The auction for 5G spectrum in the US has shattered estimates, passing $76 billion as of Monday.
The Federal Communications Commission (FCC) is holding the auction for mid-band spectrum. The spectrum is especially valuable for wireless companies, as it is seen as the sweet spot for 5G. While low-band offers excellent range and building penetration, its speed is only marginally better than 4G LTE. High-band, also known as mmWave, offers speeds in the gigabits, but is limited by extremely short range and poor penetration. Mid-band spectrum offers speeds in excess of 1 Gbps, while still providing reasonable range and penetration.
Verizon and AT&T are especially in need of mid-band spectrum, as neither company has the enough to bridge the gap between their low and high-band 5G networks. T-Mobile, in contrast, inherited a wealth of mid-band as a result of their merger with Sprint, making the company the one to beat in the 5G market.
As Bloomberg points out, analysts had predicted the auction could go as high as $47 billion, a figure that is now in the distant rear-view. Verizon has been the biggest bidder so far, and will likely continue to dominate the auction. The company cannot afford to walk away without massive gains if it expects to remain competitive.
AT&T’s need is just as dire, but the company doesn’t have the resources to spend as heavily as Verizon. Some experts believe AT&T’s recent efforts to sell DirecTV may be to raise the necessary money to purchase a meaningful share of 5G spectrum.
While T-Mobile is the company that is currently the most spectrum rich, it may want to bolster its holdings even more, especially in cities and heavily populated areas where networks can become bogged down more easily. The company also has an interest in bidding to help drive the price up, ensuring Verizon and AT&T don’t walk away with huge swaths of spectrum for a bargain basement price.
It remains to be seen just how high the bidding will go, but the current price gives a small glimpse into just how committed US wireless carriers are to their 5G rollouts.