Verizon (NYSE: VZ) won a staggering amount of spectrum in the high mid-band 3.7-3.98 GHz range in the recent FCC C-band auction. Certainly, it paid a record $45 billion to gain that spectrum. Simply referred to as the 3.7 GHz band, this spectrum puts VZ on a comparable footing in terms of coverage and capacity with T-Mobile (NASDAQ: TMUS) and its 2.5 GHz spectrum that came with the Sprint merger.
The 3.7 GHz band gives spectrum balance to mobile network operators that up to now have relied on low-band frequencies for wide area, low throughput performance and high-speed, short distance millimeter wave spectrum for 5G.
Auction 107 made available 280 MHz in the 3.7-3.98 GHz range, Inside Towers reported. That is the lower portion of the 3.3-4.2 GHz C-band range that was assigned to the U.S. by the International Telecommunications Union.
The Auction offered 14 licenses of 20 MHz channels each, grouped in A, B and C Blocks. A and B Blocks each have five 20 MHz channel licenses (A1, A2, A3, A4, A5 and B1, B2, B3, B4, B5) giving each Block a total of 100 MHz. The C Block comprises four 20 MHz channels (C1, C2, C3, C4) for an 80 MHz total. The three Blocks make up the 280 MHz aggregate.
This swath of spectrum was offered in each of the 406 Partial Economic Areas (PEAs) that cover the entire continental U.S. MNOs could bid for any or all 14 license blocks in any PEA.
VZ won 3,511 licenses of the 5,684 available across all 406 PEAs for $45 billion. This motherlode includes five A Block licenses along with two to five B Block licenses nationwide. This combination gives VZ bandwidth capacity from 140 to 200 MHz depending on the market, and sets it up for high-speed, low latency services in either mobile or fixed wireless access applications. Initial deployments likely will extend its nationwide 5G coverage on a standalone 3.7 GHz network.
For its $23 billion investment, AT&T captured 1,651 licenses in all 406 PEAs with an average bandwidth of 80 MHz, mainly in B and C Blocks. Third-place T-Mobile doled out $9.3 billion for 142 licenses, covering 72 PEAs mainly in C Block at an average 40 MHz bandwidth, while UScellular won 254 C Block licenses in 99 PEAs, predominantly across its 21-state operating area.
There is just one small hurdle to overcome to make 3.7 GHz operation a reality.
Existing communication satellites already use the C-band for their downlinks that deliver video programming to broadcasters and cable head ends. In March 2020, the FCC offered satellite companies $9.7 billion in total to clear the 3.7-3.98 GHz spectrum once the auction was completed, Inside Towers noted.
FCC rules would make the lower 280 MHz (3.7-3.98 GHz) available for flexible use, including for 5G. The adjacent 20 MHz (3.98-4.0 GHz) would serve as a guard band.
Existing satellite operations, including their associated earth stations, would be “repacked” into the upper 200 MHz (4.0-4.2 GHz) of the band. The relocation costs are to be covered by the auction and paid directly by winning bidders to the satellite carriers. In some ways, this is similar to the FCC’s television repack program. The agency repaid “reasonable” broadcaster moving costs. At least one carrier paid some stations to clear their spectrum more quickly.
Satellite operators could receive accelerated relocation payments if they can clear the lower portion of the C-band sooner than later.
On June 1, 2020, the Wireless Telecommunications Bureau announced that incumbent satellite operators had made sufficient commitments to clear the 3.7–4.0 GHz band on the accelerated timeline described in the 3.7 GHz Report and Order, thereby triggering accelerated clearing of the band. CohnReznick and subcontractors Squire Patton Boggs and Intellicom Technologies, were selected as the Relocation Payment Clearinghouse to ensure the requisite repack criteria are met before payments are made, Inside Towers noted.
With the Order, licenses in the A Block in 46 of the top 50 PEAs (1–4, 6–10, 12–19, 21–41, and 43–50) will be subject to the Phase I accelerated relocation deadline of December 5, 2021. These PEAs cover 55-60 percent of the U.S. households.
Licenses in the B and C Blocks in the top 46 PEAs, and in the A, B, and C Blocks in the remaining 360 PEAs will be subject to the Phase II accelerated relocation deadline of December 5, 2023.
The repack schedule has significant implications for the license holders.
VZ would be the main beneficiary of the early repack deadline since it holds most of A Block licenses in the Top 50 PEAs. The company could commence 5G deployments at 3.7 GHz as early as 2022.
With the second deadline, other MNOs would have to wait until 2024 and later to put their licenses into play. All MNOs have up to eight years from the date of the initial license to build out to at least 45 percent of the population in each of its license areas.
By John Celentano, Inside Towers Business Editor