When T-Mobile announced back in April 2018 that it was willing to pay over $26 billion to buy Sprint, the average Joe on the street thought that something was very strange. Surely there was no reason that a carrier on the rise like T-Mobile was interested in buying a wireless provider with all of the operational issues that Sprint had. And there would be no reason for T-Mobile to make the deal in order to pick up Sprint's customers; given time, most of them would probably end up with T-Mobile anyway.
Auction of mid-band spectrum in the U.S. raises a record amount of cash
Was there something tasty cooking in the Sprint cafeteria that couldn't be duplicated that T-Mobile just had to have? Actually, what much of the public didn't know or understand (unless they were regular PhoneArena readers) was that Sprint did own something that T-Mobile wanted badly-a hoard of mid-band 2.5GHz spectrum. And these airwaves could end up making T-Mobile the fastest provider of 5G in the states.
That's because low-band, mid-band and high-band spectrum each have individual characteristics that are important when it comes to the next generation in wireless connectivity, 5G. For example, low-band signals travel long distances making them perfect to be the coast-to-coast foundation of a nationwide 5G network although download data speeds are similar to those achieved over 4G LTE. The high-band spectrum has limited travel capabilities but does deliver fast 5G service. That means it is much harder to find these ultra-fast 5G signals. Bridging the two is mid-band spectrum which can travel greater distances than high-band while providing faster speeds than low-band airwaves.
The problem is that obtaining mid-band spectrum is rather difficult in the states and that is why the FCC has collected a record number of bids for its latest auction which is for mid-band airwaves in the range of 3.7-4GHz. This is known as the C Band. The Wall Street Journal reports that on December 23rd, after only three weeks of receiving bids, the FCC has collected a record $69.8 billion indicating that there is fierce competition for this spectrum. The previous record for bids was set in 2015 when $44.9 billion was collected for an auction of mid-band spectrum that was to be used for 4G LTE service. The acquisition of mid-band spectrum could help Verizon and AT&T catch up to T-Mobile.
The importance of mid-band spectrum to 5G was summed up by LightShed Partners telecom analyst Walt Piecyk who said, "Mid-band spectrum will be where 5G lives. When the (bidding) numbers get this big, you have to assume that everybody's getting more aggressive." Besides wireless firms like Verizon, AT&T, and T-Mobile, satellite companies like Dish and cable companies like Comcast might also be bidding for this spectrum. That's because Dish is building a 5G network as it looks to replace Sprint as the nation's fourth largest carrier. As part of a deal that allowed the FCC and DOJ to approve T-Mobile's merger with Sprint, Dish agreed to buy Sprint's pre-paid business including Boost Mobile and 8 million customers.
The current auction kicked off on December 8th and will now go on hiatus for the holidays until January 4th. The U.S. Treasury will be a major beneficiary of the auction as the agency will keep the money left over after the winning bids are paid off. The winners will also have to pay an aggregate total of $13 billion to purchase equipment for the satellite companies that agreed to change their TV transmissions to a smaller portion of the C-band. This allowed the FCC to auction off mid-band spectrum as it is doing. But what is going on now is just the beginning. It might not be until 2023 when the carriers get to take control of the mid-band spectrum they've won. And if they need to take control earlier, they could pay the satellite companies more money to give up their C-band property early.
5G is the next generation of wireless connectivity that will deliver download data speeds that will eventually be 10 times to 100 times faster than 4G. Downloading an HD movie will take seconds instead of minutes and new technologies and businesses will be created. The countries that are first to benefit from 5G could see a boost in their economies which is why the FCC is working quickly with wireless providers to make fast data speeds and latency available to U.S. wireless users as soon as possible.