The FCC’s CBRS auction results are in, showing an upswing of diverse interest in mid-band spectrum across industries and geographies. The national wireless operators Verizon and DISH dominated the auction, but cable and wireline telcos also showed healthy demand. However, this auction drew the most interest from the start with 271 qualified bidders (versus the previous five auctions with 23 to 70 participants) and saw 228 entities walk away with licenses.
Verizon’s interest in the spectrum is apparent. Among the national wireless carriers, it has by far the lowest spectrum position relative to the size of its subscriber base. Further, the carrier’s spectrum is concentrated in low-band (useful for signal coverage) and high-band (useful for high throughput over short distances). Still, it has little mid-band, which is a compromise of the two. Verizon is stretched thin in densely populated metropolitan areas. As shown in Figure 1 below, these metro acres were its focus in this auction. Verizon’s newly acquired CBRS licenses will help support its network until it can acquire C-band spectrum in the upcoming C-band auction, scheduled for December. Ultimately, Verizon spent $1.9 billion (41% of the total $4.58 billion raised), acquiring an average of 38.7 MHz across 144 counties.
Figure 1: Verizon’s CBRS Licenses
DISH is in a different position than Verizon. It must begin to build a network of its own because the MVNO it established with T-Mobile when it acquired Sprint’s pre-paid business earlier this year lapses in less than seven years. DISH bolstered its already substantial spectrum holdings in the CBRS auction, gaining a broad swath of licenses across the U.S., spending $913 million on an average of 30.2 MHz across 1,819 counties, as shown in Figure 2 below.
Figure 2: DISH’s BRS licenses
Cable Companies Make a Statement
The largest cable companies (Comcast, Charter, Cox) have made entry into wireless via MVNO deals with Verizon and T-Mobile. They will find CBRS useful as they take steps to construct their own facilities to lower cost in the near-term and support independent operations in the long-term. The CBRS spectrum is also valuable for providing fixed wireless services that allow regional cable operators to extend their service areas to adjacent geographies that would otherwise be uneconomic to serve. Cable companies focused their bidding on counties within their current service areas, as shown in Figures 3 and 4 below.
Figure 3: Comcast CBRS Licenses
Figure 4: Cox Communications CBRS Licenses
New Entrants Abound
Among the new entrants to the spectrum, marketplace are entities pursuing new use-cases, such as IoT monitoring and control, and private networks that are often hyper-local. The country’s least populous county, Loving, TX, located in the gas-rich western Permian Basin, saw unusual demand from oil and gas exploration and production companies Occidental Petroleum and EOG Resources. This county, which is often overlooked by wireless carriers, received the highest value of any county on a $/MHz/Pop basis.
Also prominent were electric utilities, as shown in Figure 5 below, which are developing private LTE networks that provide tailored connectivity and security. Eleven electric utilities acquired licenses in the auction and were amongst the biggest spenders. Other electric utilities may have participated using bidding entities with names that differed from their common name.
Figure 5: Eleven Electric Utilities Acquired CBRS Spectrum
CBRS is also useful for wireline carriers who also see an opportunity to foreclose a competitive threat from WISPs seeking to compete for broadband subscribers in their territories. We list the 30 largest CBRS bidders, by total spending, in Figure 6 below.
Figure 6: Top-30 CBRS Bidders by Total Spending
Wireless Innovation Continues
The CBRS auction results provide evidence of a broad upswing of interest in new and varied use cases for wireless spectrum. Some of these new uses may fail, while others will result in valuable innovations. The band’s physical properties provide a compromise between coverage and capacity well suited for local private networking in industrial applications, as well as consumer 5G wireless. The growth of local use cases for the mid-band spectrum has supported higher prices from a more diverse set of bidders in areas that historically did not support high levels of investment from wireless carriers owing to low population density. (For more on the departure from typical geographic variability of CBRS pricing, see our blog post from August 23rd.) This pattern of broad geographic demand bodes well for a robust C-band auction. Currently, the consensus estimate of gross proceeds is in the range of $15 to $32 billion. However, greater competition and higher prices may stretch the balance sheet of the national wireless carriers whose, by and large, are approaching debt leverage limits..
 Morgan Stanley estimates, June 3, 2020