A New C-Band Auction & What It Means for Wireless and Satellite

Full Transcript

Don Kellogg 0m10s

Hello, and welcome to the two hundred and seventy second episode episode of the week with Roger, a conversation between analysts about all things telecom, media, and technology by Recon Analytics. I'm Don Kellogg, and with me always is Roger Entner. How are doing, Roger?

Roger Entner 0m23s

Hey. I'm good. How are you?

Don Kellogg 0m24s

I've got a little bit of a cold, but I'm working through it. So here we are.

Roger Entner 0m28s

I'm glad you're here.

Don Kellogg 0m30s

So we've got some new spectrum auction stuff on the horizon. There's a new c band auction presumably coming. Why don't you tell us about it?

Roger Entner 0m39s

You know, with the one big beautiful bill act, right, it's now an act, the government directed the FCC to auction at least 100, up to 100 megahertz of spectrum. And so they're looking at the upper C band, and the FCC needs to hurry up because it has to be auctioned before Independence Day twenty twenty seven. And if you know wireless auctions, we're talking about record no, not record speed, but near record speed. Basically, in less than two years, this needs to get done. The last time something happened this fast was also under the Trump administration, which was the 3.45 gigahertz, where within a basically year, the DOD that said it can't do anything did a lot and executed and, you know, freed them the heck out of that 100 megahertz of spectrum.

Roger Entner 1m39s

And so this will be exciting. What's really interesting and good is that unlike with C band, everybody saw this coming. And so there's no excuse that the radio altimeters are not gonna work and, you know, the sky is falling and tall tales like that. So everybody knew that this was coming, and it was signaled way before. And so, you know, exciting.

Roger Entner 2m7s

Another hundred, hundred eighty megahertz in the mid band, So this can be easily integrated into existing equipment. Consumers should win.

Don Kellogg 2m17s

It should be interesting too because I know historically, DISH has played a little bit of a spoiler on some of the auctions. Right? I don't know. I mean, they might decide to bid on this, but my guess is probably not as aggressively as in the past, right, for obvious reasons. Yeah.

Don Kellogg 2m31s

But I mean, spectrum camping is kinda how they got their got what they are today. Right? Well, you know, I

Roger Entner 2m36s

think there's also a possibility that not Charlie, but the guy he sold his spectrum to, Elon Musk, will appear because, you know, the persistent rumor, he wants to at least a service provider. If he wants to be an operator, this would be a terrific opportunity to put money where the mouth or where at least the whispers are and do that. You know, I always say, like, don't look at what people say, look at what people do. And so we will see who will do what. And so it's interesting, right?

Roger Entner 3m9s

And then when we look further down the road, and when we look further across the pond, we see also an interesting development. The unlicensed crowd was very, very happy about the have the entire six gigahertz band, like, point two gigahertz of spectrum mostly available for unlicensed spectrum. The question is, what are you gonna do with all of that unlicensed spectrum when when it doesn't have that much distance and you have nothing to backhaul it with? This is in Europe

Don Kellogg 3m41s

you're talking about now. Right?

Roger Entner 3m42s

But now, yeah, I'm switching to Europe. Because in Europe, despite the heavy lobbying of the unlicensed community, it looks like that the upper half of the six gigahertz will be licensed for wireless usage in Europe, and that might reopen the conversation here. I'm sure we will get a lot of opposition from the cable guys on the upper steep end, and we will get even more opposition for the upper half of the six gigahertz from cable, because everybody is under no illusion that most of the spectrum that comes to play will go into fixed wireless, which is kind of the kryptonite for the cable industry. And so fully understandably, they're gonna fight this tooth and nail.

Don Kellogg 4m32s

Right. And the basic argument there is it's better used for Wi Fi than it is for Wi Fi like applications or CBRS like applications as opposed to licensed spectrum.

Roger Entner 4m44s

License, and then it goes into FWA and gives more choice to more people on how they wanna have broadband in more places. Right? I think one of the things we will see overall in broadband is look at beat. 20% of bead is going to go to satellite, which is actually a good decision. For the people in very rural parts of The United States, satellite will serve them really well, and we will have now more than one competitor.

