Are there any winners in the C-band auction?
The FCC auction for coveted mid-band spectrum just ended, and WSJ and Twitter are abuzz about the sky-high prices. When the results are announced, and “winners” are anointed, and analysts prognosticate about how the $42 billion Verizon might spend puts them in a better 5G position — after all that, I’ll be wondering if anyone actually won. We all know the macro equation:
C + I + G = GDP
These auctions are a massive movement from “I” to “G”, but don’t add to total output. So who might be the “winners”?
Verizon: Much has been written about Verizon’s need for mid-band spectrum to provide a meaningful national 5G offering. That’s certainly true. But the spending is so high that even analysts worry whether these companies can afford it. At some level, money spent here isn’t going into infrastructure investment. Proponents would argue licensed spectrum leads to certainty and the ability for them to invest more. I’d put it different: if they didn’t have to spend so much on licenses, would they be able to invest more in infrastructure? Almost certainly.
Government: With interest rates at historic lows, is a one-time transfer of $81 billion to the US Treasury really a productive use of funds where a large part might go to paying down the national debt? As the telecoms were quick to point out when Senator Kennedy (R-LA) uttered the term “30-day month-to-month lease” to describe FCC licenses, they view these licenses as essentially perpetual.
Our 5G future: We’ve already lost the race to 5G to China. How woefully out of position we are is clear when we fund Huwai “rip and replace” with $1.9 billion that will largely go to Ericsson, Samsung, and Nokia, with our promising domestic O-RAN companies still likely too embryonic at this stage. But sure, we need this and still more mid-band spectrum available for consumer use. So in that sense, it is a victory.
As we’re “celebrating” a successful auction and what was patently obvious (that there is tremendous demand for mid-band spectrum) lets try to figure out, for next time, where we can lower the cost and increase the flexibility to use spectrum to its best purpose in the future.