The Upcoming AWS Spectrum Auction

Transmitter_tower_in_SpainThe FCC’s auction for new cellular data spectrum will begin on November 13. This is the first big spectrum auction in six years, so it’s worth watching. The spectrum being auctioned is being referred to as AWS or Advanced Wireless Spectrum. There are three separate bands being auctioned that go from 1,695MHz to 1,710MHz, from 1,755MHz to 1,780MHz and from 2,155MHz to 2,180MHz.

The FCC has set aside a reserve big for the auction at $10.5 billion. That means that if they don’t receive bids totaling at least that much in the first round that the FCC has the right to cancel the auction. Assuming that price is met, then the normal FCC bidding process will take place and one would expect the auction to go for a few more rounds.

The AWS spectrum is expected to be used almost entirely for data, and both Verizon and AT&T already own some spectrum that sits next to these new blocks. That is going to make it fairly easy for carriers to incorporate the spectrum into handsets. Further, this same spectrum is used in Europe for wireless data, meaning that there are already a wide array of handsets capable of using the spectrum.

Because it’s high frequency, this spectrum is capable of handling a lot of data. However, like other high frequencies it’s not great at penetrating building walls and other obstacles. Contrast this to the next auction that’s on the horizon. In two years the FCC will be auctioning chunks of the 600 MHz spectrum that is being vacated by television stations. This frequency can penetrate into elevators but doesn’t carry as much data per channel as the higher frequencies.

As you would expect the bulk of the spectrum is going to be auctioned to the largest carriers. It is expected that T-Mobile is going to be aggressive in the auction with AT&T and Verizon also buying a lot of spectrum. Sprint is expected to sit out the auction since they already own a lot of high frequency bandwidth. The wildcard player is going to be Dish Networks which may go after a lot of this spectrum. Dish has announced plans to offer a fixed data product using wireless spectrum that will also be used to deliver a cable TV line-up. This spectrum would give them more bandwidth for that offering.

The AWS spectrum is not immediately available since the Department of Defense and a few other government agencies still occupy some of the spectrum. It is expected that the bulk of the government usage will be gone in about two years, but these kinds of transitions almost invariably take longer than expected. This means that it’s unlikely that the bandwidth will have much of an impact on wireless data speeds until the two to three year time frame.

The spectrum is being auctioned off by market and as you would expect this means a wide variance in the interest by the carriers in any given market. In similar auctions in the past some markets went unclaimed, meaning that nobody was willing to pay the FCC’s minimum bid for the market, and if that happens again you can expect a second auction of the leftover, and certainly rural markets. This auction does have some incentives for small bidders and while the big carriers will grab the vast majority of the spectrum you can expect to see smaller companies going after secondary and rural markets.

The auction is expected to be tactical is that each carrier has holes they are trying to fill in certain markets. And the big carriers are keeping the upcoming 600 MHz auction in mind and may hold off on bidding now in markets where they would rather have that spectrum. This makes the auction a big chess game by market. The funny thing is that the carriers know exactly what each other already owns in terms of spectrum, so they know basically what each other is most interested in. But because there are two auctions close together or very different spectrum, nobody is going to know each other’s strategies until the first round bidding is done. The auction is often finished after the first round for a lot of markets and the following rounds are usually only for the prime markets.

I just looked at the amount of spectrum that cellphone users consume late last week. The current statistics show that the average landline connection is using almost 100 times more aggregate data in a month (download and upload combined) than the average cell phone. With that said, Cisco has predicted that the amount of wireless data usage will triple over the next five years, and many analysts think this is conservative.

It’s obvious that cellphone data is never going to rival landline data usage or even come close. I chuckle whenever I see somebody say that wireless data will win the bandwidth battle. There just is not enough wireless spectrum for that to ever happen. While cellular data usage is now doubling every five years, landline data is doubling every three years and one has to carry that trend out twenty years to see that the average landline home connection might be using nearly a terabit of data each month.

But we like using data on our cellphones. The wireless carriers have trained us to be very cautious in that usage because of the severe data caps and the horrendously high price for exceeding your data cap. But even with those restrictions, the wireless carriers need more spectrum and are expected to make this an interesting auction.

The FCC Grants More Wireless Spectrum

FCC_New_LogoIn several actions on Monday the FCC granted for wireless spectrum for use as WiFi and cellular data.

In the WiFi arena the FCC freed up three new bands of spectrum for use as WiFi. The specific bands that are now available to the public include spectrum between 5470 – 5725 MHz and another band between 5725 – 5850 MHz. These two bits of spectrum were already surrounded by other WiFi spectrum and were referred to in the past as WiFi potholes. This now creates a continuous band between 5150 – 5250 MHz.

The two new bands are together 75 MHz of new WiFi spectrum and begin the process the Commission started in 2010 in the National Broadband Plan Order, when they said that they would find 500 new MHz of public spectrum.

Of course, there are not devices on the market capable of utilizing these two pieces of spectrum immediately, but one would expect that devices shipped fairly soon will have the capacity. Because these two pieces of spectrum were islands within a larger band of WiFi spectrum it will be easier to include them than it was to exclude them. These new pieces of spectrum will make it that much easier to use our insatiable use of WiFi for cellular offload and other mobile computing needs like watching video.

The FCC also announced that there will be an auction for new bandwidth that will be available to cellular carriers for 4G wireless. The three bands exist between 1695 – 1710 MHz, 1755 – 1780 MHz and 2155 – 2180 MHz. The FCC labeled this new spectrum as Advanced Wireless Services 3 (AWS-3)

There is a catch, though with these spectrum in that any cellular company that uses it has to share it with existing government wireless systems. Nationwide there are over 3,100 registered uses in this spectrum that range from the Department of Homeland Security for border surveillance to the US Army for tactical communication. The FCC is not planning to move most of these uses out of the spectrum but will instead expect any carrier that buys the spectrum to somehow coexist with the existing uses.

The major wireless carriers aren’t nuts about the idea but have agreed to run tests to see how they might share the frequency with the government. Obviously they would not share networks, but in areas of contention each would have authorized use of the spectrum somehow. Obviously the wireless carriers would love the spectrum cleared for their exclusive use, and there will be many markets where the spectrum is clear or mostly clear.

The FCC announced that it is going to auction off this spectrum in a mixture of large and small blocks, and in large and small geographic areas. They hope this will entice smaller regional carriers to go after spectrum for use in rural markets. They plan on auction rules that give an edge in these small markets to the small carriers plus T-Mobile. The proceeds from this auction are aimed at helping to pay for FirstNet, the nationwide emergency response network. Let’s just hope that by requiring bandwidth sharing that the big carriers show up and bid. They don’t always do so as evidence by the last auction where the only bidder was Dish Networks at the required minimum bid.

Certainly these announcements are good news for anybody with a cell phone, and having additional WiFi spectrum is going to make us that much more ready for the Internet of Things. As a country we have an insatiable demand for wireless spectrum and this is one more step towards making enough spectrum available to keep us humming along.