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If you like streaming “The Walking Dead” to your phone, there’s good news ahead: Wireless carriers are facing off to make sure you can keep watching those videos without a stutter for years to come.
Tuesday is the start of the Federal Communications Commission’s so-called Incentive Auction, which will take valuable spectrum away from TV broadcasters and sell it to companies that want to offer wireless service. This particular swath of spectrum is highly prized — industry insiders call it “beachfront property” — because it operates at a lower frequency. That means it can run across greater distances and go through walls for superior coverage.
And that’s why this auction is worth paying attention to. It represents one of the best chances for wireless companies to get more spectrum, which is the way everything gets ferried to your phone — from cat videos to work emails. It could also reshape the wireless industry, giving smaller carriers a chance to offer you the same, strong nationwide coverage that Verizon Wireless and AT&T deliver. Together, they control more than 70 percent of the US wireless market.
T-Mobile’s produced a video last year that portrays CEO John Legere as a hero taking out the evil “Duopoly,” AT&T and Verizon.
T-Mobile
Beyond the big two, T-Mobile, satellite TV provider Dish Network and cable giant Comcast are the other big players who say they’ll join in the auction.
This FAQ puts the details in perspective and should help explain what this all means for you.
Refresh my memory. What’s wireless spectrum again?
Spectrum is the range of radio frequencies used to transmit sound, data and video to TVs or smartphones. These are the airwaves that ignited Beatlemania in December 1963 when radio stations began playing “I Want to Hold your Hand.” Today, they can deliver “Game of Thrones” to your phone via the HBO Go app.
More spectrum means faster and more-reliable wireless service. Spectrum is a limited resource and it’s controlled, for the most part, by the US government. Companies can get their hands on it if they participate in auctions, acquire a company with spectrum holdings or buy licenses from one another in a secondary market. More spectrum is needed to handle the ever-increasing amount of data traffic we’re creating over phones, tablets, cars, and other gadgets and machines.
Related links
- For T-Mobile’s wireless ambitions, a make-or-break moment looms
- How the future of US wireless service hangs on a government auction
- Spectrum auction compromise part of payroll tax cut bill
- The US government’s wireless-spectrum auction: Why it matters (FAQ)
Why is this particular spectrum so important?
The 600MHz band, which is the spectrum up for grabs in this auction, has traditionally been used to transmit TV signals. It’s likely the last time the government will be able to auction off such spectrum.
Low-band spectrum works reliably indoors and across great distances, and it can help the carriers keep up with ever-increasing customer demands for coverage.
AT&T and Verizon, which were the big winners in the last auction of low-band spectrum in 2008, have built the foundation of their 4G LTE networks on low-band 700MHz spectrum, another sliver of spectrum that was once used to broadcast TV.
T-Mobile, the nation’s third-largest wireless provider, has been trying to assemble a similar set of assets for its own network. But for the most part, T-Mobile lacks significant amounts of low-band spectrum.
(You can check out CNET’s full explanation of wireless spectrum here.)
What’s different about this auction?
The Incentive Auction is really two auctions in one. There’s a reverse auction that will allow TV broadcasters to sell their airwaves back to the government. That process will start Tuesday. A so-called forward auction will follow in a few months, through which the government will sell those same airwaves to wireless companies. In exchange for giving up their spectrum, broadcasters will get a cut of the proceeds.
This auction will be the biggest and most complicated auction the FCC has ever run.
Satellite TV provider Dish Network is expected to bid in the latest FCC spectrum auction, but it’s unclear if the company will be as aggressive as it was in last year’s AWS-3 auction when it spent $10 billion.
Dish Network
How much money could this auction raise for the government?
Estimates suggest the auction could generate as much as $60 billion, but many in the industry feel that price is not realistic, given carriers’ constrained budgets. The 700MHz auction eight years ago raised $19.6 billion. Last year’s AWS-3 auction raked in a record-setting $45 billion.
Who are the major players in this auction?
Verizon, AT&T and T-Mobile are likely to buy the bulk of available spectrum in this auction. Because the FCC recognizes how critical low-band spectrum is in creating a company that could rival AT&T and Verizon, the agency carved out a sliver especially for smaller players like T-Mobile and some rural operators to bid on without facing the deep pockets of AT&T and Verizon.
Another wild card in this auction is Dish, which has been steadily building up a war chest of spectrum. The company was aggressive in the 2014 auction, emerging as one of the top bidders and spending around $10 billion.
It’s unclear what Dish will do with the spectrum it already owns and the licenses it will likely pick up in this auction. It is possible the company will look for a partner or will create a fixed wireless service that serves as an alternate broadband connection to DSL or cable.
Comcast also plans to bid in the auction, providing a competitor in the auction to T-Mobile for spectrum set aside for smaller operators. Comcast has built an extensive wireless network using Wi-Fi technology and may eventually partner with a cellular operator to build a network to compete with traditional wireless carriers. It has kept mum on how it plans to use the spectrum. It could also use the licenses to build its own network, but it’s more likely Comcast will use the licenses as a bargaining chip when dealing with traditional carriers. Notably missing from the auction is fourth-ranked carrier Sprint.
How will the outcome of this auction affect me?
Depending on how the auction shakes out, T-Mobile could end up a big winner. For the average consumer, that means T-Mobile could be a stronger alternative to AT&T and Verizon. T-Mobile has traditionally had weak signals outside major cities, but the spectrum from this auction will help it cover more regions of the US, especially in the suburbs and rural areas.
FCC Chairman Tom Wheeler has been trying to balance the needs of TV broadcasters looking to sell spectrum with those of wireless operators looking to buy spectrum.
Marguerite Reardon/CNET
When will I actually see these changes?
It could be several years before the spectrum is ready for carriers to use. The auction itself is complicated and could take at least five or six months to complete, with some estimates saying it will drag into 2017.
Because the whole thing hinges on how many broadcasters are willing to participate in the first part of the auction, it’s hard to say how much spectrum will be freed up for carriers to bid on.
Even after the auction ends, there will still likely be delays. At that point, TV broadcasters have 39 months to move off their spectrum positions before handing the licenses over to the FCC. In the meantime, wireless operators can’t begin delivering service using those licenses.
Will the government auction off any more spectrum?
While this is likely the last bit of low-band spectrum to be auctioned off for a while, Congress is working to pass legislation to free up wireless spectrum in the 3.1GHz-to-3.5GHz band and the 3.7GHz-to-4.2GHz band. This very high frequency spectrum will be able to transmit a tremendous amount of information, but only over shorter distances. And because it’s so high-frequency, it won’t be able to send signals through walls and could experience interference from weather phenomena like fog.
High-band spectrum is ideal for the next generation of wireless called 5G. But that’s a story for another day, some years down the road.
