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Delays in auctioning of prime 'mid-band' airwaves slow arrival of faster wireless
By Drew FitzGerald and Sarah Krouse
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (June 21, 2019).
U.S. wireless companies' limited access to some of the nation's most valuable airwaves threatens to slow down their plans to build faster 5G networks.
At issue are broad swaths of the radio spectrum in frequencies that can travel long distances and penetrate buildings. This "mid-band" is considered ideal for faster, fifth-generation wireless service.
"Mid-band is in the sweet spot in terms of what's most valuable to wireless operators," said Walt Piecyk, an analyst at investment bank BTIG, in part because carriers can deploy those frequencies atop existing cell towers, rather than blanketing neighborhoods with hundreds or thousands of new antennas. While U.S. officials take their time making mid-band airwaves available to carriers, he said, " a lot of countries are auctioning off that spectrum."
Sprint Corp. and Dish Network Corp. already hold large amounts of mid-band spectrum not yet put to work serving customers. Other nearby frequencies remain reserved for satellite communications and military use in the U.S.
Telecom companies have spent more than $25 billion over the past three years to snap up wireless-airwave licenses beyond the mid-band range, targeting both high and low extremes considered useful for carrying wireless data.
Verizon Communications Inc. and AT&T Inc. have launched 5G services in a few cities using high-frequency millimeter wave spectrum that provides ultrafast speeds but can't travel long distances and is limited in its ability to penetrate hard materials like walls.
AT&T promises to offer nationwide 5G in the first half of 2020 over spectrum licenses it already controls. Company technology chief Andre Fuetsch said more mid-band spectrum under FCC consideration "would help round out our current holdings" and speed up that 5G expansion.
The Federal Communications Commission unveiled a plan Tuesday to commercialize licenses in the Educational Broadband Service. The service was created in the 1960s for use by educational groups for instructional television, and some licenses are now used for wireless broadband systems for school districts.
Some of the airwaves, which are above 2.5 gigahertz and often lumped in with mid-band spectrum, are used by federally recognized Native American tribes in rural areas of the U.S.
The FCC's plan aims to make available to wireless companies and other businesses some unused or underused swaths of that spectrum. Schools that currently use some airwaves can continue to use their licenses, expand that use or sell them, a senior FCC official said. Tribal groups also maintain priority access.
WISPA, a trade body for fixed wireless broadband companies, said the move would expand broadband coverage, including in rural areas.
Mariel Triggs, chief executive of Mural Net, an organization that is building a wireless network to serve the Havasupai tribe in the Grand Canyon, called the move "a major step forward in the effort to close the digital divide in rural America, especially for Indian Country."
Some educational groups oppose the FCC's plan. A spokeswoman for the Schools, Health & Libraries Broadband Coalition called it "disastrous for online learning, 5G deployment and rural consumers."
Even with the FCC's efforts, agency officials cautioned the new rules would take time to implement. New mid-band auctions won't start until after the commission finishes selling more millimeter-wave licenses at the end of this year.
Executives of T-Mobile US Inc. and Sprint have seized on delays in making spectrum available to argue for approval of their more than $26 billion merger. The companies say joining forces would save them billions of dollars each year that could be invested in new equipment that uses Sprint's 2.5 gigahertz licenses.
"Here in the U.S., we have this mid-band dilemma," T-Mobile technology chief Neville Ray said in an April conference call with analysts. "We can solve that."
But T-Mobile's plan to cover rural areas using Sprint spectrum also faces obstacles. A group of state attorneys general sued last week to block the merger, arguing the arrangement would raise prices for cellphone service, especially among low-cost plans. The Justice Department hasn't issued a public decision on the proposed merger.
Other wireless industry experts cite opportunities above 3.5 gigahertz, where several other countries have marked frequencies for 5G use. Those frequencies, too, are tied up by competing interests in the U.S.
The Citizens Band Radio Service is a cluster of radio channels that offers companies or individuals access to frequencies above 3.5 gigahertz, provided they register their use with an online system designed to prevent them from interfering with Navy radar signals. Nearby on the spectrum, TV broadcasters, cable companies and other users receive satellite signals on the C-Band. A coalition of satellite companies called the C-Band Alliance floated a plan last week to squeeze those satellite customers into a narrower band that makes room for cellphone companies willing to pay billions of dollars for desirable spectrum.
That plan, too, would take months to put spectrum on the market but is still the quickest option available to avoid cutting off customers who run the gamut from cable-TV providers to Mormon churches, according to C-Band Alliance vice president Peter Pitsch.
"We're under contract to a lot of those folks," Mr. Pitsch said. "We want to keep good faith with them, keep them whole."
Verizon CEO Hans Vestberg met last week with FCC Chairman Ajit Pai and another agency official to ask the commission to make more mid-band spectrum available, according to a regulatory filing. The largest U.S. carrier told regulators that mid-band spectrum would help achieve broader coverage.
"We're interested in getting as much spectrum in the marketplace as possible," Craig Silliman, Verizon's general counsel, told analysts Tuesday.
Write to Drew FitzGerald at email@example.com and Sarah Krouse at firstname.lastname@example.org
(END) Dow Jones Newswires
June 21, 2019 02:47 ET (06:47 GMT)
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