FCC wraps up mid-band auction with bidding at $22bn

After a whopping 151 rounds of bidding, the US Federal Communications Commission has brought the curtain down on its latest 5G spectrum sale.

The total raised from the clock phase of Auction 110 is $21.89 billion. Not record-breaking, but a considerable chunk of change nonetheless, and comfortably more than the $14.77 billion reserve set by the FCC. This figure will rise a little during the upcoming assignment phase, when participants vie for the specific frequencies they want. Only once that is concluded will the names of – and the amount of cash spent by – individual bidders come to light.

There’s nothing wrong with a bit of speculation though, and the generally-accepted wisdom is that AT&T will emerge as one of the biggest spenders, given it didn’t acquire as much bandwidth as it would have liked in the FCC’s last mid-band auction, the C-band auction.

In this auction, 100 MHz of spectrum in the 3.45 GHz band was up for grabs, and only 19 of the 4060 licence areas went unsold.

As expected, that $21.89 billion is a lot less than the eye-watering $81 billion raised in the C-band auction.This is understandable given there was more than double the amount of spectrum going under the hammer in the latter. It was also the US’s first mid-band 5G auction, meaning there was considerable pent-up demand. What’s more, the C-band auction only concluded this January, so US telcos will have needed to work just that little bit harder to persuade the bean-counters, lenders and shareholders to support them shelling out a few more billion dollars on frequencies.

In addition, Auction 110 included a 40 MHz spectrum cap, as well as Department of Defence (DoD) coordination requirements, which are also likely to have caused a bit of price suppression.

As spectrum analyst and BitPath COO Sasha Javid pointed out on his Website on Wednesday, the average price per MHz of spectrum per head of population (price/MHz/pop) in this latest auction comes in at $0.67 based on 2020 census data, considerably less than the $0.94 in the C-band auction.

And of course it is the population that will ultimately bear the cost of these high-spending telcos. Given the relative lack of competition in the US compared to other markets, operators should have little trouble recouping their outlay through ‘appropriately-priced’ 5G service plans.