Today’s blog talks about a practice that doesn’t get discussed very often, which is the warehousing of spectrum. Warehousing is the practice where carriers sit on spectrum without using it or make only a minimal technical deployment to protect a spectrum license without actually using the spectrum as intended.

Warehousing is most often done because FCC rules require that spectrum be put into use within a reasonable amount of time after somebody acquires a license. Each band of spectrum has different rules. Some require deployment working links within a few years, while other spectrum bands give license holders up to a decade to use the license.

There are several situations that promote warehousing. The first is spectrum speculators who buy spectrum in the hope of selling it later at a profit. There are a few big examples of the practice. Columbia Capital bought a lot of 600 MHz spectrum in an FCC auction in 2017, purely as a speculative investment. The company profited handsomely a few years later when T-Mobile paid them a premium price for the unused spectrum. NextWave openly purchased huge amounts of PCS spectrum in the 1990s as an investment. The company went bankrupt and then spent years in legal battles with the FCC to retain the spectrum licenses until the company finally was able to sell the spectrum to AT&T, T-Mobile, Verizon, and others.

Buying spectrum as an investment is common in auctions where the FCC sells licenses for smaller geographic areas. I recall the LMDS and MMDS auctions in the late 1990s, when a large percentage of spectrum went to investors who had been convinced that the licenses were great investments. These spectrum bands required that an active link be established in a market to retain the licenses. I remember fielding a lot of requests from license holders trying to preserve their speculative investments.

A more common use of warehousing is with the big carriers that buy spectrum because they think it might be useful. For example, most cellular companies purchased licenses for millimeter wave spectrum when there was a lot of talk that the spectrum would be a key component of 5G and the ability to provide gigabit speeds. T-Mobile alone invested over $1 billion in millimeter wave licenses. It turned out that the spectrum didn’t play as well as hoped in the outdoor environment, but most carriers who bought the spectrum are still sitting on it, hoping that research into 6G applications might find a use for it.

Probably the most common use of warehousing spectrum is in rural America. A lot of spectrum is sold in licenses that cover large geographic areas, in some cases nationwide. Carriers buy the spectrum to use in urban areas with no intentions of ever deploying it in rural areas. Unfortunately, most of the big wireless carriers are not interested in the effort involved in sublicensing spectrum to rural users, so the spectrum sits idle.

The use of the term warehousing is practically taboo among the big wireless carriers, and all will deny that they sit on unused spectrum. The industry has spun the story so often that spectrum is for serving customers that they don’t want to go on the record saying they have unused spectrum.

The politics of spectrum includes a tradition of wireless carriers constantly begging for more spectrum. Most wireless experts say that the big three cellular companies have more spectrum today than they need – which is part of the reason they can offer FWA cellular broadband. But the carriers also know that it takes many years to get the FCC to shake loose new spectrum, so they constantly cry poverty today for spectrum they won’t need for another decade.