Link to full paperAbstract
The 2021 C-Band Auction (FCC Auction 107) raised over $81 billion in proceeds, almost double the amount of the next highest-grossing FCC auction and more than double experts’ estimates of auction revenues. This auction has altered the worldview on the value of spectrum. We are in a new equilibrium, brought about by 5G and the Internet of Things (IoT) as they transform the wireless landscape. This auction’s value “surprise” can be attributed to two channels – band/auction specific factors and a change in overall spectrum value. The first channel is composed of factors specific to the C-Band spectrum, such as its “sweet-spot” frequency location in the upper mid-band with an optimum mix of coverage and capacity, as well as aspects specific to the timing and events of the auction, such as Verizon’s need to eliminate its deficit in 5G spectrum compared to its competitors. The second channel, the “sea-level change” in spectrum value, is the focus of this paper. This sea-level change was confirmed by the results of the second mid-band auction – the 3.45 GHz, which raised about 27% of the C-Band auction’s proceeds for about 35% of the spectrum, despite coordination requirements that will make several licenses more difficult for bidders to use.
In this paper, we use a combination of empirical modeling and a review of advancements in wireless technology to gain insight into the “surprise,” decomposing the components of the C-Band value into the prior expectation, the value increase due to band-specific characteristics, and the value increase due to an overall increase in spectrum value. On average, we find that the sea-level effect accounts for a 42% uplift in C-Band spectrum value, which is 43% of the surprise, while the frequency effect or Goldilocks effect accounts for a 50% uplift in C-Band spectrum, or 57% of the C-Band surprise.