5G Cellular Spectrum Auction—Can’t Tell the Players Without a Scorecard

 

Who will gain in the FCC’s next big spectrum auction? How will consumers gain, and what will we lose?

 

Steven Cherry Today’s episode may confuse people and search engines alike—we’ve titled this podcast series Radio Spectrum, but our topic for today is the radio spectrum. Could you here the capital letters the first time I said “radio spectrum” and all lower case letters the second time? I thought not.

Anyway, let’s dive in. Here’s a quote and a 10-point quiz question—who said this?

“The most pressing communications problem at this particular time, however, is the scarcity of radio frequencies in relation to the steadily growing demand.”

Everyone who guessed that it was a U.S. President give yourselves a point. If you guessed it was President Harry Truman, in 1950, give yourself the other 9 points.

At the time, he was talking mainly about commercial radio and the nascent technology of television, ham radios. We didn’t even yet have Telestar, a satellite linkage in the land-based telephone monopoly. That would come a decade later. A decade after that, Motorola researcher Martin Cooper would make the first mobile telephone call.

By the late ’70s, the Federal Communications Commission was set to allocate spectrum specifically for these new mobile devices. But it’s first cellular spectrum allocation was a messy affair. The U.S. was divided up into 120 cellular markets, with two licenses each, and in some cases, hundreds of bidders. By 1984, the FCC had switched over to a lottery system. Unsurprisingly, people gamed the system. The barriers to enter the lottery were low, and many of the 37,000 applications—yes, 37,000 applications—simply wanted to flip the spectrum for a profit if they won.

The FCC would soon move to an auction system. Overnight, the barrier to entry went from very low to very high. One observer noted that these auctions were not “for the weak of heart or those with shallow pockets.”

Cellular adoption grew at a pace no one could anticipate. In 1990 there were 12 million mobile subscriptions worldwide and no data services. Twenty-five years later, there were more than 7 billion subscriber accounts sending and receiving about 50 exabytes per day and accounting for something like four percent of global GDP.

Historically, cellular has occupied a chunk of the radio spectrum that had television transmissions on the one side and satellite use on the other. It should come as no surprise that to meet all that demand, our cellular systems have been muscling out their neighbors for some time.

The FCC is on the verge of yet another auction, to start on December 8. Some observers think this will be the last great auction, for at least a while. It’s for the lower portion of what’s called the C-band, which stretches from 3.7–4.2 gigahertz.

Here to sort out the who, what, when, why, and a bit of the how of this auction is Mark Gibson, Senior Director for Business Development and Spectrum Policy at CommScope, a venerable North Carolina-based manufacturer of cellular and other telecommunications equipment—the parent company of Arris, which might be a more recognizable name to our listeners. And most importantly, he’s an EE and an IEEE member.

Mark, welcome to the podcast.

Mark Gibson Thank you, Steven. I love that intro. I learned something. I got one point, but I didn’t get the other nine. So …  but thank you, that was very good.

Steven Cherry Thank you. Mark, maybe we could start with why this band and this particular 280 MHz portion of it is so important that one observer called it the Louisiana Purchase of cellular?

Mark Gibson Well, that’s a great question. Probably the best reason is how much spectrum is being offered. I believe this is the largest contiguous spectrum in the mid-bands, not considering the millimeter wave, which is the spectrum, about 28 gigahertz. Those were offered in large GHz chunks, but they have propagation issues. So this is the mid-band and of course, meaning you know, mid-band spectrum has superior propagation characteristics over millimeter wave. So you have 280 MHz of spectrum that’s in basically the sweet spot of the range—spectrum that Harry Truman didn’t think about when he talked about the dearth. And so that’s the primary reason. A large amount of spectrum in the middle—the upper-middle of the mid-band range—is one of the reasons this is of so much interest.

Steven Cherry I’m going to ask you a question about 5G that’s maybe a bit cynical. 5G makes our phones more complex, it uses a ton of battery life, it will often increase latency, something we had a recent podcast episode about, it’s fabulously expensive for providers to roll out, and therefore it will probably increase costs for customers, or at least prevent our already-too-high costs from decreasing. When, if ever, will it be a greater plus than a minus?

Mark Gibson That’s a great question, because when you consider the C-band—the Spectrum at 3700 to 3980—that … Let me back up a minute. One of the reasons the issues exist for 5G has to do with the fact that for all intents and purposes, 5G has been deployed in the millimeter wave bands. If you, for example, read a lot of the consumer press, the Wall Street Journal, and others, when they talk about 5G, they talk about it in the context of millimeter-wave.

