- The One Big Beautiful Bill Act suggests the spectrum proposals could net $85 billion for the U.S. Treasury
- Telecom operators may overpay for new spectrum assets that prove to be less valuable than anticipated
- Telecom investors should be asking executives some hard questions about the business case for such massive capital expenditures
The One Big Beautiful Bill Act (OBBBA) passed Congress and was signed into law on July 4, 2025. The spectrum auction section of the OBBBA assumes that the FCC will be able to generate huge sums from licensing more frequencies for high power 5G and future 6G mobile use, over the next decade.
But while the telecoms operators and CTIA seem broadly pleased with the final legislation – and indeed have been promoting specific bands they would like to obtain – their investors should be asking executives some hard questions about the business case for such massive capital expenditures.
The bill suggests the spectrum proposals could net $85 billion for the U.S. Treasury, based on auctioning of 800MHz of spectrum currently used by both federal and non-federal users. But importantly, these cited auction revenue estimates are net of any relocation costs to clear incumbent users from those bands. This would mean that gross auction payments from mobile carriers are expected to be substantially in excess of this amount in order to meet necessary relocation and clearing costs.
One Wall Street analyst projected carriers could spend more than $200 billion on spectrum auctions by year-end 2028. And whatever the final auction cost, there would then be further added equipment and construction capex costs, to actually build out coverage in these new frequencies.
But it is far from clear what incremental revenues could generate positive returns on these new carrier investments. There is flattening demand growth for mobile broadband services, and natural constraints on fixed-wireless access expansion. Other proposed new 5G/6G services, such as connections for augmented-reality headsets or autonomous vehicles, are either completely speculative or do not necessarily need more high-powered exclusive spectrum anyway.
Something doesn’t stack up. Investors should re-assess executives’ underlying assumptions about demand for high-powered exclusive spectrum and deployment costs, in the context of a regulatory focus on spectrum auctions for revenue maximization. Does this suggest good value for network operators, their investors, and their consumers – or does it give grounds for concern? Could an overflowing spectrum pipeline cause a damaging flood?
Some factors to consider:
- Management claims they already have enough spectrum – Executives from the major wireless carriers are on record saying that they have plenty of spectrum available to meet foreseeable demand growth. Verizon’s CEO, for instance, has said, "There is multi, multi, multi-years left on the C-band…I don't know which number I'm going to put, but it's years and years and years”. How much money are they proposing to spend on new frequencies they don’t really need?
- Physics and economics mean higher-band spectrum has less utility and value – Frequencies above 4GHz can potentially deliver high capacity for mobile services, yet fade within a few hundred meters and struggle to reach users indoors. They make economic sense only in venues with dedicated local wireless systems, downtown blocks and private-campus networks. Vast rural licenses could lie dormant forever. Higher bands generally mean higher power consumption, too.
- Under-used spectrum is plentiful – Drive-tests, crowdsourcing and RF-mapping satellites regularly show national carriers lighting up only fractions of their rural spectrum holdings. In cities, millimeter-wave channels mostly sit dark, despite new equipment offering markedly improved performance over first-generation gear. Investors should be concerned at the notion of spending billions for more spectrum, before existing assets are “sweated."
- Efficiency gains will outrun fresh spectrum – Networks are continually improving their efficiency, with a solid roadmap of future innovations and enhancements. Between 2015-2024, U.S. operators’ networks increased achievable capacity from each Hz of spectrum roughly six-fold. Future innovations, such as various AI radio-network techniques, promise another 30-60% head-room in the next few years, and much more with 6G standards in the 2030s. Investors should ask if efficiency gains may be available at a fraction of the auction price and substantial costs of deploying new spectrum.
- Utilization transparency kills the premium for spectrum scarcity – Various start-ups, such as Aurora Insight (acquired by Maxar) and Hawkeye 360, monitor band-by-band spectrum occupancy. While the focus is currently on intelligence and military use-cases, it is notable that SpaceX recently measured EchoStar’s spectrum from satellite, as part of its argument that the FCC should reconsider its license. Hard data punctures the myth of widespread network congestion, undercutting the “just-in-case” rationale for hoarding licences – and thus, perhaps their value in secondary market sales.
- Rising regulatory risk on spectrum warehousing – The FCC’s investigation of EchoStar for missed build-out milestones - and the implied possibility of revocation - sets a dangerous precedent. The widely discussed threats to Citizens Broadband Radio Service (CBRS) PAL licenses further raises the specter of licenses being clawed back. Several other countries are creating use-it-or-lose-it (or -lease-it) rules. That may turn operators banked spectrum from a safe store of value and possible appreciating asset into a source of contingent risk that investors must discount.
- The demand curve has flattened – Mobile broadband data traffic is now only growing at single-digit pace in most developed countries, including the U.S. In some markets such as Netherlands, there have even been absolute falls in consumption. Easier and more reliable offload to Wi-Fi, as well as more efficient video compression techniques, suggests less network congestion than many predicted only a couple of years ago. Investors should consider 5G supply growing faster than demand – which does not inspire confidence in pricing power or profitability.
- Equipment costs and availability could be an obstacle – Auctioning a new spectrum band does not translate directly to deployment and revenue-generating services for network operators. There needs to be an ecosystem of suitable network equipment and end-user devices such as smartphones. New and unusual bands may mean slow availability, and higher costs if those bands lack global scale. This further harms the business case for new spectrum auctions.
Investors need to be concerned
In summary, investors need to be concerned that the OBBBA aims to extract huge sums from the mobile industry in spectrum auctions, despite a lack of evidence of future return. Telecom operators may overpay for new spectrum assets that prove to be less valuable than anticipated.
Investors should reward companies whose executives focus on stretching existing spectrum assets via technology upgrades, and offer realistic demand forecasts and address congestion by selective local licences or partnership arrangements. They should be wary of those who intend to repeat the debt-fueled spectrum land-grab of the past. Indeed, they should also revisit valuations of existing spectrum holdings in the light of multiple ongoing changes in market and regulatory spheres.
The industry should be focused on a “spectrum sprinkler”, not a pipeline. Spectrum is needed in the right places, at the right times, in the right quantities to match supply and demand. Investors and others should rethink the risks of overpaying to refill a brimming tank.
Dean Bubbly is the Founder of Disruptive Analysis. He is one of the leading analysts covering 5G, 6G, Wi-Fi, telco business models & regulation, the future of voice/video, and the emergence of technologies such as quantum networking and AI.
Op-eds from industry experts, analysts or our editorial staff are opinion pieces that do not represent the opinions of Fierce Network.