The FCC’s 5G auctions are out of control: ~$70B and counting

AT&T and Verizon are likely bidding like crazy to catch up to T-Mobile on 5G spectrum.


December 28, 2020

Why is it that every network carrier can’t STFU about their 5G service?

It’s probably because they’re spending obscene amounts of money to win spectrum licences from the Federal Communications Commission (FCC).

According to the Wall Street Journal, the latest 5G auctions have already brought in $69.8B, topping the record $44.9B raised in 2015 (for 4G enhancements).

The auction process is done in secret to prevent collusion

But analysts believe the big bidders are AT&T and Verizon, which need to match the license assets T-Mobile scooped up when it acquired Sprint in February.

Investment firms, cable providers, and satellite companies are also bidding up prices.

Whoever wins will have to spend $13B more to upgrade equipment, and customers might not see new 5G coverage — which promises to speed up data flows — until 2023.

The FCC used to assign spectra through hearings and lotteries

It wasn’t until 1994 that the competitive bidding process was implemented; there have been 80+ auctions since, with the US Treasury receiving $60B+. (Auction proceeds also cover administrative costs and fund future auction programs.)

With borrowing costs so low and stable revenue (e.g., our obnoxious monthly cellphone bills), the bids could get crazier until the deadline, Jan. 4, 2021.

In sum: the “We have 5G” ads aren’t going away anytime soon.

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