They talk about small cells, indoor capability, and the like. When you think about 5G in the context of this spectrum, the C-band, a lot of the concerns you’re talking about, at least in terms of some of the complexity with respect to propagation, begin to diminish. Now, the inherent complexities with 5G still exist in some of those are overcome with a lot of spectrum, especially the fact that the spectrum will be TTD, time division duplex. But I’d say that for the most part, the fact that this band will be the 5G—will be deployed in this mid-band range—will give it superior characteristics over millimeter wave, at least in the fact you’ve got a lot of spectrum and also have it in the lower mid-band so you can travel further.

The other inherent concerns, I guess you can say about 5G or the same things we heard about 4G versus 3G. So I think it’s just a question of getting used to the Gs as they get bigger. The one main thing that will help this out is this band of spectrum as well as the band that’s right below it, which is the CPRS band that’s supposed to be a 5G band as well.

Steven Cherry There was already an auction this summer of the band just above this at 3.5 GHz. The process of December’s auction started back in 2018. The auction itself will be held at the end of 2020. What took so long?

Mark Gibson Well, part of the problem is that the band is occupied by … right now I think the number is around 16 500 Earth stations on the ground and then twenty-some satellites in the air. So it took a long time to figure out how to accommodate them. They’re incumbents, and so the age-old question, when new spectrum is made available: What to do with the incumbents? Do you share, do you relocate, do you do both and call it transitional sharing. There was a lot of discussion in that regard around the owners of the spectrum.

The interesting thing here, you have an Earth station on the ground that transmits to the satellite. That could be anybody, it could be for a lot of these are broadcasters. NPR has a network, Disney, ESPN, the regular cable broadcasters, and whatnot. Then you have satellite owners who are different and then you have Earth station owners who are different. So in this ecosystem, there’s three different classes of owners and trying to sort out their rights to the spectrum was complicated. And then how you deal with them in regard to sharing relocation. In the end, the commission came down to relocation and so now the complexity is around, “how do you relocate?” And “relocate” is sort of a generic term. It means to move in spectrum, basically repack them. But how do you repack 16 000 Earth stations into the band above? That would be into the 4.0 to 4.2 gigahertz band. So that’s taken a long time to sort out who has the rights to the spectrum; how do we make it equitable; how do we repack; and then how do we craft an auction? Those are some of the main reasons it’s taken so long.

Steven Cherry Auction rules have evolved over time, but there’s still a little bit of the problem of bidders bidding with the intention of flipping the spectrum instead of using it themselves. Can you say a word about the 2016 auction?

Mark Gibson Well, that’s a good question. With all the spectrum auctions, the commission the SEC manages, what they try to do is establish what’s called substantial service requirements to ensure that those that are going to buy the spectrum put it to some use. But that doesn’t eliminate totally speculation. And so with the TV band auction, there was a fair amount of speculation, mostly because that 600 MHz spectrum is really very valuable. That auction went for $39 billion, if I’m not mistaken. But there was another auction that was complicated because of the situation of TV stations having to be moved. But we saw this in the AWS-3, which is the 1.70 to 2.1 gig bands. A lot of speculation went on and we saw this in great detail, a great sense in the millimeter-wave. In fact, there had been a lot of speculation in the millimeter-wave bands even before the auctions occurred, with companies having acquired the spectrum and hanging onto it, hoping that they could sell it. In fact, several of them did and made a lot of money.

But the way the commission tries to address that primarily is through substantial service requirements over the period of their license term, which is typically 10 years. And what it says loosely is that in order for a licensee to claim their spectrum, they have to put it to some substantial service, which is usually a percent of the rural and percent of the urban population over a period of time. Those changed somewhat, but mostly this is what they try to do.

Steven Cherry Yeah, the 2016 auction was gamed by hedge funds and others who figured out that particular slices in the spectrum, that particular TV stations, if they could hold them, they could keep another buyer from holding a continuous span of spectrum. I should point out that the designers of the 2016 auction won a Nobel Economic Prize for their innovations. But —.

Mark Gibson Yes.

Steven Cherry — I’m just curious, the hedge funds sold these slices at a premium so that there wouldn’t be a gap in a range of spectrum. What would have happened if that were to be those little gaps?

