C-band 5G auction nears $5B after a dozen rounds

After a dozen rounds of bidding, the C-band spectrum auction reached almost $5 billion in gross proceeds Friday.

As of December 11, the 5G auction for spectrum in the 3.7 GHz band stood at $4,954,406,500. The start of four more rounds was underway Monday, with the first round bringing that figure above the $5 billion threshold to about $5.45 billion.  

There are 57 participants in the clock phase, competing for licenses that could give major carriers access to key mid-band 5G spectrum nationwide.

“The C-Band auction is the ‘Louisiana Purchase’ opportunity for the wireless operators, roughly doubling their spectrum,” said Morgan Kurk, EVP and CTO of CommScope, in emailed comments. “The 100MHz of continuous mid-band spectrum each operator will likely buy will be the most efficient, cost effective, and capacity intense in history and will usher in a new era of wireless, connecting everything.”

Ahead of the auction, eyes largely focused on Verizon, as well as AT&T, who need mid-band as they compete with T-Mobile and its deep 2.5 GHz spectrum holdings for 5G from Sprint. Who will ultimately come away with what won’t be known until after the auction wraps up.  

BitPath COO Sasha Javid, who closely tracks auction results, told Fierce that so far Auction 107 “is generally meeting its high expectations.”

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“Indeed excess demand has remained surprisingly persistent even in the largest markets relative to prior FCC clock auctions,” Javid said.  “Only in Round 12 did we finally start to see some bidders move their demand out of the more expensive PEAs to less expensive ones,” which is a trend Javid expects to accelerate.

At the end of round 12, the nationwide price per MHz-PoP across the category blocks was $0.057878, according to Javid’s tracking data. His interactive website also denoted a “fully-loaded” price, which includes an estimated $9.7 billion in accelerated clearing payments and $3.3 billion in relocation costs to move incumbent satellite users out of the band outside of the auction, of $0.209746.

Analysts have previously estimated C-band licenses could go between $0.20-$0.50 per MHz Pop.

RELATED: Verizon to go big in C-band auction: analysts

The FCC’s Auction 107 offers 280-megahertz between 3.7-3.98 GHz, with 5,684 licenses available. There were only 50 unsold license blocks as of Friday afternoon.

Licensed by partial economic areas (PEAs), New York was still getting the most attention after bidding concluded the first week – with aggregate demand of 53 outpaced supply of 14 by 39 after the auction’s first week.

Rounding out the top three PEAs with the largest demand above supply at the end of round 12 were Kanab, Utah, and Chicago. Those were followed by four PEAs all with excess demand of 29, including Los Angeles and San Francisco in California, Albuquerque, New Mexico, and Phoenix, Arizona.

Licenses covering New York had posted prices above $43 million at the close of bidding Friday, while Los Angeles was listed around $33.2 million. That dropped to around $16 million and $15.5 million for Chicago and San Francisco PEAs, respectively.   

Javid said it will be interesting to see how demand unfolds for category A blocks in the largest markets. 

Category A blocks include the first 100-meghertz tranche of spectrum in 46 of the top 50 markets that must be cleared by incumbent satellite operators by December 2021 if they want to receive the full amount of accelerated clearing payments.

“So far we have not yet seen a huge outflow of bidders from these blocks despite my ‘fully-loaded’ estimates” that already exceeded $0.41 per MHz-POP after Round 13. He noted the auction still has nearly 20 blocks requested for A blocks in the largest markets, even though supply sits at just 5.

“I am guessing that in addition to Verizon and AT&T bidding for these blocks, T-Mobile is also bidding to ensure that prices continue to go up for these blocks,” Javid added.

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And because of the formula set up by the FCC, it’s not only the clock price for the blocks that competition will drive up, according to Javid, but also their share of the second accelerated clearing payment to satellite incumbents that’s estimated at $7.3 billion.

“A double-whammy for the eventual winners of these A blocks,” he said.

Before the C-band auction started on December 8, MoffettNathanson stressed how vital the mid-band frequencies are for carriers, saying Auction 107 “opens what may be the most important wireless auction of our time.”

“Who ‘wins’ the C-Band auction will shape the competitive dynamics of 5G for a decade,” wrote MoffettNathanson’s Craig Moffett.