The biggest auction of millimeter wave (mmWave) spectrum licenses in modern history ended with total bids of $7.6 billion.
The FCC said it will release the identity of the winning bidders in the coming days, but analysts believe T-Mobile likely will walk away with the bulk of the licenses.
"We expect T-Mobile will emerge as the top bidder," wrote the analysts at Wall Street research firm Raymond James in a note to investors in January following the close of the "clock" phase of the auction, dubbed Auction 103. After the "clock" phase ended, the auction moved into an "assignment" phase where bidders chose the specific licenses they want. That phase – which just ended Friday – didn't involve any large bids.
The Raymond James analysts estimated that T-Mobile spent $2 billion on licenses during the event. The firm estimated that AT&T, Dish Network and Sprint each spent around $1 billion to $2 billion, while U.S. Cellular spent an estimated $1 billion or less.
If T-Mobile did indeed walk away with the bulk of the mmWave licenses in Auction 103, the operator appears poised to add that spectrum to the extensive collection of 2.5GHz spectrum licenses it stands to gain though its pending merger with Sprint. While that transaction has not yet officially closed, many expect it will by April.
"Given its significant starting position of MMW [millimeter wave] spectrum, we think Verizon will end up being one of the smallest players in Auction 103," the firm added. Indeed, Verizon has already acquired vast mmWave spectrum holdings from its purchases of Straight Path, XO Communications and Nextlink – those licenses form the basis for the operator's growing "ultra wideband" 5G network.
The Raymond James analysts calculated that Auction 103 ended at around $0.009 per MHz-POP. The MHz-POP calculation is applied to most spectrum transactions and reflects the number of people covered compared with the amount of spectrum available. Based on this calculation, millimeter-wave spectrum is generally valued way below other bands. For example, the FCC's AWS-3 auction in 2015 for paired spectrum clocked in at a whopping $2.72 per MHz/POP, while the 600MHz auction in 2017 reached $0.93 per MHz/POP.
Importantly, the $7.6 billion raised in Auction 103 is almost double some initial expectations, including those from Raymond James. However, analyst Tim Farrar with TMF Associates wrote before the auction started that it could generate up to $7 billion to $8 billion in total proceeds.
Auction 103 is the FCC's third mmWave spectrum auction, and by far its biggest, both in terms of the money raised and the amount of spectrum available. The FCC's Auction 101 for 28GHz spectrum licenses raised $703 million in total bids, while its Auction 102 for 24GHz licenses raised $2 billion in bids. Both auctions ended in 2019. Verizon, AT&T and T-Mobile spent the most money on spectrum licenses during the FCC's two previous mmWave spectrum auctions. The agency's Auction 103 stretches across the 37GHz, 39GHz and 47GHz bands, and offers up a whopping 3,400MHz of total spectrum. It's "the largest spectrum auction in American history," according to the FCC.
Operators including Verizon, AT&T, T-Mobile and U.S. Cellular are using mmWave spectrum in part for their 5G network buildouts.
However, transmissions in mmWave spectrum often can only travel a few thousand feet at most, making it difficult for operators to use mmWave spectrum to cover large rural areas.