Coronavirus vaccination rates are slowly but steadily rising in most parts of the US. Disneyland is fully open. Guns 'N Roses is back on tour.

But AT&T and Verizon are still citing the COVID-19 pandemic, and possible mobile network traffic spikes resulting from working and schooling from home, as the reasons they need access to additional spectrum from the FCC.

Not only that, the spectrum licenses that AT&T and Verizon want access to for those traffic spikes sit at the heart of a court battle between the FCC and companies tied to Dish Network.

Ultimately, the situation reflects the complexities surrounding spectrum usage and ownership in the US. It also stems from the FCC's early efforts to address a pandemic that brought much of American life to a screeching halt in the early part of 2020. Further, the efforts by AT&T and Verizon to continue using spectrum tied to Dish Network helps to underscore the value of that spectrum for 4G and 5G, and operators' varied efforts to get access to that spectrum.

Spectrum under a cloud

In March 2020, in the very early days of the COVID-19 pandemic in the US, the FCC took the extraordinary step of temporarily giving AT&T, Verizon and T-Mobile access to unused spectrum licenses. Those spectrum licenses were owned by other companies, but were loaned to the big wireless network operators so they could reinforce their networks with additional capacity.

Among the many entities and companies offering up their unused spectrum licenses were Northstar Wireless LLC and SNR Wireless LicenseCo. The two companies won roughly $13.3 billion in AWS-3 spectrum licenses during the FCC's 2015 spectrum auction, but they did so as "designated entities (DE)." DEs receive discounts intended to help small businesses participate in big spectrum auctions like the AWS-3 auction.

However, the FCC in 2015 took issue with the results because Northstar and SNR are connected to Dish Network, and the FCC did not want to give Dish access to those small business discounts. As a result, the agency invalidated the DE discounts for Northstar and SNR.

In response, Northstar and SNR in 2015 decided to forgo ownership of 197 of the 702 licenses they won at the 2015 spectrum auction, including in key markets like New York, Boston and Chicago. Those licenses represented about $3.3 billion worth of their $13.3 billion in total auction winnings – or roughly the equivalent of what the companies' DE discounts would have been. The move put those licenses back into FCC ownership.

But SNR and Northstar also appealed the FCC's decision in an effort to ultimately get those licenses back.

That appeal remains active. After a series of back-and-forth developments on the topic, an appeals court in Washington, DC, is scheduled to begin collecting filings on the issue in July.

'Changing and unpredictable wireless traffic'

As SNR and Northstar continue to fight the FCC for ownership of those 197 licenses, AT&T and Verizon are asking the FCC for continued access to them. After all, the FCC technically owns the licenses.

"AT&T anticipates a continued potential for changing and unpredictable wireless traffic patterns due to the continued health emergency arising from COVID-19," AT&T wrote to the FCC in May. "Thus, AT&T seeks an additional 90-day extension ... until August 29, 2021, to allow AT&T to retain the needed flexibility to adjust to changes in wireless traffic patterns during this national health emergency, including unexpected spikes in data and voice traffic."

In its own May request, Verizon said the additional capacity it would obtain via the spectrum "allows Verizon to serve health care officials, first responders, public safety officials, and existing customers through the pandemic."

Importantly, Verizon said it stopped borrowing the spectrum licenses held by SNR and Northstar at the end of 2020. However, it's still asking the FCC for access to some of the licenses the two companies returned to the FCC in 2015 – the licenses that SNR and Northstar are trying to get back via the DC appeals court.

Brian Goemmer, founder of spectrum-tracking company AllNet Insights & Analytics, said Verizon and AT&T's requests make sense. He said borrowing the licenses from the FCC is an easy way for the operators to "maintain expanded capacity" as they work to add more C-band and CBRS spectrum to their operations.

But Northstar and SNR aren't too happy with the situation. Last year, they argued the FCC should not give AT&T and Verizon access to the 197 licenses under debate without first discussing the issue with Northstar and SNR. The whole process "raises significant administrative due process issues," the companies wrote.

According to Northstar and SNR, AT&T and Verizon are using the spectrum licenses "with no compensation to the government or United States taxpayers," and those actions "undermine the free operation of the commercial wireless marketplace, which has worked successfully for decades to enable service providers to secure access to the spectrum resources."

Representatives from AT&T and Verizon declined to address the topic in response to questions from Light Reading.

Implications and ramifications

Ultimately, most US mobile network operators reported declines in traffic on their networks during the pandemic as large numbers of Americans worked and schooled from home on their wired network connections. However, Verizon, T-Mobile and other operators implemented a number of strategies to address the pandemic. For example, they worked with school districts across the country to distribute Wi-Fi hotspots to students who didn't have a home Internet connection, thus increasing traffic on their networks.

Further, it's worth noting that the spectrum licenses at the heart of the issue – the 197 licenses that Northstar and SNR returned to the FCC – represent a small part of a much bigger picture. For example, the analysts at LightShed Partners reported late last year that Dish's overall spectrum holdings would increase by only 3.7% if the FCC ultimately returned the $3.3 billion worth of spectrum back to Northstar and SNR.

But the LightShed analysts also believe that Northstar and SNR will win their case against the FCC, and will ultimately reclaim the 197 licenses that they gave to the FCC in 2015.

"It could take years for the DC Circuit to rule, but ultimately a panel of judges could order the FCC to recognize the bidding credit [discounts]," the analysts wrote in November. "That would mean the return of that spectrum. ... We believe that is the most likely outcome. The facts are clearly on the side of Dish and its DEs."

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— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano