This article is the first in a three-part series examining the outcome of the landmark CBRS auction (105). Throughout the series, there will be a focus on the winnings and ambitions of wireless carriers, cable MSOs and utility providers.
The insatiable appetite among wireless carriers for licensed spectrum was exemplified by the CBRS auction. Both Verizon – the nation’s largest carrier in terms of subscribers – and Dish Network – the fourth and up-and-coming contender – forked out significant sums of money for a large number of 3.5GHz licenses.
Of course, this result was to be expected. In a climate of ongoing 5G deployments, it has become patently clear that low and high-band (or mmWave) spectrum alone is insufficient to cater to the parallel needs for in-fill coverage and in-fill capacity. Mid-band spectrum represents the missing piece in this great spectrum puzzle.
Across markets in Europe and Asia, the spectrum has been exploited for some time now to commercialise non-standalone 5G. It is alluring for wireless operators because it exhibits wider channel bandwidth relative to other frequencies deployed with 4G LTE while also maintaining comparable signal propagation characteristics with massive MIMO implementation.
Wireless Market Context in the US and Verizon’s Spectrum Challenges
Up until the completion of Auction 105, there was a chronic lack of licensed mid-band spectrum available to wireless carriers in the US. For the new T-Mobile, this was less of a problem. Since gaining approval to merge with Sprint, the operator has been leveraging the latter’s expansive 2.5GHz portfolio to provide a 60MHz layer of mid-band 5G across more than ninety urban markets.
In fact, the new T-Mobile has exploited the above to communicate its network strategy in the form of a “5G Layer Cake”, whereby spectrum spanning low (600MHz), mid (2.5GHz) and high-band (28GHz) frequencies is being deployed in order to provide both expansive coverage and large capacity.
While it does not wield the same quantity of mid-band spectrum as the new T-Mobile, AT&T’s portfolio is larger than that of Verizon thanks to WCS/AWS-3 holdings. It did not participate in Auction 105, and will likely look to the upcoming C-band auction in December to gain a greater slice of the mid-band pie. In recent times, AT&T has been deploying low-band 5G in the 850MHz band and mmWave 5G in the 24 and 39GHz bands.
As mentioned earlier, it was Verizon that emerged as the biggest bidder in the CBRS auction. Its intentions were very clear from the outset – to secure a mid-band capacity layer in dense urban markets that could be used to augment the existing 4G LTE network and provide sufficient capacity planning headroom in the lead-up to the C-band auction.
The operator coughed up a hefty sum of $1.9 billion for licenses which cover circa 46% of the US population. While this level of coverage may be lower than some initially anticipated, it is important to note that Verizon secured at least 30MHz of spectrum across the regions in which it purchased licenses and an average of 34MHz.
Unlike both of its competitors, Verizon entered Auction 105 with a very limited mid-band portfolio. Analysts have been sounding the alarm about the implications of this spectrum deficit for Big Red. The operator has been forced to deploy 5G in the 28 and 39GHz mmWave bands exclusively (“Ultra Wideband”), where it has a treasure trove of spectrum but succumbs to the inherent signal attenuation challenges.
While many in the industry, including Verizon itself, have alluded to the potential of dynamic spectrum sharing (DSS) to remedy these spectrum shortcomings, the technology will likely act only as a band-aid to provide expansive low-band 5G coverage. This is because much of the operator’s existing spectrum assets are heavily deployed for 4G LTE, and it does not have sufficient excess capacity in a lot of markets to share with 5G.
The 557 CBRS licenses that the carrier obtained will complement its ongoing densification strategy in urban markets, which has seen it invest heavily in fiber and small cells to create a dense capacity layer. When overlaid on the existing macrocell grid, Verizon will be able to combine the 3.5GHz band with other non-contiguous spectrum to boost capacity through carrier aggregation.
Dish Network: Reinforcing an already expansive mid-band portfolio
Dish Network (bidding as Wetterhorn Wireless) secured 5,492 licenses in the auction – the most by far – and shelled out $912 million for the privilege. Notably, the budding operator captured licenses across a very large geographical area, spanning from coast to coast and across cities and rural markets.
In contrast to Verizon, however, Dish’s strategy has been described as one founded on the pursuit of “breadth and not depth”. For example, the operator purchased an average holding of just 20MHz of spectrum across much of the US. It secured only a single PAL license in some urban markets and 1.8 licenses per county.
This result aligns with Dish’s position in the market as it seeks to obtain spectrum that can provide in-fill coverage with its ongoing greenfield network buildout. In addition, the mid-band spectrum can be leveraged to expand the operator’s wholesale and enterprise Internet of Things (IoT) offerings.
Nonetheless, some analysts were surprised by the prominence of Dish’s showing in the auction. It already boasts ownership of a very significant and vacant mid-band portfolio. The CBRS winnings only expand this and the operator is expected to bid in the C-band auction to secure further mid-band assets.
In the interim, this spectrum affords value to Dish by strengthening its proposition as it seeks to partner with companies such as Amazon. If it is not used in some of the areas in which Dish has purchased it, the operator can lease the spectrum to other operators such as Verizon.
Conclusion: Turning Mid-Band Tides
The successful completion of Auction 105 represents a landmark milestone for the wireless industry – spurring a step-change in spectrum policy and toppling barriers to market entry. For Verizon, the injection of additional mid-band spectrum into its portfolio will come as somewhat of a relief and placate capacity planners.
Dish Network, meanwhile, managed to reinforce its already enviable spectrum position with a mid-band coverage layer. This will support its network buildout and help it to reduce the proportion of time that its prospective subscribers spend roaming on the new T-Mobile network.