Operators begin stockpiling spectrum as the race to 5G quickens

James Pearce
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Originally the industry claimed we wouldn’t see 5G technology until 2020. But that does not seem so far away when you consider how quickly a number of operators are stockpiling 5G spectrum.

Whether it be through acquisition of other companies, or through early spectrum auctions, operators from Japan to the US, via the UK and Ireland, have all recently come into the possession of licences for spectrum bands expected to play key roles in the next generation of mobile.

Despite the fact that we don’t even really know what 5G will look like yet, the amount splashed out is already in the billions of dollars.

One of the biggest deals saw Verizon succeed in buying Straight Path Communications, a US company with millimetre wave spectrum that is suitable for 5G, after a bidding war with AT&T.

Straight Path’s shareholders will get $3.1 billion, five times the company’s share value in March, when AT&T bid $1.6 billion. Verizon came into the battle late, as a so-called “mystery bidder” whose identity was unveiled almost immediately, and it increased its bid three days before bidding ended.

Straight Path’s attraction to Verizon is its spectrum in the 28GHz and 39GHz bands. Verizon already owns a significant amount of 28GHz spectrum, and will get 20% more by buying Straight Path. AT&T owns none in that band. Straight Path owns a huge amount of spectrum in the 39GHz bands – more than 12 times what all other US operators have together. 

Acquisition trail

CK Hutchison’s UK arm Three has also been on the acquisition trail, buying UK Broadband from PCCW for £250 million.

Three agreed the deal to buy UK Broadband, which operates mobile broadband provider Relish, in February. It has just 17,000 customers but, perhaps more importantly, it has access to several key spectrum bands.

The deal also gives Three access to a chunk of additional spectrum, understood to be around 40MHz across the 3.4GHz, 3.6GHz and 3.9GHz bands. Though this spectrum cannot currently be used for mobile services, it has been earmarked as possible bands for 5G services.

Speaking when the deal was announced, CCS Insight analyst Kester Mann told GTB: “Although Three will acquire new spectrum, the acquired band is not compatible with most of today’s mobile devices, meaning that it cannot be put to immediate use. It is likely to be a key band for 5G services, which will launch in the UK from 2020. Therefore, today’s deal does little to address its immediate concerns.”

For those who don’t want to go down the acquisition route, there is also the option of spectrum auctions, with Ireland one of the first to the mark, auctioning €78 million worth of bandwidth.

The auction, which was for spectrum in the 3.6GHz band, saw the assignment of all 350MHz of spectrum in 594 lots spread across nine regions. 

The 3.6GHz band has been identified by the Radio Spectrum Policy Group as key for the deployment of 5G services across Europe, meaning the auction could play an important role in the future of the mobile industry in Ireland.  

Vodafone Ireland spent €22.8 million and took home 85MHz for use in rural regions and 105MHz for the cities – the largest amount taken by any operator, while Eir’s Meteor and Three Ireland also had winning bids. The other successful bidders were Wireless ISP Imagine Communications and Airspan Spectrum Holdings.

Though these bands have all been identified as “5G spectrum” as they could be used in millimetre wave technology, not everyone supports the idea of labelling bands like this.

In a recent US auction, Deutsche Telekom’s T-Mobile US came out as the largest bidder, and revealed plans to roll out a “real nationwide mobile 5G network using the new spectrum we acquired” within the next two to three years, according to CEO John Legere.

His CTO, Neville Ray, however, said in a statement: “[There is] no such thing as ‘5G spectrum’, and in the next decade we’ll see everything moving to 5G. Nationwide mobile 5G will require both high-band AND broad low-band coverage, and having unused nationwide 600MHz spectrum means T-Mobile is in an ideal position to deliver.”

5G spectrum or not, mobile operators are stockpiling assets in preparation for the next generation of connectivity. 5G is coming – even if we still have no idea what it is going to look like.