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15 June 2021

5G auctions restart, but non-traditional spectrum allocation is critical too

In those seemingly faraway years just before the global pandemic hit, there was a great flurry of activity to release 5G-targeted spectrum around the world, mainly in at least part of the 3.4 GHz to 4.2 GHz range.

The focus of the auctions, and therefore most of the initial 5G deployments, was on these midband, capacity-centric frequencies, and the aim was to boost capacity to support usage levels and data rates in relatively constrained areas such as downtowns or business parks. Here 4G – which in most areas is nowhere close to ‘capacity crunch’ – might start to burst at the seams.

There was some disruption and delay to auctions and build-outs in the early months of the pandemic, though this was a great deal less than some had expected, and most planned auctions have now been rescheduled. In some markets, Covid-19 has actually stimulated 5G build-out, especially where 5G is part of a national recovery or infrastructure plan, as in China.

Now, in 2021, a new series of interesting auctions and other spectrum-related developments awaits. The finalization of Release 16 and the start of 5G Standalone deployments mean that 5G is now capable of more than just enhancing mobile broadband capacity and speeds. It is also technically able to deliver its other promised benefits, including enterprise services that require mission critical connectivity or very low latencies, for instance. That will start to drive leading operators to diversify their 5G business model in search of new, enterprise revenue streams, and that in turn will require a broader range of spectrum bands to support the newly varied use cases.

This will put new focus on sub-GHz coverage bands. Most operators – with a few notable exceptions such as T-Mobile USA – could continue to rely on sub-GHz 4G for many years to come, in order to provide broad population coverage for mobile broadband. However, some of the industrial, automotive and IoT applications on which advanced operators are focused will require a whole new degree of coverage, reaching underground and ultra-remote spots, and this will need to be combined with guaranteed quality of service.

Coverage, then, will become a challenge for the first time, and throw a new spotlight on low frequency spectrum, as well as complementary technologies like satellite. In turn, achieving broader 5G coverage will go hand-in-hand with deployment of SA, which improves the range and QoS of the network, even in midbands, and is necessary, because it relies on a 5G core, for many new industrial and consumer services.

But 5G will use far more than the conventional sub-GHz and midband (1.8-6 GHz) licensed spectrum that has been the bedrock of cellular. It will move up into the millimeter wave bands, whose high capacity will not only enable new user cases but also new business models, since there will be plenty of spectrum to spare for unlicensed, shared or industry-specific purposes.

That diversification of the organizations that can deploy, operate and use cellular networks is a response to the very varied needs of different enterprises, especially inside buildings, but is in turn enabled by a more flexible approach to spectrum. The first 5G-Unlicensed standards have been ratified in Release 16 (see item below) and are likely to have far greater impact on the industry than their 4G predecessors, which arrived rather late in the 4G day and without a clear operator requirement.

Of course, the ability to deploy cellular technologies in a standardized way in unlicensed bands can create coexistence issues with incumbent unlicensed standards, notably WiFi. This has led to a fierce debate about the occupancy of the 6 GHz band, which has been opened up in about 40 countries now, following the lead of the USA, for shared use.

The WiFi community has been quick to treat this as a logical extension of the 5 GHz band, and released specifications under the label WiFi 6E. But as with most unlicensed spectrum, 6 GHz is technology neutral provided any user complies with rules to avoid interference and excessive congestion. In China, 6 GHz is being treated as a 5G band, and last month, the MNOs’ representative body, the GSMA, went as far as to argue that the global value of 5G would be at risk if 6 GHz were left entirely unlicensed. It called on governments to align on a policy that included a significant element of licensing of 6 GHz frequencies. So far, China is the only country to allocate the whole 1,200 MHz to 5G; Europe and parts of Africa and the Middle East are splitting the band, with the upper portion targeted at licensed cellular and a 500 MHz tranche reserved for unlicensed use.

Our special report this week highlights some of the new sources of spectrum in the 5G era, whether unlicensed or industrial-specific. But it is important to remember that the majority of operators will stick to conventional mobile broadband, consumer-weighted business models for many years to come, and will continue to focus on conventional sub-6 GHz spectrum in order to support the enhancement of these applications and QoS.

So the next wave of midband spectrum auctions will be closely watched as they start to spark 5G deployments in major markets such as India and Brazil, and as they release new capacity for operators in existing 5G markets.

Brazil’s much-delayed auction will take place next month, and the aim is to have 5G SA commercially active in all the state capitals one year from now. Regulator Anatel will make spectrum in the 700 MHz, 2.3 GHz, 3.5 GHz and 26 GHz bands available.

Meanwhile, India has also delayed its auctions several times, sometimes at the behest of cash-strapped operators, but plans to conduct a major 5G auction in early 2022. This will release a huge 275 MHz of spectrum in the 3.3-3.6 GHz band, which considering the three operators currently hold only 289 MHz of total spectrum between them, would finally help the country to avoid the crippling capacity crunch that has dogged its quality of service in 3G and 4G.

And the USA is also gearing up for yet another auction, after three millimeter wave sales followed by the first significant allocations of midband spectrum for 5G, with the processes concerning CBRS licences and then the huge C-band auction. Before these, the US operators had lacked midband spectrum and the only 5G auction had been in 600 MHz, forcing them to make their first 5G moves in a globally atypical combination of 600 MHz coverage bands and/or millimeter wave.

The next sale, Auction 110, will offer up to 4,060 licences in the 3.45-3.55 GHz band and will commence on October 5. The FCC plans to auction 10 licences of 10 MHz each in the 416 partial economic areas (PEAs). There will be a two-stage process – a bidding phase followed by an assignment phase in which the operators compete for specific blocks. The reserve price is about $14.7bn but the regulator will have to cover sharing or relocation costs for incumbent federal users, which use this spectrum mainly for defence radar.

The coming year, then, will see both a new wave of spectrum auctions geared to 5G, and a proliferation of non-traditional licensing and sharing schemes, not to mention the start of initiatives, by some operators, to refarm legacy spectrum or adopt dynamic spectrum sharing. All of this should help to accelerate progress towards a far more diverse and enterprise-oriented 5G platform than the world has seen so far.