Verizon, T-Mobile, AT&T and others spent billions of dollars in the early days of 5G on millimeter wave spectrum licenses. But the value of those licenses appears to be rapidly declining.
In the early days of 5G, millimeter wave (mmWave) spectrum was viewed as a potential goldmine. Verizon – the world's primary mmWave proponent – has variously described it as "wireless fiber" and "transformational."
Indeed, roughly seven years ago, Verizon and AT&T engaged in a bidding war over mmWave spectrum holder Straight Path. Verizon eventually walked away with the company's spectrum licenses thanks to its $3.1 billion winning bid.
And just four years ago, companies like Verizon, T-Mobile, EchoStar and AT&T spent close to $10 billion over three FCC auctions for more mmWave holdings.
Today, however, the value of that mmWave spectrum has clearly declined.
Reevaluations
For example, UScellular recently cut the value of its unsold mmWave spectrum licenses in half as part of its ongoing sell-off. Specifically, the company recorded a $136 million impairment on its mmWave holdings, dropping the value of those spectrum licenses from around $300 million to just $161 million.
Separately, T-Mobile in July completely surrendered 520 mmWave spectrum licenses where the company is not going to meet the FCC's coverage requirements. Analyst Frank Rayal of Xona Partners noted that T-Mobile plans to retain another 865 mmWave spectrum licenses.
But even in the licenses T-Mobile plans to keep, the company is reworking its coverage obligations. As Light Reading previously reported, T-Mobile received FCC approval to cut up some of its mmWave spectrum licenses into smaller geographic areas that are easier to cover.
Giving up spectrum without any financial payback is virtually unheard of in the US 5G industry.
Finally, it's worth noting that American operators are the only ones that ever chased mmWave spectrum licenses. "The price of US mmWave spectrum is about the highest in the world," Rayal told Light Reading. He noted that in most other countries where regulators have auctioned mmWave licenses, those licenses either went unsold or they sold at the minimum bid price.
That's likely why Apple continues to eschew mmWave in its international products. As noted by MacRumors, all four of Apple's new iPhone 16 models offer mmWave 5G in the US but not in any other countries.
Value in an era of scarcity
"I believe US mmWave spectrum was valued based on a mobile use case," Rayal explained.
Verizon chased mmWave spectrum between 2017 and 2020 because 5G was on the horizon and the FCC did not make any other spectrum available at that time, according to Rayal. Verizon viewed the spectrum as suitable for mobile uses, like smartphones, rather than fixed uses like high-speed Internet for homes and offices.
Then, when the FCC began auctioning midband C-band spectrum in 2021, Verizon pivoted to that type of spectrum with bids totaling $53 billion.
"Looking back, the timeline of setting mmWave valuations align with the need for 5G spectrum prior to C-band," Rayal noted.
Finding its place
That said, US operators still see some value in mmWave spectrum, despite the relatively diminutive propagation characteristics of transmissions in those bands. Signals in highband mmWave spectrum can't travel nearly as far as signals in midband and lowband spectrum, nor can they penetrate objects like buildings or hands.
"It's a tool in the toolbox," analyst Earl Lum, of EJL Wireless Research, told Light Reading.
Lum said mmWave spectrum can dramatically increase 5G users' speeds in locations like stadiums and airports, adding that the spectrum may play a role in outdoor fixed wireless access (FWA) applications. Indeed, Verizon has suggested it will use some of its mmWave holdings to offer FWA Internet services to apartments and other multi-dwelling units (MDUs) starting next year.
But Lum acknowledged that "it's a pain in the ass" to deploy mmWave spectrum on a widespread basis. That runs counter to what Verizon CEO Hans Vestberg suggested in 2019: "We can launch nationwide with millimeter wave," he said at the time.
"You can't stick it everywhere. It's financially stupid," Lum said.
Indeed, a 2019 Google study for the Pentagon's Defense Innovation Board (DIB) indicated it would take roughly 13 million transmitters and $400 billion to deliver 100 Mbit/s to 72% of the US population using 5G in mmWave spectrum. That's because each mmWave transmission site can only cover a few thousand feet, and each one of those sites can cost tens of thousands of dollars or more.
Meanwhile, as the value of mmWave spectrum drops, the value of lowband and midband spectrum has been on the rise.
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