 non tax revenues to be limited to Rs 28,000 crore, trailing the budgeted Rs 54,000 crore, which will modestly widen its fiscal deficit, “ she said.

Image Credit: Shutterstock

The government is targeting a fiscal deficit of 6.8 per cent of GDP in 2021-22, a big improvement over the previous year when the fiscal deficit shot up to 9.3 per cent in the Covid-affected economy.  The DoT has sought the views of Trai across multiple bands such as 700Mhz, 800 Mhz, 900 Mhz, 1800 Mhz, 2100 Mhz, 2300 Mhz, 2500 Mhz bands as also 3,300-3,600 Mhz that were not put up for auctions in the last round.

On the timeline for 5G auctions, Vaishnaw noted that the Trai is undergoing consultations on the matter. “I think they will submit their report by February-mid is what we are thinking, maybe February-end, maximum to maximum March. Immediately after that, we will have the auctions,” he said.

References:

https://www.telegraphindia.com/business/5g-spectrum-auction-likely-to-be-delayed-till-april-may-2022/cid/1838494

India’s DoT preparing for another mega spectrum sale

India’s telecom department has set the stage for another mega spectrum sale by sending a reference to the sector regulator, seeking fresh base prices for the gamut of airwave bands, including key frequencies like 700 MHz, 3.3-3.6 GHz and the coveted millimeter waves such as 26 GHz and 28 GHz that support 5G technology (but have not been agreed upon in revision 6 of ITU-R M.1036 Frequency Arrangements for Terrestrial IMT).

India’s Department of Telecommunications (DoT) has also sought fresh base prices for 4G airwave bands such as 800 MHz, 900 MHz, 1800 MHz, 2100 MHz and 2300 MHz, two people aware of the matter said. But with the time usually taken for the consultation process, sources say it may be tough to meet government’s auction timeline of January-February, 2022.

The reference comes at a time when the government has acknowledged that high spectrum pricing is a prime reason behind the acute financial stress in the debt-laden telecom industry, and is also open to price rationalization in public interest.

In its reference, the department has sought recommendations from the Telecom Regulatory Authority of India (Trai) on the terms of reference for the next auction and the quantum of airwaves proposed to be auctioned, one of the persons cited told ET.

“We have received a detailed reference from DoT about 2-3 days back, seeking our recommendations on spectrum matters and pricing…there are a number of spectrum bands involved, and the Authority is currently examining the reference and will respond to the government,” Trai secretary V Raghunandan told ET. He, though, declined to share details.

Sector analysts expect the potential annual cash flow relief stemming from the four-year moratorium allowed on statutory payouts to give Bharti Airtel and Reliance Jio the financial headroom to participate aggressively in the next spectrum auction. They, though, don’t expect Vodafone Idea (Vi) to participate as strongly if it’s unable to close its much delayed Rs 25,000-crore fundraise.

Another official said that Trai will need to seek additional details from the DoT, before proceeding with its analysis and starting the consultation process.

After a DoT reference, Trai conducts a process which includes a four-week period for stakeholders to submit their views after a consultation paper is floated, followed by two weeks for counter comments. Then Trai holds open-house discussions before arriving at its recommendations. The whole process usually takes about four-five to months at least.

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On March 1, India concluded its first spectrum auction of 2021. India’s Department of Telecom (DoT), through a Notice Inviting Applications (NIA) issued in January 2021, had put up spectrum for auction in multiple bands, including 700, 800, 900, 1800, 2100, 2300 and 2500 MHz bands. These frequencies cut across 2G, 3G and 4G service bands and included both FDD (paired) and TDD (unpaired) bands.

The auction was a qualified success. It netted the Government $10.6 billion and was almost double initial estimates. However, barely 37% of the total spectrum put up for auction had takers, while the 700 MHz band saw no bids at all.

The main takeaway from this auction is that the focus of India’s telcos is currently on 4G, not 5G. With several licenses coming up for renewal, it was imperative that telcos bid on expiring spectrum to renew but also to consolidate with new holdings. The biggest bidders were Reliance Jio ($7.8 billion), Bharti Airtel ($2.55 billion), followed by VodafoneIDEA a distant third with bids worth $272 million.

There was heavier than expected bidding in the 800 MHz band as well as the 2300 MHz band. All of the three operators bidding have taken different approaches to this auction. The common theme for both Jio and Airtel’s auction strategies was to shore up existing spectrum, acquire new frequencies to consolidate holdings per circle and boost capacity, and lay the groundwork for an eventual 5G network launch.

