The midband spectrum auction moved slowly through its first week
The Federal Communications Commission’s 2.5 GHz auction has rounded up just $143 million in gross bids after nine rounds.
The auction raised about $103 million in its first day, with six hours of bidding. IT has only brought that total up by about $40 million since. Two more rounds are scheduled today.
There are likely a few reasons for this auction’s slow pace and low total: These are overlay licenses that are encumbered in metro areas, so the actual spectrum availability is primarily in rural locations; and because T-Mobile US has amassed significant holdings and/or access arrangements to 2.5 GHz, it is seen as the national carrier with the most interest in the band, while Verizon and AT&T concentrated most of their midband efforts (and money) on last year’s record-breaking $81 billion C-Band auction. (A recap of the two recent midband spectrum auctions is here.)
Only 168 of the available licenses had no bids during the first round. Most of the licenses—4,395, to be exact—had a single bidder in the first round. A total of 3,454 licenses had multiple bidders. By Round 9, this had dropped to 162 licenses with no bids, while 5,858 licenses had a single bidder and 1,997 licenses were being actively contested by multiple bidders.
Since this is an auction of county-level overlay licenses with limited utility in the major metro areas, there is a different dynamic in play than the typical auction flow, in which densely populated urban areas get bid up rapidly until bidders drop out and the major metro prices settle first, with bidding then shifting to mid-sized markets and finally to rural ones.
The most in-demand licenses as of Round 9 were Cibola County in New Mexico; Roscommon County, Crawford and Missaukee counties in Michigan; and Daggett County, Utah. All of those counties have a population of less than 30,000 people.
There are approximately 8,000 county-level licenses up for grabs, with the best actual spectrum utility in rural areas because of encumbrances in the spectrum in urban areas. The 2.5 GHz (2.496-2.690 GHz) spectrum available in this auction is being sold as overlay licenses, as a result of FCC action in the past few years to reform the use of the band, which used to be known as the Educational Broadband Service (EBS) band. The former Sprint, in particular, had built up extensive leasing arrangements across the country with educational institutions who held EBS licenses. T-Mobile US acquired Sprint’s 2.5 GHz spectrum when it bought the rival carrier and has relied heavily on that midband spectrum deployment for its 5G services. This auction gives the operator the chance to buy still more 2.5 GHz spectrum as it continues to emphasize its pursuit of customers in smaller and rural areas.
There are three channels available, according to the FCC band plan: Channel 1, which is 49.5 megahertz of spectrum; Channel 2 is adjacent to Channel 1 and consists of 50.5 megahertz of spectrum. There is also a smaller channel, Channel 3, which consists of 17.5 megahertz and is not adjacent to either of the other two channels. Channels 1 and 2 seem to be receiving more interest than Channel 3 — for instance, in Cache County, UT, there were six bids each for Channels 1 and 2 but only three bids for Channel 3.
The auction will use an ascending clock format auction. The FCC has put together a new mapping tool so that would-be bidders can find out whether there are unassigned 2.5 GHz licenses in areas they are considering.
There is a field of 82 qualified bidders, including the three national wireless network operators, US Cellular and Dish Wireless, bidding under the name Carbonate Wireless.
There are also a significant number of small and medium-sized telecom network operators set to participate in the auction, including Carolina West Wireless, Cellular South Wireless, Copper Valley Wireless, Granite Wireless, Nex-Tech Wireless, NSight, Puerto Rico Telephone Company, Redzone Wireless and Union Telephone Company.