Mark Gibson Well, if you have gaps in spectrum, that’s not it’s not terrible. It’s just you don’t then have a robust use of the spectrum. What our regulator and most regulators endeavor to do in any spectrum auction is to make allocations or the assignments, if you will, contiguous. In other words, there’s no gaps. You know, if there are gaps, what it means is you have a couple of things. One is if you have a gap in the spectrum for whatever reason and that gap, the people using that, then you have adjacent channel concerns. And these are concerns that could give rise to adjacent channel interference from dissimilar services.

With the way that spectrum auction is run, they were able to separate, if you will, bifurcate the auction so that there was a low and a high, and they sold them both at once. Base station frequencies were in the upper portion and the handset frequencies were in a lower portion of that band. And so if you have gaps, then you have problems with who’s in those gaps, and that gives rise to sharing issues. The other thing is, if there’s gaps, the value of the spectrum tends to get diminished because it’s not contiguous. And we’ve seen that in some instances in some of the other bands, and somewhat arcane bands like AWS-4 [Advanced Wireless Service], some of the bands that are owned by Dish and whatnot.

Steven Cherry There’s been a lot of consolidation in the cellular market. In fact, we have only three major players now that T-Mobile acquired Sprint, a merger that finally finished merging earlier this year. So who are the buyers in this auction?

Mark Gibson Well, they run the gamut. I mean, there’s a lot of them there. What’s interesting, a couple of interesting things have come out of it. The Tier 1s are well represented by AT&T, T-Mobile, Sprint, and Verizon. So we expect them all to participate. And interestingly enough, T-Mobile only bought eight markets. If you want to compare this to the spectrum right below it, with the CBRS [Citizens Broadband Radio Service] for at least a spectrum comparison. T-Mobile only bought eight markets and that.

So anyhow, the Tier— the Tier 1s are well represented, but so are the MVNOs [Mobile Virtual Network Operators]—the cable operators. And what’s interesting is that Charter and Comcast are bidding together. Now, ostensibly, that’s because they want to make sure they de-conflict some of the spectrum situations in market area boundaries. In other words, they’re generally separate in terms of their coverage areas. But there were some concerns that there may have some problems with interference de-confliction at the edges of the boundaries. So they decided to participate together, which is interesting.

You know, at the end of the day, there’s 58 companies that qualified to bid and there are a lot of wireless Internet service providers or we call WISPs, for whom this would be a fairly expensive endeavor, the WISPs did participate in the CBRS auction, but that, by comparison, will probably be easily an order of magnitude below what the C-band will be.

But you look at it, it’s the usual suspects. It’s most everybody that’s participated in a major spectrum auction going way back to probably the first ones, although their names have changed. You have a lot of rural telcos, rural telephone companies, a lot of smaller cable operators. Just generally people that could be speculating. Don’t see a ton of that in this band and this spectrum. But there are some that look like they could be some speculators. But I don’t see a lot of that.

Steven Cherry I think people think of Verizon as the biggest cellular provider in the U.S. With the biggest, best coverage overall, but they’ve been playing catch up when it comes to spectrum.

Well, their position is interesting. They act like they’re playing catch up, but they do have a lot of a spectrum. They have a lot of spectrum in the millimeter-wave band, they have a lot of 28 gig spectrum from the acquisition of LMDS [Local Multiband Distribution Service], which is a defunct service. And so they have a lot of 28 gig spectrum. They got a lot of spectrum in the AWS [i.e., Advanced Wireless Service-3] auction, they got a lot of spectrum. In fact, they were the largest spectrum acquirer and I’m sorry, second-largest spectrum acquirer in the CBRS auction. They got a lot of spectrum in the 600 MHz auction. So I don’t know that they’re spectrum poor compared perhaps to some of the others, but they just want to have a broader spectrum footprint, it looks like, or spectrum position.

Steven Cherry You mentioned Dish Network before … The T-Mobile–Sprint merger requires that it give up some spectrum to help Dish become a bigger competitor.

Mark Gibson Right.

Steven Cherry I think the government’s intent was that it be a fourth major to replace Sprint. Did that happen? Is that happening? Is Dish heavily involved in this auction?

