Wireless customers, you've got more choices coming your way

The US government's latest sale of radio airwaves could mean stronger competitors in the wireless field.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
5 min read
James Martin/CNET

It's a good time to be a wireless customer.

Unlimited data is back. Prices are falling. And thanks to the conclusion of the Federal Communications Commission's latest wireless spectrum auction, consumers could have a greater choice of carriers going forward.

Thursday marked the end of the FCC's Incentive Auction, which will shift valuable spectrum away from TV broadcasters to companies that want to offer wireless service.

Spectrum is what those companies will use to shuttle work emails, cat videos, and any number of other things to your phone, and this particular swath is highly prized -- industry insiders call it "beachfront property" -- because it can cover greater distances and go through walls for better coverage indoors.

The auction represented one of the best chances for wireless companies to get more spectrum. It could also reshape the wireless industry, giving smaller carriers a chance to offer you the same strong nationwide coverage as Verizon Wireless and AT&T, which, combined, control more than 70 percent of the US wireless market.

To help you better understand what it all means for you, CNET has put together this FAQ.

Workers on a cellular communication tower.

Workers on a cellular communication tower. The FCC's latest auction of wireless spectrum could mean more competition among carriers like T-Mobile and Verizon.

Justin Sullivan/Getty Images

Refresh my memory. What's wireless spectrum again?

Spectrum is the range of radio frequencies used to transmit sound, data and video to TVs and phones.

More spectrum means faster and more-reliable wireless service. But spectrum is a limited resource and it's controlled, for the most part, by the US government. Companies can get their hands on it if they participate in auctions, acquire a company with spectrum holdings or buy licenses from each other in a secondary market.

More spectrum is needed to handle the ever-increasing amount of data traffic we're creating over phones, tablets, cars and other machines.

Why is this particular spectrum so important?

The 600 megahertz band, which is the spectrum sold in this auction, has traditionally been used to transmit TV signals. It's likely the last time the government will be able to auction off such spectrum.

Low-band spectrum is great at penetrating walls and going across long distances, which means carriers don't need to put up a cell tower on every block. It can also help the carriers keep up with rising customer demands for coverage.

AT&T and Verizon, the big winners in the last auction of low-band spectrum, in 2008, have built the foundation of their 4G LTE networks on low-band 700MHz spectrum, a sliver of spectrum that was once used for broadcast TV.

T-Mobile, the nation's third-largest wireless provider, has been trying to assemble a similar set of assets for its own network. But for the most part, it lacked significant amounts of low-band spectrum. Until now.

(Check out CNET's full explanation of wireless spectrum.)

What was different about this auction?

The Incentive Auction was really a twofer. A reverse auction allowed TV broadcasters to sell their airwaves back to the government, and then a forward auction had the government selling those same airwaves to wireless companies. In exchange for giving up their spectrum, broadcasters are getting about $10 billion.

How much money did the auction raise for the government?

The auction raised a total of $19.8 billion. Estimates going into the auction had been as high as $60 billion, but many in the industry realized that wasn't realistic, given carriers' constrained budgets. The 700MHz auction nine years ago raised $19.6 billion. The AWS-3 auction in 2015 raked in a record-setting $45 billion.

Who were the big winners in this auction?

T-Mobile, Dish Network and Comcast came out on top.

T-Mobile spent $8 billion in the auction and won 31MHz of spectrum, according to the FCC. Dish Network was second, committing $6.2 billion for 18MHz, and Comcast spent $1.7 billion. Verizon, which had committed ahead of time to participating in the auction, didn't bid, the FCC said. AT&T spent less than $1 billion. US Cellular spent $328 million.

Notably missing from the auction was fourth-ranked carrier Sprint, which decided beforehand not to participate.


Were there any surprises in the auction results?

Yes and no. T-Mobile was expected to be a big player in the auction, and that's just what happened.

Because the FCC recognizes how critical low-band spectrum is in creating a company that could rival AT&T and Verizon, the agency carved out a sliver especially for smaller players like T-Mobile and some rural operators to bid on without going up against the deep pockets of AT&T and Verizon. As a result, AT&T and Verizon weren't expected to bid aggressively in this auction, especially since they already had plenty of low-band spectrum.

Still, it's surprising that Verizon didn't bid at all.

Also unexpected was Dish spending as much as it did. Dish, which has amassed nearly 80MHz of spectrum from previous auctions, was also aggressive in the 2014 auction, emerging as one of the top bidders and spending around $10 billion. It's unclear what Dish will do with the spectrum it already owns and the licenses it just picked up. It's possible the company will look for a partner or will create a fixed wireless service that serves as an alternate broadband connection to DSL or cable.

The third big surprise in the auction was that Comcast, the third-highest bidder, didn't walk away with more spectrum. The cable giant earlier this month announced pricing for its wireless service that will use a combination of its Wi-Fi network and capacity it's leased from Verizon to offer an unlimited wireless data service. The company is offering discounts to customers who buy wireless with its internet or TV services.

Yeah, but how does this affect me?

T-Mobile's big win means it could become a stronger alternative to AT&T and Verizon in the next few years. T-Mobile has traditionally had weak signals outside major cities, but the spectrum from this auction will help it cover more regions of the US, especially in the suburbs and rural areas.

When will I actually see these changes?

T-Mobile's chief technology officer, Neville Ray, said on Twitter on Thursday that T-Mobile expects to get some of its new spectrum in use later this year. He added that devices using the 600MHz frequency will also be available later this year.

That said, TV broadcasters have 39 months to move off their spectrum positions before handing the licenses over to the FCC. So it could take years before all the spectrum allocated in this auction is put to use by wireless operators.

The good news for consumers is that the clock is already ticking.

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