Rosenworcel Faces Pressure to Schedule 2.5 GHz Auction

The FCC is under growing pressure to set a starting date for the 2.5 GHz auction, as the 3.45 GHz auction draws to a close. Analysts said questions remain about who will bid for the spectrum, even given the relatively strong performance of the 3.45 auction, the third-highest in FCC history. Chairwoman Jessica Rosenworcel says the FCC is likely to move forward after the current auction, which is in its final stage (see 2111180047). The agency didn’t comment Friday.

Former Commissioners Mignon Clyburn and Robert McDowell told us they hope Rosenworcel will move on final rules and schedule an auction as soon as possible. T-Mobile has continued to advocate for quick action. “Time is not on our side,” Clyburn said: “We need to designate a start date for the 2.5 GHz auction; otherwise, America’s spectrum pipeline could very well run dry. We can’t afford to let that happen. This issue is one on which all four commissioners could agree.”

McDowell said, "With the C band and 3.1-3.45 GHz sidelined for an indefinite period, and given that the FCC still has not named a start date for the 2.5 GHz auction, we are facing a serious disruption in the 5G supply chain at a crucial inflection point in the arc of the 5G build out story." The commission “could fix that easily and immediately with a 4-0 vote to tell potential bidders when the 2.5 GHz auction is going to start.” The auction could start in Q3, “which would allow plenty of time for preparation of all related loose ends,” he said. Both former commissioners do work for T-Mobile.

One loose end is that the FCC is still processing tribal applications for broadband use of the band. T-Mobile representatives said the FCC can move forward anyway, in calls with aides to the four commissioners and Wireless Bureau and Office of Economics and Analytics staff, per a recent filing in docket 18-120.

“T-Mobile appreciates the Commission’s efforts in processing applications for Tribal areas and recognizes that some of those applications remain pending, but the Commission can still schedule a date that the auction of the 2.5 GHz spectrum will begin and adopt auction procedures,” the carrier said: “As Chairwoman Rosenworcel has noted, less than 50 applications will likely remain pending by the end of this year, compared to the over 8,000 licenses that will be auctioned.” T-Mobile noted it generally takes several months between release of auction rules and the start of an auction, giving the FCC time to finalize work on the tribal applications.

The outlook for the auction remains unclear.

If Dish Network “participated in a major way in the 3.45 GHz auction, as many now expect, the universe of likely large bidders beyond T-Mobile for the 2.5 GHz auction has likely shrunk,” said Sasha Javid, BitPath chief operating officer. Verizon and AT&T are unlikely to bid “other than marginally to make sure T-Mobile does not get licenses too cheaply,” he said. The county-sized overlay licenses “that will be made available in this auction are largely rural and have many challenges that will make it hard for anyone other than T-Mobile to use this spectrum as a foundational 5G band,” Javid said.

“There certainly does seem to be an insatiable appetite for mid-band spectrum,” emailed Moffett Nathanson’s Craig Moffett: “There isn’t an inexhaustible amount of money. At some point, the reality of over-stretched balance sheets has to catch up to the demand for spectrum.”

Every flagship phone now supports the 2.5 GHz band, said Recon Analytics’ Roger Entner. That means “the business case” for other carriers to buy the spectrum “has become a realistic option.”

Major providers other than T-Mobile are unlikely to participate “because the licenses are so fragmented,” said spectrum consultant Tim Farrar. Dish may want to bid to “mess up T-Mobile's strategy” but probably doesn’t have the cash to do that if it spent an expected $4 billion-6 billion in the 3.45 GHz auction, he said. Farrar also doesn’t consider 3.45 a success, noting it was “modestly below” consensus estimates.