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Cell Phone Providers and Tech Companies Bid on Airwaves for 5G

A Multi-Billion Dollar Auction for Airwaves

Much-anticipated 5G networks have arrived in the United States, which can be up to 600 times faster than their 4G predecessors. Cell phone providers like Verizon (VZ), AT&T (T), and T-Mobile (TMUS) will likely spend billions of dollars in a government auction of C-band airwaves which began earlier this week. These wireless frequencies are important for companies offering 5G service.

The auction could last several more weeks as cable, technology, and investment companies battle with cell phone providers for prized C-band space. Analysts say a total of $52 billion could be spent over the course of the auction.

The ABCs of C-Band Airwaves

C-band spectrum is widely considered the “sweet spot” for 5G networks. These mid-range frequencies can handle long distances from cell towers while also moving lots of data quickly. Davis Herbert, an analyst at CreditSights, said, “C-band is going to be the cornerstone of 5G networks for the next decade.”

The frequencies are already used in television. Satellite operators had to agree to make room for cell companies on the C-band airwaves they use to send TV feeds around the United States.
In years past, the Federal Communications Commission handed out frequency licenses for free. But as new technologies heightened demand, the commission started selling the licenses.

Looking Ahead

Americans both pay for and benefit from the new licensing system. The bidding companies take on debt to secure the licenses, and that money ultimately moves from the FCC to the US Treasury. The winning companies then charge their customers higher fees to cover that borrowing.

Just as big changes are happening in the cell carrier industry, another transition is also on the horizon. President-elect Joe Biden will be inaugurated in January, and will soon appoint a new chair of the FCC. The new administration is expected to prioritize net-neutrality rules. Biden has also said he will focus on expanding broadband service around the country.

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