Surprise! With $637M in Auction Bids, Demand for mmWave Spectrum Continues

The first round of the FCC's third millimeter-wave (mmWave) spectrum auction just ended, and participants pledged a total of $637 million in bids. That first-round figure is higher than the FCC's other two other mmWave spectrum auctions, and it could indicate operators' ongoing desire for more mmWave spectrum for 5G.

However, there's no telling which companies are actually bidding on those mmWave spectrum licenses -- the FCC won't release the identities of the bidders until the auction is over. And analysts continue to believe that overall demand for mmWave spectrum is cooling as more and more mmWave spectrum becomes available, and the industry's attention turns to other types of spectrum -- specifically midband spectrum for 5G.

"There's so much of it [millimeter wave spectrum] that's already been brought to the marketplace that hasn't even started to be used yet," Brian Goemmer, president of spectrum analysis company AllNet Insights & Analytics, told FierceWireless in October.

Similarly, the analysts at Wall Street research firm Raymond James wrote in an October report that there's "not much treasure expected in these waters." They estimate that the FCC's newest mmWave spectrum auction will raise around $3 billion in total bids -- slightly above previous mmWave auctions but well below auctions for midband and lowband spectrum.

Plenty of spectrum
The FCC dubbed its newest auction "Auction 103." The event, which started today, will release an astounding 3,400MHz of spectrum across the 37GHz, 39GHz and 47GHz bands. That's a lot of spectrum, but it's located in the so-called mmWave bands. Signals in mmWave spectrum can carry enormous amounts of data but often can't travel more than a few thousand feet, and they can have trouble passing through obstacles like trees, buildings and some types of windows.

The FCC over the past year or so has already auctioned a significant amount of mmWave spectrum during its two other auctions: Auction 101, which raised $703 million in bids, and Auction 102, which raised $2 billion in bids. The first round of Auction 101 raised just $36 million in bids, while the first round of Auction 102 raised $284 million in bids.

Thus, the fact that the first round of Auction 103 today raised more than twice what Auction 102 raised in the same timeframe is notable. However, Auction 103 is also offering far more spectrum overall than Auction 102.

Nonetheless, it appears that there's still demand for mmWave spectrum despite the results of the FCC's previous auctions and the difficulties operators will have in using mmWave spectrum to cover large geographic areas. Those difficulties include everything from paying for mmWave equipment to obtaining permits for cell site locations.

Possible bidders
It's reasonable to assume that Verizon, AT&T and T-Mobile are driving the majority of the bids during the FCC's Auction 103 today. That's because they're the companies that have always spent money for spectrum.

Figure 1:

Those three companies were also the big bidders during the FCC's other two mmWave spectrum auctions. For example, AT&T led the way with total bids of $982 million in the 24GHz Auction 102, buying 49% of all the available licenses, while Verizon spent the most in the 28GHz Auction 101 with total bids of $506 million for the spectrum. Verizon won 72% of all the available 28GHz licenses.

As a result, all three companies already own significant mmWave spectrum holdings:

Figure 2:

Further, there aren't very many other deep-pocketed bidders listed among the 35 qualified participants in the FCC's Auction 103. For example, major cable operators like Charter Communications and Comcast did not register to participate in the event, despite executives' stated interest in owning spectrum licenses.

The full list of the 35 qualified bidders for Auction 103 is here, and real-time results from the auction are here. However, the FCC isn't saying which companies are placing which bids, and will only do that after the auction is over. Further, companies often participate in FCC auctions under "bidding entities," and it's sometimes difficult to connect the bidding entity to the company that's actually doing the bidding. Hogan Lovells -- a law firm that specializes in telecom issues -- offers a helpful look at the ownership structure behind each of these "bidding entities" here. Noteworthy participants in Auction 103 aside from the usual suspects (Verizon, AT&T and T-Mobile) include Columbia Capital, Sprint, Chat Mobility, Dish Network, Japan's DoCoMo, U.S. Cellular and Windstream.

This is the second time the FCC is conducting an "incentive" spectrum auction. This kind of auction encourages the companies that currently own the spectrum to relinquish it for a cut of the auction's proceeds. The FCC's first incentive auction was for 600MHz licenses and ended in 2017 with a total of $20 billion in total bids.

Finally, it's worth noting that most of the rest of the world is moving forward with 5G in midband spectrum, not mmWave spectrum. For example, China and South Korea are both mainly using the 3.5GHz band for their respective 5G buildouts.

That said, a new report from the Global mobile Suppliers Association (GSA) indicates that the US isn't alone in its interest in mmWave spectrum. The firm's new report on spectrum above 6GHz found that 66 operators across 13 countries hold licenses enabling operation of 5G networks using mmWave spectrum, and that 14 are known to be deploying 5G networks using mmWave spectrum.

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