Auction of C-Band Spectrum for 5G: How Much?

There is a long history of squabbles about spectrum between the mobile and satellite industries, the latest turn being proposals to re-auction C-band spectrum that once was a mainstay of the satellite video delivery business but which now even the satellite industry agrees is an asset better monetized.

U.S. C-band revenues are dropping about six percent per year through 2027, predicts Northern Sky Research. It is worth noting also that just two companies--SES and Intelsat--use 90 percent of those revenues, largely to support cable TV operators downlinking video to their headends.

However, with spectrum rights expected to expire in the mid-2020s in any case, “revenues associated with C-band spectrum do not make economic sense (-6% CAGR in 10 years),” say researchers at Northern Sky Research.

source: Northern Sky Research

The U.S. C-band spectrum auction--like other similar auctions globally--potentially represents up to 500 MHz of licensed mid-band spectrum between 3.45 GHz and 4.2 GHz and is fairly important, for a number of reasons.

Many believe mid-band spectrum is the ideal new spectrum to support 5G networks over distance, even if millimeter wave assets are seen as useful for small cell deployments where capacity is the big problem to be solved.  

The satellite industry, on the other hand, could monetize an asset that has less relevance than it used to. Virtually everybody might agree that the amount of spectrum put up for auction has huge implications.

Mobile interests auctioning more spectrum; satellite interests favor auction of less spectrum. The satellite industry’s call for release of 200 MHz is seen by mobile interests as too little, the preferred auction amounts of 400 MHz of capacity designed to ensure that all major national mobile providers get 100 MHz of spectrum each.

In other countries, C-band spectrum auctions tend towards the higher figures. China will clear 500 MHz of mid-band spectrum, while Japan aims to release 500 MHz of spectrum by early 2019. Germany also has plans to clear 400 MHz early in 2019.

So it is not surprising that CTIA believes the economic impact of releasing the larger amount of spectrum is substantial.

“If one really wants to know what the optimal amount of spectrum to be reallocated is, without any complicated analysis or even a single assumption, then one should just open up the whole 500MHz for auction and let the market decide,” argues financial analyst Paul Litchfield.