Mark Gibson Ah, Dish is involved … I’m not sure to what extent heavily. We haven’t seen anything come out yet with respect to down payments and down payments, give you some indication of their interest in the spectrum. I will say that they spent the most amount of money, over a billion dollars in the CBRS auction. So they were very interested in that. And their spectrum position is, like I said, it’s really a mélange of spectrum across the bands. They have a bunch of spectrum in the AWS-4, a bunch of spectrum in the old 1.4 gig. Their spectrum holdings are really sort of all over the place and they have some spectrum that they risk losing because of this whole substantial service situation. They haven’t built some of their networks out and they have a unique situation because they’re a company who has not built a wireless network yet.

And so most of us expect that Dish again, will build their spectrum portfolio as needed, and then they can decide what they want to do. But you’re correct, they were considered by the commission as possibly being able to help with the 2.5 gig spectrum and some of the other spectrum that was made available through the Sprint-T-Mobile acquisition or merger.

Steven Cherry Auctions are about as exciting as the British game of cricket, which is incredibly boring if you don’t know the rules of the game —

Mark Gibson And going about as long!

Steven Cherry — Right! But it is very exciting if you do understand the rules and the teams and the best players and all that, what else should we be looking out for to get maximum excitement out of this auction?

Mark Gibson Well, I don’t think anybody who’s not interested in spectrum auctions is going to find this exciting other than the potential amount of monies coming into the Treasury. And at the end of the day, $28 to $35 billion dollars is not chump change. So there’s that interest there. And you compare that to CBRS and other auctions, you know, the auctions generate a fair amount of money. I think that’s something to keep in mind, just to watch the auction, are the posturing by the various key players, certainly the Tier 1s and the cable companies.

And just to watch what they do, it’ll be interesting to also watch what the WISPs do, and how the WISPs manage their bidding in some of their market regions. It was interesting in the CBRS auction, the one location that generated the highest per-POP [Point of Presence] revenue was a place called Loving, Tx., which has a total population, depending upon who you ask, of between 82 and 140 people. Yet that license went for many millions of dollars. So the dollar-per-MHz-POP, which is a measure of how much the spectrum was worth, was in the hundreds of dollars. So there’s that stuff that happens, which is we all looked at that and kind of scratched our heads. For this one, like I said, it’ll be the typical looking at what the Tier 1s here choose to do, for that matter, and all the telcos, what they’re going to do, certainly what Dish is going to do and how they do that.

But you won’t know that during the auction because you don’t know who’s bidding on what per se. A lot of the bidding is closed, and so you won’t know, for example, that AT&T or T-Mobile or Dish or whoever are bidding on a given market. You only know that at the end. What you will know, though, is at the end of the rounds how much the markets are going for. Then you can start making educated guesses as to what’s happening there based on what you might know about a given entity.

It’s also interesting to look at the entity names because there’s the applicant name and then there’s the name of the company and there’s sort of a lot of—it’s not chicanery, but hidden stuff going on. For example, Dish is bidding as Little Bear Wireless. So that’s interesting because they had a different name for the CBRS auction. So anyhow, I will be—and my cohorts will be—watching this auction to sort of seeing, first of all, how high it goes, how high some of the markets go. And then at the end, when the auction is all done, who bid for what? And then try to piece together what all that means.

Steven Cherry So what will Comcast’s role be in the auction and what would be a good outcome?

Mark Gibson Well, you know, it’s interesting. Comcast does not own spectrum per se they do a lot of leasing. I think they may have won some spectrum, a little bit of spectrum, in the 600-megahertz band, but they participated in AWS—AWS-1—as a consortium called SpectrumCo, and they were there with Cox and two other smaller cable companies. And they ended up getting a bunch of spectrum. I think they ended up bidding $4 billion in that auction and won a bunch but couldn’t figure out what to do with it. The association dissolved and the spectrum then was left to various other companies.

So I think for for Comcast it’ll be good if they get spectrum in the markets that they want to participate in, obviously. As you probably are aware, the auction is going to be done in two phases or the spectrum going to be awarded in two—and I think the auction is going to be done in two phases as well, the phase one is for the lower—the A Block, which is the 3700 to 3800 [MHz], the lower 100, in the top 46 PEAs, partial economic areas. So that auction will happen and then the rest of it will be sold—the rest of the 180. So the question is, well where will they be bidding? Will they be bidding in their DMAs, which is their market areas overlaid with the PEAs they’ll be bidding. I don’t know that, but that would be interesting to watch. But I think to the extent that Comcast gets any spectrum anywhere, I think it’ll be good for them that I’m pretty sure they can turn around and put it to good use. They have interesting plans, you know, with strand mounted approaches which are really very interesting. So we’ll see. That will be interesting to watch.

