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HomeDAS & In Building WirelessFCC’s 3.45GHz auction passes $3B after 19 rounds

FCC’s 3.45GHz auction passes $3B after 19 rounds

The Federal Communication Commission’s (FCC) Auction 110, which will offer new flexible-use licenses in the in the 3.45–3.55 GHz band (3.45 GHz Service) throughout the United States, kicked off on October 5 and currently has drawn more than $3 billion in bids through 19 rounds. The FCC will sell 10-MHz blocks in the 3.45 GHz band during this auction.

“This is the third installment in a series of important mid-band spectrum auctions that should serve as the foundation for 5G networks in the U.S.,” BitPath Chief Operating Officer Sasha Javid wrote at the start of the auction. “While the 3.45 GHz band auction is unlikely to generate anywhere near the magnitude of proceeds that the $81-billion C-band auction did earlier this year, it should still be a significant auction with industry analysts predicting around $25 billion in gross proceeds.”

Although Auction 110 is just a little more than a week old, there have been some significant activity. Javid noted on October 8 that it looked like a large bidder dropped out during Round 10. The shift didn’t appear to cause other bidders to drop out of the bigger markets in the following round, because that might have caused some concern for the FCC heading into the long weekend. Meanwhile, Javid noted another bidder dropped out of some of the larger markets such as New York, Chicago and Philadelphia and moved to the smaller markets as well as with Dallas in this latest round.

After 15 rounds, New York and Los Angeles lead all partial economic areas (PEA) in largest excess demand with an aggregate demand of 25. Houston, Phoenix and Orlando weren’t far behind with a demand of 24. New York also currently has the highest posted price ($28.7 million), with Los Angeles posting $22.1 million after 15 founds. Chicago and San Francisco are currently the only other cities that have eclipsed the $10 million mark.

What Auction 110 means for wireless carriers

Auction 110 could be a second chance for wireless carriers who didn’t get what they wanted during the C-band auction, according to Javid. They could win some spectrum in the 3.45 GHz band, but it might not be as appealing. That’s because only 100 MHz will be available this time, versus 280 MHz in the C-band auction. Plus, there’s a cap on how much one carrier can win—no more than 40 MHz.

“This 40-MHz cap in particular could suppress auction revenues because carriers generally prefer larger contiguous blocks for their 5G services,” Javid wrote. “On the flip side, the FCC established a significant reserve price of $14.77 billion based on NTIA estimates of the cost to clear the band of incumbent federal entities. This reserve price should establish a floor for auction proceeds because having this auction fail would be catastrophic for at least one or two of the expected participants.”

Javid also noted that the wireless industry dynamics headed into Auction 110 differ from where they were when the C-band auction took place. For example, Verizon won on average 160 MHz across the U.S. in the prior auction, leading Javid to believe that Verizon’s could be a limited participant in Auction 110.

“As I noted in a prior blog post, Verizon potentially spent $3.5 billion more than they really wanted/needed in the C-band auction,” he said.

Meanwhile, AT&T needs spectrum in the 3.45 GHz band to stay in the race, given it acquired just 80 MHz on average during the C-band auction. The 40-MHz cap could be problematic for AT&T as it could use more to catch up with T-Mobile and AT&T. The cap could prevent AT&T’s competitors from eliminating it from the race completely, however. As for T-Mobile, it still holds the most mid-band spectrum, and the carrier’s participation in Auction 110 could be to simply deny competitors an opportunity to gain spectrum inexpensively, according to Javid.

“T-Mobile will want make sure they remain the crème de la crème of 5G offerings,” he said.

Javid’s full, latest insights on Auction 110 can be found here.

Joe Dyton can be reached at joed@fifthgenmedia.com.

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