Once worthless radio waves find new life in spectrum auctions

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Mobile phone operators often call their most valuable radio wave licenses “beachfront property”. As with real estate, it pays to be in a prime location.

Government officials will test that thinking this month by selling off once-barren plots of this virtual real estate at the high end of the wireless spectrum. It remains to be seen how much companies are willing to pay for it.

The Federal Communications Commission will launch the first of two auctions for ultra-high-frequency spectrum licenses on Wednesday, raising funds from a type of radio wave once considered unnecessary for wireless service. Recent advances in technology have made these frequencies more useful, and officials are counting on spectrum sales to launch the first fifth-generation, or 5G, wireless service offerings.

wave of the future

Signals with frequencies above 1 gigahertz help strengthen today’s 4G networks by carrying more data. They are often stacked on low frequency bands which cannot handle dense groups of customers on their own.

Ultra-high frequency wavelengths can carry even more Internet traffic, but run into walls, trees, and other obstacles. Early use focuses on urban areas where signals can augment existing cellular capacity or replace cable service.

Square one for the first mobile phone service, these frequencies are not far from TV broadcasts. These are sometimes the only signals providing cellular coverage in rural areas.

Signals with frequencies above 1 gigahertz help strengthen today’s 4G networks by carrying more data. They are often stacked on low frequency bands which cannot handle dense groups of customers on their own.

Square one for the first mobile phone service, these frequencies are not far from TV broadcasts. These are sometimes the only signals providing cellular coverage in rural areas.

Ultra-high frequency wavelengths can carry even more Internet traffic, but run into walls, trees, and other obstacles. Early use focuses on urban areas where signals can augment existing cellular capacity or replace cable service.

Ultra-high frequency wavelengths can carry even more Internet traffic, but run into walls, trees, and other obstacles. Early use focuses on urban areas where signals can augment existing cellular capacity or replace cable service.

Square one for the first mobile phone service, these frequencies are not far from TV broadcasts. These are sometimes the only signals providing cellular coverage in rural areas.

Signals with frequencies above 1 gigahertz help strengthen today’s 4G networks by carrying more data. They are often stacked on low frequency bands which cannot handle dense groups of customers on their own.

low band

Square one for the first mobile phone service, these frequencies are not far from TV broadcasts. These are sometimes the only signals providing cellular coverage in rural areas.

Median spectrum

Signals with frequencies above 1 gigahertz help strengthen today’s 4G networks by carrying more data. They are often stacked on low frequency bands which cannot handle dense groups of customers on their own.

millimeter wave

Ultra-high frequency wavelengths can carry even more Internet traffic, but run into walls, trees, and other obstacles. Early use focuses on urban areas where signals can augment existing cellular capacity or replace cable service.

“Spectrum really is worthless without 5G,” said Jonathan Chaplin, analyst at New Street Research. Technology that makes signals more accurate has changed the equation, he added, making spectrum “much more valuable”.

Authorities will first auction licenses around 28 gigahertz and follow with a second auction for licenses above 24 gigahertz. Both sales will test the market’s appetite for technology that has yet to hit the market outside of a few test cities.

Verizon Communications Inc.

already owns most of the licenses in the 28 gigahertz range after agreeing last year to spend around $3.1 billion to buy Straight Path Communications Inc., a startup that paid very little to acquire the licenses in the first place. This year’s auction will allow other companies as well as Verizon to bid for the remaining licenses still held by the government.

The FCC plans to launch three more auctions next year to encourage the use of “millimeter wave” spectrum, so called because its wavelengths are so close together that they are measured in millimeters. These high frequencies allow new radio equipment to compress huge amounts of information into a small beam, allowing businesses to deliver broadband service over the air as fast as fiber optic cable.

“It’s not a spectrum that goes very far,” said AT&T Inc.

chief technology officer Andre Fuetsch. “However, this spectrum, because it is so much higher in frequency, allows for much higher speeds.”

First-mover advantage

Two federal auctions will test companies’ appetite for millimeter wave spectrum.

Average National Spectrum Ownership

Average National Spectrum Ownership

Average National Spectrum Ownership

Average National Spectrum Ownership

AT&T plans to use its licenses first to provide more reliable alternatives to Wi-Fi in offices and businesses. The signals could also provide lightning-fast downloads in specific urban pockets where people move. Mr. Fuetsch calls this a “Swiss cheese” approach.

Verizon uses its licenses in other parts of the country for small-scale home broadband service. The mobile operator says it can use the frequencies to transmit Internet connections directly through customers’ windows, avoiding the expense and inconvenience of a technician’s door-to-door visit.

A team is working with AT&T to install a small cellular antenna in New York.


Photo:

Thomas Di Fonzo/The Wall Street Journal

Millimeter frequencies have their drawbacks. Walls and trees can block signals. This forces companies to blanket neighborhoods with clusters of expensive and controversial small cell towers.

There are signs that the November auctions may not live up to the hype created by last year’s Straight Path sale. Comcast Corp.

and communications on the charter Inc.,

two cable companies with wireless ambitions ignore them.

The United States is among the first countries to raise funds by selling millimeter wave licenses. Other countries sell midband spectrum first, which can also carry video and other data-intensive applications over the air.

Some companies are waiting for the FCC to auction mid-band spectrum, but many licenses won’t be available until late next year at the earliest. A separate paper on the agency’s case to overhaul the spectrum used for satellites could take several years to yield results.

The first two auctions – for 28 gigahertz and 24 gigahertz – could end within weeks, allowing telcos and equipment makers to get more infrastructure on the ground.

Analysts say it’s hard to estimate how much money spectrum sales will bring in because the technology to use it is still young. The latest phase of a 2017 auction for television airwaves raised nearly $20 billion. These licenses were close to others already in use for cellular service, so the equipment was already available for purchase.

With the millimeter wave spectrum, it will be up to manufacturers to produce enough cheap equipment to use the waves, according to University of Delaware professor Dennis Prather, a researcher in the field.

“It’s like going to the moon and planting a flag on it,” Mr Prather said. “There is no technology that you can just get and deploy. It has to be developed.”

Write to Drew FitzGerald at andrew.fitzgerald@wsj.com

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