Verizon Wireless, AT&T Wireless, and T-Mobile spend a combined total of $81 billion on frequencies that they will use for their 5G networks. These frequencies were auctioned off by the FCC starting in December 2020 and wrapped up in January 2021. What does this mean for customers?
There were 5,684 licenses available for bid.
Verizon Wireless purchased the most with 3,511 licenses for a total of $45.5 billion. AT&T Wireless ended up with 1,621 license for $23.4 billion and T-Mobile spent $9.3 billion on 142 licenses. Although Verizon Wireless, AT&T Wireless, and T-Mobile spent the most significant amounts on licenses, other new license-holders were United States Cellular and a private-equity firm. One thing to consider is that not all licenses are available now even though they have been purchased. A portion of the licenses won’t even be available until the end of 2023.
But what are licenses?
There are three different categories for licenses when it comes to the 5G spectrum of frequencies. There are high-frequency signal licenses, high-frequency is great for fast connectivity but only travel short distances, requiring more distribution points. Mid-frequency licenses and low-frequency licenses are better for larger geographical areas but don’t boast the speed of true 5G. All three license types are important at this time because not all geographic areas can use, or want, the high-frequency type. High-frequency means many distribution points so a sparsely occupied neighborhood in Middle America doesn’t make sense to deploy high-frequency. However mid- or low-frequency licenses work great for this type of area so they remain connected without the cost or disturbance of multiple frequency distribution points.
The impact on customers is a little unclear at this time, but will likely lead to price increases.
In good news, all of the money from this auction goes into the U.S. Treasury. The number they were originally expecting to take away from this auction was around $30 billion. Although this auction was a positive step towards increased 5G availability throughout the United States, it has some immediately noticeable drawbacks. For starters, this could easily squash competitors such as pre-paid mobile options or smaller wireless providers such as Spectrum Mobile. At this time it seems they won’t be able to truly compete in the race to 5G. With the loss of competition unfortunately comes the need to compete. This typically leads to increased prices as companies aren’t cutting prices to compete with multiple different entities.
Although these top three competitors have all promised or stated that 5G won’t raise prices, we know we’ll see an increase in plan pricing sooner rather than later. After all, that’s $81 billion spent on just accessing the frequencies for 5G. Stay ahead of it all by investing just 15 minutes in a full wireless account analysis. And it’s as simple as 1-2-3. Provide us your invoices, authorize us to view your accounts, and then make the decisions that you see fit. Everything else Verify! does off-site, leveraging our over 15 years of experience in these industries. You’ll receive a full inventory of services, efficiency suggestions, and cost-cutting recommendations that save clients an average of 31%. All of this without changing carriers. Get started today by scheduling a consultation with one of our dedicated analysts. Best of all? If we can’t find you savings, we won’t send an invoice. Guaranteed.