FCC’s 2.5 GHz auction ends, raising just $428M in proceeds

The FCC’s Auction 108, which made 8,017 county-sized licenses of Educational Broadband Services (EBS) in the 2.5 GHz spectrum band available to bidders, has ended after 73 rounds of bidding. The auction raised $428 million in proceeds.

While $428 million may seem like a significant chunk of change, it’s nothing compared the C-band auction in 2021 that delivered a record-breaking $81.2 billion in bids. However, the 2.5 GHz auction was never expected to raise a bunch of money and instead was viewed by many in the industry as an opportunity to close gaps in the spectrum where some of the licenses were not being used.

The FCC will provide details about the bidders and their licenses in the next few business days.

Only 82 bidders qualified to participate in the auction and T-Mobile is expected to win the majority of the licenses because it wants to fill in holes in its nationwide mid-band spectrum. However, other qualified bidders included AT&T, Verizon (under the name Cellco Partnership) and Dish Network (under the name Carbonate Wireless).

At the close of the auction, 7,872 licenses were sold and 145 licenses were unsold. Sasha Javid, COO of BitPath and a former chief data officer with the FCC, said that it’s not uncommon to have unsold licenses at the end of an auction but what makes the 2.5 GHz auction unique is that some of those unsold licenses are for very large counties. For example, the license for Cook County, Illinois, which includes Chicago, and the license for Harris County, Texas, which includes Houston, both remained unsold at the end of the auction.

Javid said that he believes this happened because the bidders determined that these licenses were simply too encumbered by existing EBS licenses to make bidding on them worthwhile. “It is also likely true that no nationwide bidders other than T-Mobile were participating in any meaningful way in this auction,” he added.

Licenses that are too encumbered means that winning bidders may not get full access to the license because there are incumbents that still have a right to operate in the band. If a company bids on these licenses and wins them then they have to either avoid and protect incumbents in the spectrum or negotiate to have them removed from the band. That is why Auction 108 is sometimes referred to as a “white space” auction.

T-Mobile already owns or leases much of the 2.5 GHz spectrum in this U.S., and its existing licenses were obtained when the company purchased Sprint in 2020. Some of T-Mobile’s 2.5 GHz spectrum licenses were the result of long-term lease deals with incumbent EBS licensees. The FCC did not require T-Mobile to reveal the terms of its existing 2.5 GHz lease deals so the company had a lot more information about the spectrum than the other bidders.