Andromeda bidders avoid auction failure – but now the real work begins

The FCC's ongoing Andromeda auction of valuable midband spectrum is officially a success – total winning bids crossed the $15 billion mark Wednesday, above the agency's $14.8 billion reserve price.

However, some of the world's biggest equipment vendors said that auction winners will need to purchase plenty of new equipment to put their new spectrum licenses into action.

That bidding in the auction crossed the reserve price is noteworthy considering widespread worries last week that the economic threshold would not be reached. "We'll be watching with white knuckles," wrote the financial analysts at New Street Research in a note to investors late last week, arguing that there was a possibility that bidding would stall below the reserve price. If the auction ended with total bids below the $14.8 billion reserve price, no bidders would have gotten any spectrum and the auction would have been considered a failure.

Now, though, the auction has officially passed the reserve price – a necessary milestone considering that reserve price is the cost to move existing, incumbent military users out of the band.

Waiting for winners

The next step will be for bidders to finish competing for licenses around the country. When there are no more bids, the auction will end. It's still unclear how much more money the Andromeda auction will ultimately raise.

"We could still end up reaching (or even breaching) our $25 billion forecast from before the auction," wrote the New Street analysts in a note to investors Wednesday. The analysts were speculating on how much total winning bids the auction will generate. "We regard that outcome as unlikely, but with the re-acceleration in price growth seen this morning, it is plausible."

The FCC's Auction 110 of spectrum between 3.45GHz and 3.55GHz, which started October 5, has been dubbed the "Andromeda auction" by Light Reading because it sounds cool. As in prior spectrum auctions, the FCC is only releasing the amount and geographic location of each bid and not the identity of the bidder. The agency is expected to release the identity of winning bidders after the auction is over, likely sometime in January.

And then the real work will begin. Shortly after announcing the winners of the auction, the FCC will likely begin officially delivering Andromeda spectrum licenses to winners, thereby allowing them to put the licenses to use. AT&T is widely expected to walk away with at least 40MHz of spectrum in the auction, and T-Mobile, Verizon and – potentially – Dish Network may also gain some licenses.

New radios for 3.45GHz-3.55GHz

To put their licenses to use, auction winners must purchase new radios that are capable of broadcasting signals in the 3.45GHz-3.55GHz band. That's noteworthy considering Verizon and AT&T are already spending billions of dollars this year buying radios for their new C-band spectrum licenses, which sit in the nearby 3.7GHz-3.98GHz band.

"We anticipate operators deploying new radios to support the 3.45GHz-3.55GHz band," an Ericsson representative wrote recently in response to questions from Light Reading. The company is one of the biggest suppliers of 5G equipment to North American wireless network operators. "Ericsson will fully support products for this spectrum band to allow rapid rollout when spectrum becomes available."

For its part, Nokia – another major US equipment supplier – suggested that some of its C-band equipment might also be able to support the new band. "For the new 3.45GHz spectrum band, some equipment from C-band deployments could be reused," a Nokia representative wrote in response to questions from Light Reading.

But the company said operators will still need new radios. "CSPs [communication service providers] will need to deploy new radios that are designed specifically for the 3.45GHz band," the Nokia representative added.

Such statements are undoubtedly music to the ears of executives in the cell tower industry. After all, companies like Crown Castle and American Tower often charge wireless network operators based on the number of radios they need to hang atop cell towers.

3.45GHz-3.55GHz and smartphones

However, at least one company suggested that current smartphones that support the C-band might also be able to support 5G transmissions in the new 3.45GHz-3.55GHz band that's currently being auctioned. That's because both bands fall into the 3GPP's n77 technical standard, which stretches from 3.3GHz to 4.2GHz.

"Because this new frequency band of 3.45GHz-3.55GHz is within the n77 defined 5G band (3.3GHz-4.2GHz) then current 5G phones will allow operation in these frequencies – this includes iPhone 12 and iPhone 13," wrote Mike Eddy, VP of corporate development at smartphone component supplier Resonant, in response to questions from Light Reading. "However, as traffic increases in n77 (including in the US C-band and CBRS) there is increasing potential for interference, hence the need for improved filtering in the future (such as Resonant XBAR) to allow for co-existence of n77 and n79 5G, 5GHz and 6GHz Wi-Fi and UWB."

Qualcomm, one of the world's major suppliers of 5G radio components for smartphones, did not respond to repeated questions from Light Reading on the topic.

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

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