Roger Entner 5m15s

Amazon, last week, with a strike of genius, launched their Amazon LEO, I don't know how they came up with that name, Leo satellite service for businesses and consumers. And they were like, oh, we're so fast, was basically the takeaway. And so we're gonna see competition from, finally, real competition to Starlink coming from Amazon. And, you know, do you wanna have a satellite dish together with that $8

Don Kellogg 5m46s

USB cable. Yeah. Going back to the Bead comment, though, I think while it's admirable that everybody theoretically should get fiber, the economics just don't bear it out, and nobody is forcing anybody to bid on anything with Bead. And so if you force a fiber mandate on everybody, what you wind up with is a bunch of areas that were economically unviable to serve beforehand and are still economically unviable to serve. Whereas satellite, FWA potentially have the ability to edge out and fill a lot of those spots that just don't work with, you know, normal cable.

Roger Entner 6m18s

Yeah. And with more spectrum, you will be able to bring FWA into into urban areas. So why do people living in in New York City don't deserve having FWA? I don't know. Have more competition.

Don Kellogg 6m31s

Well, if you've got the fallow spectrum, why not use it? Right? I mean, like, the pushback there is that FWA generates less revenue than wireless.

Roger Entner 6m39s

Yeah. But the FCC's goal is not to make revenue for carriers, but to serve the American public.

Don Kellogg 6m46s

Yes. But last time I checked, these are all public companies that are trying to maximize revenue for shareholders. Right?

Roger Entner 6m52s

Well, and we wanna keep it that way because you know?

Don Kellogg 6m55s

Anyway, it's an option. It's an option.

Roger Entner 6m57s

I don't think governments should run businesses. They shouldn't run wireless carriers, and they shouldn't run grocery stores either. No comment. Oh, right? That's fine.

Don Kellogg 7m8s

Well, this should be interesting. Right? I mean, like, as you say, breakneck pace on this Yeah. New auction. I think it's a fairly different environment than the last time we had an auction with three dot four five given where Starlink and Boost are, also where Verizon is from a debt leverage perspective, etcetera.

Don Kellogg 7m25s

Right? So I think it'll be interesting to see how this plays out. It never plays out the way anybody thinks it's gonna gonna play out. It's always it's always a fun thing to watch.

Roger Entner 7m34s

And we'll see how much money the carriers actually have to spend. That's always the thing. On one hand, you know, the government is happy when when they spend, like, you know, the lowest heat band was $80,000,000,000, when they spent, like, a ton and reduced the government deficit. On the other hand, you know, how sustainable is this? Right?

Don Kellogg 7m56s

Well, I think you can make a pretty strong argument that spending $47,000,000,000 for Verizon on the c band may have been a little high, right, relative to how fast they got it to market.

Roger Entner 8m7s

If there was one time that I agreed with Randall Stephenson from AT&T, then it was like, you know, every time he bought Spectrum, no matter how badly and how harshly he was criticized for spending too much, in hindsight, it always looked cheap.

Don Kellogg 8m23s

Well and the counterpoint there is that AT&T spent about half as much as Verizon did for that particular auction. Right? And T Mobile spent even less.

Roger Entner 8m31s

Yeah. Because they waited for 3.45.

Don Kellogg 8m34s

And got it at a better price per megahertz pop.

Roger Entner 8m37s

Right? So Yeah. And and arguably can do more with it because they don't have to run 200 megahertz on one power schedule, but on two. Right? And so they might actually get more capacity out of it.

Don Kellogg 8m52s

Well, that we all had a crystal ball. Right?

Roger Entner 8m54s

Yeah. Well, I have a crystal ball. I know that we're gonna have another really cool Christmas episode

Don Kellogg 9m1s

Oh, yeah.

Roger Entner 9m2s

With another former Verizon executive. Not that we're planning this, but this is now third time in a row that we will have a former Verizon executive come on the podcast with somebody else. If you wanna have the story spoiled, follow me on Twitter. The gentleman volunteered, and we'll have a very, very spirited conversation. I'm looking forward to that one.

Don Kellogg 9m26s

Absolutely. Me too. Alright, Roger. We'll talk to you next week.

Roger Entner 9m29s

Bye bye.