Almost every investor, consultant, or casual observer has asked Fog Optics the same question when it comes to FCC licensing: How much bandwidth can pass through what amount of spectrum? A more critical question however is: “How can I get more bandwidth when there aren’t any licenses available?”
The answer for RF isn’t simple. Each bit of spectrum has its own properties, and the major telecoms have departments dedicated to maximizing advantages of each spectral range. With each new piece of hardware or encoding technique, such as LTE, the value of blocks of spectrum change as the amount of data telecoms can pass through increases. The spectrum auction system means the FCC doesn’t have to figure it out – they let the free market do them a favor and the telecoms themselves bid to the value they can reap.
The blocks of spectrum offered in this auction are traditionally shorter range but higher data rate; the limited range has historically meant limited value. However, major breakthroughs have been made by pairing spectrum across bands, fitting much more data through by transmitting across unlikely sets of frequencies. Sprint sat out because it “doesn’t have complementary AWS spectrum” for the spectral bands offered this time.
Overall, spectrum in cities were in highest demand in this $44 B auction, this is where the most bandwidth is needed. AT&T had the top three bids per block, for NYC/Long Island ($2.76 B). Verizon bought the 2nd highest block covering LA/Riverside/Orange City ($2.06 B). For net dollars, AT&T spent the most (~$15.5 B), followed by Verizon (~$9.2 B), then Northstar Wireless ($5.2 B) and SNR Wireless ($3.7 B).
Fog Optics doesn’t generally compare the FCC licensing and RF equipment costs directly, that kind of comparison, while comprehensive, is different for every area, company, and implementation. However, there is a strong business case for equipment that provides bandwidth where it is needed most, without purchasing a FCC license, and no spectrum is available.