Millimeter wave spectrum prices differ markedly from low-band or mid-band spectrum, partly because of the propagation characteristics and partly because capacity per MegaHertz is so different from either low-band or mid-band spectrum.
Consider mid-band prices. Where recent U.S. C-band spectrum prices had an average national price of $0.94 per MHz-POP, millimeter wave prices in various countries have been in the range of cents per MHz-POP.
After expected clearing costs, the U.S. C-band average price might reach $1.09 per MHz-POP.
C-band prices in other auctions also have been generally higher than for millimeter wave assets.
Signal propagation differences--millimeter wave signals do not propagate as well as low-band or mid-band signals, requiring use of small cells and therefore implying higher infrastructure costs. To make the millimeter wave business model work, operators must pay less for the spectrum to offset the higher infrastructure costs.
The other issue is simply the amount of capacity that millimeter wave represents, essentially representing a volume buy, compared to low-band and mid-band assets. Where low-band spectrum might have represented a total capacity of just 10s of MegaHertz in any single auction, millimeter wave allocations often represent hundreds of MegaHertz to a GigaHertz or more of capacity.
The point is that licensed millimeter wave asset pricing is on a different scale than low-band or mid-band spectrum.
That is true despite the fact that millimeter wave capacity is so much higher than low-band or mid-band frequencies. The basic concept is that the higher the frequency, the higher the bandwidth.
The bandwidth of a signal is the difference between the upper and lower frequencies. And that is where frequency really matters. A 20-MHz channel at any frequency is “the same” in terms of channel size.
But potential bandwidth varies by frequency, within any channel, simply because higher-frequency signals have more oscillations per unit of time than low-frequency signals, and hence more opportunities to code information in a unit of time.
Assume the simplest case of coding information where each oscillation of a wave includes a +1 and a -1 state, the +1 state corresponding to a “one” and the -1 state corresponding to “zero.”
Low-frequency waves (low-band mobile signals, for example) simply have fewer +1 to -1 transitions in any unit of time. Millimeter waves, with much-higher oscillation rates, have many more +1 to -1 transitions in any unit of time. And that means more symbols can be coded in any unit of time, which means higher symbol transmission rates, and therefore higher bandwidth.
Standards also make a difference, as 5G millimeter wave channels are potentially larger. Channels in 4G are set at a maximum of 20 MHz. LTE-A allows channels of 100 MHz. Compare that to 5G channels which can range up to 500 MHz. The wider the channel, the more bandwidth per channel.
Modulation also matters. More-complex modulation systems are capable of coding multiple bits per Hertz, rather than a single bit per Hertz.
The recent U.S. C-band auction drew record bid amounts. But that is partly because it also represented a huge block of spectrum, roughly four times the amount of spectrum offered in the crucial AWS-3 auction that was a mainstay for U.S. 4G, as well as four times the amount of capacity made available in the recent 2020 Citizens Broadband Radio Service auction, both of which were on a new scale for mobile spectrum auctions.
Going forward to a future where future mobile platforms will rely on new millimeter wave spectrum, we will have to adjust to pricing metrics that are different quantitatively and qualitatively from low-band and mid-band economics.
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