The US government’s auction of wireless spectrum of 3.5 GHz rights has collected $81 billion, the highest till date, and Verizon Communications has secured more than half of these wireless airwaves.
Verizon bought $45.5 billion worth of 3, 511 midrange spectrum rights to accommodate its 5G foray.
Other bidders were AT&T Inc, which pledged $23.4 billion, and T-Mobile, which shelled out $9.3 billion.
The winning satellite bidders will have to spend an estimated $14 billion more to cover the costs of shifting their operations to a narrower band of the spectrum.
Telecom companies have to keep on buying up spectrum bandwidths to accommodate the ever-growing demands of users. Added to this scramble for spectrum rights is the 5G capacity. Apple Inc and other smartphone manufacturers have already launched devices that can support this high-speed ability.
For Verizon, the need for acquiring a more comprehensive spectrum strength was acute as its rivals Sprint and T-Mobile have merged, giving the new company an edge due to its joined assets.
Verizon to date has concentrated on building a high-frequency millimeter wave spectrum that can support high internet speeds but lags behind in distance carrying capacity.
This latest auction by the Federal Communications Commission offers the C-band range, which was previously restricted to satellite communications. The commission auctioned off 280 megahertz of the band.
The high demand for 5-G strength frequencies drove up the bids to nearly $81 billion. Verizon, AT&T and T-Mobile together accounted for $78.2 billion, or the vast majority of the total. In total, there were 21 winning bidders, picking up all 5,684 of the available spectrum licenses.
Even the regional carriers have upped the ante, and US Cellura Corp bought licenses worth $1.3 billion. Satellite TV operator Dish Network bid $2.5 million, C & C Wireless Holding Co., a joint venture of Comcast and Charter Communications, won no licenses.
The high cost of the spectrum bid is sure to affect the finances of the carriers. Both AT &T and Verizon have taken loans. At&T has borrowed took $14.7 billion and Verizon took a term loan of $25 billion.
“They need to attach some revenues to this huge check that they’re writing,” said John Hodulik, an industry analyst.
Most likely, it will be the users who would be carrying the burden. The carriers, according to Hodulik, will offer the benefits of C-band to its home-internet customers. Combining the airwaves acquired this year with existing high-frequency spectrum holdings could support a service that “could actually be something of a competitor to cable,” he said.
“These record-breaking results highlight the demand and critical need for more licensed mid-band spectrum and demonstrate the importance of developing a robust spectrum auction pipeline,” said CTIA CEO Meredith Baker in a statement. CTIA is a trade group that represents the wireless industry.
The FCC is planning another auction for 100 megahertz of similar midrange spectrum in early October.
