Sunday, 11 April 2021

Verizon almost doubles AT&T’s total spend in $80bn spectrum auction

by Harry Baldock, Total Telecom
Thursday 25 February 21

The specific results are in from the US C-band auction, seeing Verizon snag a dominant portion of the available spectrum

Last month, the US completed the first stage of its C-band (3.7–4.2GHz) spectrum auction, raising an enormous $80.9 billion. The scale of this spend was unprecedented, significantly exceeding the $30–45 billion estimates for the auction given by various analysts.  Now, the breakdown of the results have been announced, with Verizon emerging as the big winner…

Last month, the US completed the first stage of its C-band (3.7–4.2GHz) spectrum auction, raising an enormous $80.9 billion. The scale of this spend was unprecedented, significantly exceeding the $30–45 billion estimates for the auction given by various analysts. 

Now, the breakdown of the results have been announced, with Verizon emerging as the big winner, accounting for over half the spend: $45.5 billion. This figure almost doubled that of the second place player, AT&T, who spent $23.4 billion. 

This fierce competition on the part of both Verizon and AT&T’s is not too surprising, since both operators’ 5G networks currently rely heavily on lower-band frequencies, meaning the speeds they can deliver are only slightly superior to 4G. Of course, both operators also have spectrum in the mmWave frequencies, which offer incredible speeds, but range and penetration of this band is problematic – this is why the middle ground of the C-band is so attractive, providing the best of both worlds for 5G when it comes to speed and coverage.

T-Mobile notably spent less than its rivals, bidding just $9.3 billion, though this was to be expected, given the already significant lead in C-band spectrum the company holds following its merger with Sprint last year. 

UScellular was in a distant fourth place, bidding $1.3 billion.

The acting chair of the Federal Communication’s Commission Jessica Rosenworcel said that the scale of the bidding represented “a shift in our nation’s approach to 5G toward mid-band spectrum that can support fast, reliable, and ubiquitous service that is competitive with our global peers”.

The ultimate effects of the scale of this expenditure on the US telecoms sector is unclear. Some analysts, such as Craig Moffett of MoffetNathanson, suggest that the high price of the auction will “risk displacing the capital investment needed to put the acquired spectrum to use”. On the other hand, AT&T and Verizon will now be more motivated than ever to rapidly increase their rollout, in a bid to recoup their investment. 

Whether this new spectrum and accompanying build out will be enough to catch up to T-Mobile is a different story, however. Analysts note that even if Verizon had purchased all of the C-band spectrum up for grabs in this auction, it would only hold 16% more than its newly merged rival. With its massive mid-band spectrum holdings coupled with its aggressive market strategies, T-Mobile is in a commanding position in the US.

The new spectrum is set to become available to the operators by the end of this year.

 

Also in the news: 
Deutsche Telekom backs solar power for mobile sites
WeFibre announce FTTP deployment in Cumbria and South Wales
Vodafone will float Vantage Towers on Frankfurt Stock Exchange

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