No Spectrum, No Business

It perhaps goes without saying that ownership of spectrum licenses is a fundamental requirement for operation, at scale, for a mobile service provider. Business models can be constructed on a wholesale basis, but operation at scale, with higher profit margins, is only possible on a facilities-based basis.

Though many will worry about the debt implications of heavy spending by Verizon and AT&T to acquire mid-band spectrum, it is something of an existential matter. Without the new spectrum--despite the capital spending implications--neither firm could hope to remain competitive in the 5G era.

For 5G, mid-band spectrum now is crucial for coverage, as well as boosting speed. In the U.S. market, that has been supported by new mid-band spectrum made possible by the Citizens Broadband Radio Service and C-band spectrum auctions.

Both auctions are important, but the C-band spectrum will prove to be foundational for U.S. 5G, in the same way that the AWS-3 auctions were foundational for U.S. 4G.

Verizon was the top buyer, while AT&T acquired the second-greatest amount of assets. In fact, it appears all the spectrum that is available soonest (the A block) was acquired by those two firms. 

source: Sasha Javid 

Cellco Partnership, doing business as Verizon Wireless, won nearly 62 percent of the A block licenses, with AT&T buying 28.5 percent of the A block licenses. The A block was favored because it can be put to commercial use the fastest, with the least amount of spectrum clearing and time delay to do so. 

T-Mobile, already possessing a trove of mid-band spectrum, won licenses covering 72 markets. 

Most observers expect the A block spectrum to be commercially available by the end of 2021, while the other blocks will take longer to clear. Still, with the A block representing at least 80 percent of total C-band spectrum auctioned, it is clear that most of the C-band spectrum will be available for use quickly. 

Verizon paid more than $45 billion, while AT&T committed $23.4 billion. It appears both AT&T and Verizon acquired licenses in the same 406 markets, essentially blanketing the entire continental United States. 

Perhaps surprisingly, Comcast and Charter Communications, the largest U.S. cable operators, did not bid at all. 

source: Sasha Javid 

To give you some idea of the huge amount of mid-band coverage spectrum Verizon and AT&T acquired, consider that Verizon gained an average of 160 MHz nationwide in the C-band auctio, while AT&T got about 80 MHz coverage of about 95 percent of the land mass in the same auction. 

Prior to the C-band and 2020 Citizens Broadband Radio Service auctions, Verizon had less than 125 MHz of low-band mid-band spectrum in total. AT&T had less than 150 MHz in total spectrum assets in the low-band and mid-band ranges. 

Verizon more than doubled its trove of low-band and mid-band spectrum in a single auction. AT&T increased its low-band and mid-band assets by about 50 percent.