Spectrum matters: mid-band on the block in the US, auction delay in Europe

• The value of mid-band spectrum is now soaring as the US realises it will have to scramble to ‘catch up’
• The satellite spectrum holders have been asked to hand over their spectrum for the greater good
• But will Pai’s approach lead to court challenges?

When the share price of US satellite operator Intelsat tanked on the news that Pai’s FCC had decided to publicly auction off the so-called C-band spectrum used by satellites, it should tell you much about the satellite business and quite a bit about the state of 5G in the US. 

US C-band describes 500 MHz of spectrum at 3.7-4.2 GHz which is used by satellites for cable TV programmes. Pai’s plan is to auction 280 MHz to 5G operators while leaving 200 MHz for TV-to-consumer programming. 

As things stood before this plan, the satellite operators stood to gain by essentially flogging off some of their valuable spectrum to spectrum-hungry 5G operators. Intelsat in particular is ‘highly leveraged’ and could see a chance to ‘de-leverage’ while still retaining enough spectrum to carry on with the existing business. 

After careful consideration Pai claims he has decided to go with a public auction rather than have the existing satellite holders of the spectrum sell it off to 5G operators for maximum gain. Here he explains his move by ‘official tweet’. 

The way forward with C-band spectrum, he tweets, is to:

1. Free up significant spectrum for 5G

2. Do it quickly (thus responding to the perennial ‘race-to-5G clamour’)

3. Generate revenue for the federal government

4. Ensure continued delivery of services currently using the C-band

“After much deliberation and a thorough review of the extensive record, I've concluded that the best way to advance these principles is through a public auction of 280 megahertz of the C-band conducted by the @FCC's excellent staff.” Pai chirped. 

The auction is expected to happen next year.

Making available some extra ‘mid-band’ spectrum is now seen as a critical course correction for US 5G policy, since the so-called ‘3.x GHz’ spectrum sits just above the ‘2.x’ spectrum currently used for 4G. Therefore it’s a good next step for cellular service, granting extra speed and capacity without completely poleaxing the signal’s ability to travel a reasonable distance and then penetrate buildings when it gets there. 

The high frequency spectrum used in the US - especially by Verizon- is unable to do this. The other three have some mid-range spectrum now (including their 4G holdings of course) but not enough. The low frequency spectrum - also released for 5G there - can go the distance (and is therefore useful in rural settings) but isn’t as speedy. 

And 3.x GHz, as heavily deployed in much of the rest of the world, has the advantage of being able to be deployed on the 4G mast grid (no need to build out thousands of extra short range, high speed base stations) and in many cases (depending on the vendor) can come as a reasonably easy upgrade to 4G, using the same antennas and anchored by the existing 4G network. 

Speedy build-outs

As such it has enabled countries - most notably Switzerland - to speedily build out non-standalone 5G and substantially up the average speed of their 4G/5G networks.

So the cry went up for some mid-band or else the ‘race’ to 5G would be comprehensively lost. C-band was identified, but how to get rid of the satellite companies squatting on it? 

The satellite companies thought the best way was for them to sell their spectrum off to the 5G operators for the best price they could get. This, they claimed, might be expensive but it would get the spectrum changing hands faster and meet the US race to 5G objectives. 

But sensing that someone was getting a free lunch with this approach the US government wanted to get its customary cut of cellular spectrum revenue and made its thoughts known.

So Pai’s solution, as tweeted above, is an attempt to find a middle way to keep at least the government (which gets a slice) and the operators (who will be able to buy up spectrum in the normal way) on board, leaving the satellite operators potentially out of pocket, hence the slide in share value for Intelsat.

But there’s still a small problem. It’s at least possible that the satellite operators will dig in with a court challenge if they judge their compensation won’t be enough and, judging by Intelsat’s share drop, it may not be. 

C-band spectrum for 5G isn’t on the auction block just yet. 

French mid-band delayed

Meanwhile in France, Reuters reports that there will likely be a delay to its upcoming 5G spectrum auction until at least March 2020, instead of the end of this year. 

In fact France appears to have been relatively unmoved by the 5G race. It’s last spectrum auction was way back in 2015. Under its current schedule the next auction will involve spectrum in the 3.4-3.8 GHz range. 

Reuters reports that the delay to March is the result of disagreement between the French finance ministry and the telecoms authority, Arcep, over the reserve price for the spectrum blocks. Once that’s out of the way the auction will go ahead. No problem.