FCC hands T-Mobile the 2.5 GHz auction it always wanted

Yesterday, the Federal Communications Commission (FCC) announced that July 29, 2022, will be the start of bidding in Auction 108 for 2.5 GHz licenses. This auction will be for “white-spaces” of the 2.5 GHz band where no one owns the spectrum.

T-Mobile is particularly interested in Auction 108 because it already owns or leases much of the 2.5 GHz spectrum across the United States, and it wants to fill in the gaps in its coverage. The auction will offer about 8,000 new county-based overlay licenses.

“T-Mobile is likely to be the major winner, as the auction will allow the company to fix the ‘Swiss Cheese’ problem its 2.5 GHz network grid is known to suffer from,” wrote New Street Research policy analyst Blair Levin in an investor note today.

The FCC has decided to grant T-Mobile the things it wanted for this auction.

First, the FCC is expediting the auction. Even though Verizon and AT&T have complained they can’t make informed bidding decisions unless they know some of the terms of T-Mobile’s existing 2.5 GHz leases with schools across the country, the FCC is moving forward quickly without making any public ruling on Verizon’s and AT&T’s request for lease information.

Secondly, the FCC announced that Auction 108 will use an “ascending clock” auction format. This is the type of auction that T-Mobile wanted.

Some potential bidders had wanted a single, sealed-bid auction because T-Mobile has so much more information about the spectrum. But the ascending clock auction will allow T-Mobile to more precisely target its bids.

Based on the FCC’s decision to expedite the auction, to use rules for the auction that T-Mobile favors, and to not require T-Mobile to reveal the terms of its leases, it appears the FCC has determined it’s in the national best interest for T-Mobile to have a seamless mid-band spectrum layer across the country.

Fierce has previously reached out the FCC for comment on this issue, but the agency has declined.

“Today we are readying the launch of the next 5G mid-band spectrum auction, following close on the heels of the recent, successful 3.45 GHz auction,” said FCC Chairwoman Jessica Rosenworcel, in a statement. “The 2.5 GHz band auction can help deliver on the promise of 5G services and ensure that it reaches as many people as possible. The 2.5 GHz band spectrum provides an opportunity to fill in some of the critical 5G gaps in rural America.”

She added that the announcement of the auction follows substantial public comment on various process proposals.

Short-form applications for the auction are due by May 10. Shortly after, the FCC will publish the list of applicants.

To be fair to the FCC, the 2.5 GHz overlay auction has been a thorny issue to resolve.

When 2.5 GHz spectrum was first distributed to educational institutions in the 1980s, the licenses were granted in 35-mile-radius circles. Unfortunately, the circles left oddly-shaped white spaces where no one owns the spectrum. This is the spectrum that will be available via Auction 108.

New mapping tool

In its announcement yesterday the FCC also said it would be using a new mapping tool for Auction 108. The FCC’s Wireless Telecommunications Bureau and the Office of Economics and Analytics said its innovative new mapping tool can be used to help assess whether and to what extent there is unassigned 2.5 GHz spectrum available in any county nationwide. The mapping tool, as well as instructions for its use, can be found under the Education tab on the Auction 108 website.

Conflicts with schools

Not only has the FCC had to contend with a messy mapping problem of circular boundaries and white spaces, but conflict has arisen between T-Mobile and the educational institutions who still own 2.5 GHz licenses.

After these licenses were granted to educational institutions decades ago, many of the schools didn’t use their spectrum, but instead struck deals to lease the spectrum to Sprint. In 2020, T-Mobile bought Sprint and became the holder of these leases. The spectrum is extremely valuable to T-Mobile for its 5G services, and that's why the carrier wants to fill in the gaps in its coverage.

However, recently some spectrum brokers have thrown T-Mobile a curve-ball. They have approached the educational institutions who own 2.5 GHz spectrum and offered to purchase the licenses. This could drive up the value of the licenses, which T-Mobile presumably would like to purchase at some point in the future.

At least one school, Christian College of Georgia, has filed proceedings with the FCC, asking the agency for clarification about its lease rights.