Steven Cherry And what will your company’s role in the auction be—and what would be a good outcome for CommScope?

Mark Gibson Our role is … We don’t participate in the auction. I, and my spectrum colleagues, will be watching it closely just to kind of discern sort of the parlor game of who’s doing what. Of course, when the auction ends, we find out we’re all wrong, but that’s okay. But we’ll be we’ll be looking at who’s doing what kind of trying to figure out who—to anticipate who’s doing what. Obviously, CommScope will be selling all of the auction winners what we do, which is infrastructure equipment, base station antennas, and everything in our potpourri —

What would be nice for you guys is if Dish and the cable companies do well since they have to start from scratch when it comes to equipment.

True. That’s true. Yeah, that would be good. And we work with all of these folks, so it’ll be interesting to see how that comes together.

And other than the money in the Treasury, what would be some good outcomes for consumers and citizens?

Well, that’s a good question. Having this spectrum now for 5G, and actually now we’re hearing 6G, in this band will be very useful for consumers. It’ll mean that your handsets will now be able to operate without putting your head in a weird position to accommodate the millimeter wave antennas that are inherent in the handsets. It’s right above CBRS, so there’s some contiguity. There’s another band that’s being looked at. There’s a rulemaking open on it right now. That’s 3450 to 3550. That’s right below CBRS. So that’s 100 megahertz.

So when you consider that plus the CBRS band plus the C-band, you’re looking now at 530 megahertz of mid-band spectrum possible. And so for consumers that will open up a lot of the use cases that are unique to 5G, things like IoT, vehicular technology use cases, that can only be partially addressed with the 5.9 GHz band. If you’ve been following that. C-V2X [Cellular Vehicle-to-Everything] capabilities to push more data to the vehicle will be much more doable across these swaths of spectrum—certainly in this band. We’ve seen interesting applications that were borne out of CBRS that should really see a good life in this band, things like precision agriculture and that sort of thing. So I think consumers will benefit from having the 280 contiguous megahertz of mid-band spectrum to enable all of the use cases that 5G claims to enable.

Steven Cherry Well, Mark, as the saying goes, in the American form of cricket—that is, baseball—you can’t tell the players without a scorecard. Thanks for giving us the scorecard and for joining us today.

Mark Gibson Well, my pleasure, Steven. Very good questions. I really enjoyed it. Thanks again.

Steven Cherry That’s very nice of you to say. We’ve been speaking with Mark Gibson of telecommunications equipment provider CommScope about the upcoming auction, December 8th, of more cellular spectrum in the C-band.

Radio Spectrum is brought to you by IEEE Spectrum, the member magazine of the Institute of Electrical and Electronic Engineers, a professional organization dedicated to advancing technology for the benefit of humanity. This interview was recorded November 30th, 2020. Our theme music is by Chad Crouch.

You can subscribe to Radio Spectrum on the Spectrum website—where you can sign up for alerts or for our newsletter—or on SpotifyApple Podcast, and wherever else you get your podcasts. We welcome your feedback on the Web or in social media.

For Radio Spectrum about the radio spectrum, I’m Steven Cherry.

Note: Transcripts are created for the convenience of our readers and listeners. The authoritative record of IEEE Spectrum’s audio programming is the audio version.


Mark Gibson

With over 36 years of spectrum management experience, Mark is responsible for developing domestic and international business opportunities for CommScope. In addition to leading technical and business development efforts for numerous wireless and spectrum-related products and services, he has led efforts to address spectrum sharing between Federal government and commercial users. He leads CommScope’s CBRS efforts on the Spectrum Access System/Environmental Sensing Capability. He is a board member of the CBRS Alliance and an officer on the board of the Wireless Innovation Forum and is chair of the WInnForum 6 GHz Multi-stakeholder Committee. He is a member of the Commerce Spectrum Management Advisory Committee, where he has also co-chaired working groups related to spectrum sharing and data exchange issues. He has led spectrum management efforts including the development of the SAS and ESC, TV White Space, spectrum sharing analysis protocols and sharing criteria, as well as development of Comsearch’s engineering services and software products. He has led efforts in working with the American Hospital Association as their technical partner for WMTS frequency coordination. He has authored several papers on spectrum sharing and relocation and has advised numerous wireless participants in their system design. He is a Life Member of IEEE. He has an amateur radio license and is an instrument-rated commercial pilot.