Industry Voices—Madden: Who holds the 5G spectrum in major U.S. cities?

By now, everyone has heard the news about Verizon and AT&T buying up struggling companies with millimeter-wave spectrum licenses. Verizon is locking up hundreds of MHz-POPs through its deals with XO Communications and Straight Path. 

What’s next? Now that these deals are set, the remaining license pool is pretty shallow. XO Communications and Straight Path together controlled 235 LMDS licenses, out of 766 total active LMDS licenses today. T-Mobile has 36, Sprint has 41, and Vivint owns 161. After these heavyweights, the other 293 licenses are held by some 40 small companies.

AT&T has taken an interesting approach, buying FiberTower out of bankruptcy to get their hands on licenses in the 24 and 39 GHz bands. These are not LMDS bands; in this case the FiberTower licenses were originally intended for microwave backhaul links. Our checks indicate that most FiberTower licenses cover 120 MHz contiguous blocks as well as some odd 40 MHz blocks. This means that 5G services in the FiberTower spectrum will be possible but limited to a single 100 MHz channel. These licenses are not as valuable as the wider Verizon licenses.

Now the spectrum bidding wars will change. Instead of chasing nationwide spectrum, each mobile operator will be looking for ways to plug the holes in their 5G spectrum. At this stage, the operators are likely to be concentrating on key urban markets: New York, Los Angeles, Chicago. That’s because 5G capacity will be needed in big cities but not in the wide open spaces of the Midwest.

If you’re following my logic so far, the obvious next question is: Who holds the spectrum in major U.S. cities? Verizon has a good position, but for AT&T and T-Mobile, it’s really slim pickings. In the top three US cities (NY, LA, Chicago), only five little companies have interesting license holdings:

Geneva Communications LLC holds one license in Chicago for the LMDS A-Block covering over 850 MHz of spectrum.

Microwave Satellite Technologies Inc. holds an expired license in New York. If the FCC terminates this license, it should come around for auction in the 2020 time frame. A big operator can swoop in to acquire this asset before the license gets revoked, as the new FCC seems to prefer a quicker process.

NextWeb/TPX and Skyriver Communications hold LMDS licenses in Los Angeles and appear to have active deployments for microwave backhaul in LA.

Towerstream Corp. holds leases on LMDS licenses in Chicago and Los Angeles, as well as an expired (but not terminated) license in New York. This is the only company left with big-city LMDS licenses that is publicly traded, and their lack of profits in the backhaul market has reduced them to penny-stock status.

Big operators like AT&T and T-Mobile have some spectrum, but the profile is not a good match for 5G so far. Instead of focusing on total MHz-POPs nationwide, they should be more focused on deep spectrum in major cities. It’s time for AT&T and T-Mobile to go shopping in this “garage sale” of LMDS licenses.

Joe Madden is principal analyst at Mobile Experts LLC, a network of market and technology experts that analyze wireless markets. The team provides detailed research on Small Cell, Base Station, Carrier Wi-Fi, and IoT markets. Mr. Madden currently focuses on trends in 5G, IoT, and Enterprise markets for wireless infrastructure. Over 26 years in mobile communications, he accurately predicted the rise of Digital Predistortion, Remote Radio Heads, Small Cells, and the rise of a Mobile IT market. He validates his ideas with mobile and cable operators, as well as semiconductor suppliers, to find the match between business models and technology. Mr. Madden holds a Physics degree from UCLA. Despite learning about economics at Stanford, he still obeys the laws of physics.