For its part, Vodafone IDEA (VIL) has taken a very frugal, optimization strategy to spectrum. Their public position has been that they have abundant spectrum and therefore are not hard-pressed to bid aggressively. This is true, with VIL holding ample spectrum, but there is no doubt that they would have had very limited means due to a stressed balance sheet.

Reference:

https://telecom.economictimes.indiatimes.com/news/dot-gearing-up-for-another-mega-spectrum-sale/86469701

https://www.fiercewireless.com/operators/india-s-recent-spectrum-auction-opening-opportunities-putcha

Big U.S. Wireless Carriers to bid at FCC mid-band auction; cablecos missing in action

The FCC will conduct another 5G spectrum auction on October 5th. FCC Auction 110 will be for 100MHz in the 3.45GHz to 3.55GHz band for flexible use of wireless services.

Full Title: Auction of Flexible-Use Service Licenses in the 3.45-3.55 GHz Band for Next-Generation Wireless Services; Status of Short-Form Applications to Participate in Auction 110

Auction 110 will offer approximately 4,060 new flexible‐use licenses of 100Mhz within the 3.45–3.55 GHz band (3.45 GHz Service) throughout the contiguous United States. Bidding in Auction 110 is scheduled to begin on October 5, 2021.

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Analysis:

AT&T, T-Mobile, US Cellular and Dish Network are among the 42 different entities that registered interested in participating in Auction 110, based on the roster contained in FCC filings related to the auction (attachments A & B in References below).  Verizon’s application is listed as incomplete.

We’ve never heard of most of the other companies bidding, but note that the big cablecos/MSOs (Comcast, Charter Communications, Altice USA and Cox Communications) are not listed.

3.45 GHz spectrum up for auction is in the mid-band range seen as key for 5G by offering a mix of coverage and capacity, and sits nearby the 3.7 GHz C-band and the shared 3.5 GHz Citizen Broadband Radio Service (CBRS) band.

Financial analysts at New Street Research say that Auction 110 will increase the total overall amount of spectrum in circulation in the US from 1023MHz to 1123MHz.  They believe that AT&T and T-Mobile to be the big winners with Dish Network an also ran.

“We think that AT&T, T-Mobile and Dish each want 40MHz in the 3.45GHz auction (the limit any one company can buy), but there is only 100MHz to go around,” the analysts wrote in a note to investors in July. “Based on visible resources, AT&T and T-Mobile are best positioned to end up with 40MHz each, leaving 20MHz for Dish (and other participants).”

Analysts at Morgan Stanley offered a their perspective at how the upcoming 3.45GHz-3.55GHz FCC auction compares with recently completed spectrum auctions in the U.S. and Canada.

Source: Morgan Stanley

“AT&T will be keen to get the maximum 40MHz allowable on a quasi-nationwide basis, while T-Mobile has said they will be opportunistic, although they and Verizon already have some 200MHz of midband spectrum. Dish is another wild card, although it lacks the financial resources of the larger wireless players,” wrote the financial analysts at Morgan Stanley in a note to investors this week.

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Recent FCC auctions have included the 37GHz, 39GHz and 47GHz spectrum bands in Auction 103, Auction 101 of 28GHz spectrum and Auction 102 of 28GHz spectrum, Auction 105 for 3.5GHz CBRS spectrum licenses, and Auction 107 -the C-band auction (which ended earlier this year and generated an astounding $81 billion in winning bids).

“We think Auction 110 looks much more similar to the smaller, cheaper CBRS auction that had $4.5 billion in net bids for 70MHz of spectrum ($0.215 per MHz POP), than the larger, more expensive C-band auction that ended with $81 billion in net bids for 280MHz of spectrum ($0.945 per MHz POP),” wrote the financial analysts with Raymond James in a note to investors this week. (The per MHz-POP calculation is applied to most spectrum transactions and reflects the number of people covered compared with the amount of spectrum available, though it can be affected by a wide variety of factors.) The Raymond James analysts cited Andromeda’s 40MHz ownership cap and military sharing zones as reasons for their conclusions.

“Still, midband spectrum remains crucial in densifying 5G networks, and while we do not expect anywhere close to C-band-like prices, this is a good opportunity for price-conscious bidders (e.g. Dish) to augment spectrum holdings,” the Raymond James analyst team concluded.

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Terms & Conditions for Auction 110:

Upfront payments for Auction 110 are due in the proper account at the U.S. Treasury by 6:00 p.m. Eastern Time (ET) on Thursday, September 2, 2021. In order to meet the Commission’s upfront payment deadline, an applicant’s payment must be credited to the Commission’s account by the deadline.

Due Diligence: The FCC reminds each potential bidder that it is solely responsible for investigating and evaluating all legal, technical, and marketplace factors and risks associated with the licenses that it is seeking in Auction 110; evaluating the degree to which those factors and risks may have a bearing on the value of the licenses being offered and/or affect the bidder’s ability to bid on, otherwise acquire, or make use of such licenses; and conducting any technical analyses necessary to assure itself that, if it wins any license(s), it will be able to build and operate facilities in accordance with the Commission’s rules.

Non Disclosure Rules: Bidding applicants must take care not to communicate non-public information to the public, financial analysts, or the press.45 Examples of communications raising concern, given the limited information procedures in effect for Auction 110, would include an applicant’s statement to the press or other public statement (for example, a statement on social media) about its upfront payment or bidding eligibility, an applicant’s statement to the press or other public statement that it is or is not interested in bidding in the auction, or an applicant’s statement to the press or other public statement prior to the down payment deadline that it is the winning bidder in any particular geographic areas.

References:

https://www.fcc.gov/auction/110

DA-21-999A1.pdf (fcc.gov)

https://www.fcc.gov/document/auction-110-345-ghz-service-application-status

https://www.fcc.gov/document/auction-110-345-ghz-service-application-status/attachment-a

https://www.fcc.gov/document/auction-110-345-ghz-service-application-status/attachment-b

https://www.fcc.gov/document/facilitating-5g-345-355-ghz-band

https://www.federalregister.gov/documents/2021/07/19/2021-14968/the-federal-communications-commission-and-national-telecommunications-and-information-administration

https://www.lightreading.com/5g/what-to-expect-from-upcoming-345ghz-auction-for-5g/d/d-id/771612?

https://www.lightreading.com/5g/cable-may-miss-americas-next-big-5g-spectrum-auction/d/d-id/771578?

https://www.benton.org/headlines/big-wireless-carriers-apply-fccs-mid-band-spectrum-auction

 

 

Telstra wins most lots in Australia’s 5G mmWave auction

Five companies have won spectrum in the Australian Communications and Media Authority’s (ACMA) latest spectrum auction in the 26 GHz band. The 26 GHz band has been identified as optimal for the delivery of  5G wireless broadband services.

Of the 360 lots available in the auction, 358 were sold, realizing a total revenue of Australian $647,642,100, equivalent to almost $0.0127/MHz/POP.  The new licensees will have rights to the spectrum for 15 years, starting from later in 2021 through 2036.

Dense Air Australia Pty Ltd won 2 lots for $28,689,900, Mobile JV Pty Limited won 86 lots for $108,186,700, Optus Mobile Pty Ltd won 116 lots for $226,203,100, Pentanet Limited won 4 lots for $7,986,200, and Telstra Corporation Limited won 150 lots for $276,576,200.

Further apparatus licenses in the 26GHz band will be issued next month by ACMA.

“This outcome represents another significant milestone for 5G in Australia. The successful allocation of this spectrum will support high-speed communications services in metropolitan cities and major regional centers throughout Australia,” said ACMA Chair Nerida O’Loughlin.

“This auction is one among a suite of licensing approaches that the ACMA has introduced in the 26 GHz and 28 GHz bands to encourage a wide range of innovative communications uses,” said Ms O’Loughlin.

Optus said it had secured “the most highly valued position at the top of the spectrum band” and foreshadowed new services such as AR/VR video, next-generation cloud gaming and massive simultaneous usage, as well as enterprise use cases such as automation and private networking.

In a blog post, Telstra CEO Andy Penn expressed similar expectations.  Penn said the new spectrum capacity was more than ten-times Telstra’s existing 5G spectrum holdings and would be deployed to increase capacity in high-traffic locations such as shopping centers, inner-city train stations and sporting stadiums.  Telstra’s mobile networks was increasing by an average of 40% annually.

Telstra is leading in 5G Australia deployments with its 3.6GHz spectrum network expected to reach 75% of the population by the end of June.

References:

https://www.acma.gov.au/articles/2021-04/outcome-millimetre-wave-spectrum-auction

https://www.lightreading.com/asia/australian-operators-pay-a$648m-for-mmwave-spectrum/d/d-id/768991?