Bidders are getting their virtual paddles ready as the FCC is poised to kick off the 28 GHz auction on Wednesday, Nov. 14, to be followed by the 24 GHz auction. According to the FCC, the 1.55 gigahertz of spectrum offered in these two high bands will be critical in deploying 5G, IoT and other advanced services—and they’re expected to bring in billions of dollars for the U.S. Treasury.

The 28 GHz auction marks the first-ever auction of high-band spectrum dedicated to the deployment of 5G wireless services in the U.S. It’s not the first time for the spectrum to be put up for auction—that’s a process that started back in the 1990s, when it was known as local multipoint distribution service (LMDS) spectrum. But since then, it’s become the subject of untold numbers of 5G trials and engineers have developed new ways of using beam-steering and other technologies to make it work for the next generation of wireless.

The 28 GHz band will be licensed as two 425-megahertz blocks (27.500- 27.925 GHz and 27.925-28.350 GHz). For each county in which 28 GHz licenses will be available for auction, both blocks of the 28 GHz band will be available. The lower segment of the 24 GHz band will be licensed as two 100-megahertz blocks while the upper segment will be licensed as five 100-megahertz blocks, for a total of 700 megahertz in each market.

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Because so much of the 28 GHz spectrum is encumbered, only 47.56% of the U.S. counties are available; 1,695 counties have incumbents and two are partially encumbered, leaving 1,537 counties available for the auction, according to Stephen Wilkus, CTO at Spectrum Financial Partners. Those counties up for auction represent about 23.7% of the U.S. population.

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Still, the 28 GHz auction, also known as Auction 101, offers bidders the chance to get licenses for markets as diverse as Honolulu, Hawaii, and Anchorage, Alaska, and places like Faribault County in Minnesota, Polk County in Georgia and Whitley County in Kansas.

Licenses in the 28 GHz auction are based on counties, while the 24 GHz licenses in Auction 102 will be based on Partial Economic Areas (PEAs). The nation’s big mobile operators tend to like PEAs rather than counties due to their economics, while smaller or regional operators prefer smaller sized license sizes, so it’s quite possible the latter will more active participants in the 28 GHz auction.

Which companies are bidding?

The FCC released the names of would-be auction participants in October, of which there are 40, including AT&T Spectrum Frontiers, Verizon, Cox Communications, T-Mobile, U.S. Cellular, Frontier Communications and Windstream. A range of smaller players are also on the list, including Starry, Pine Belt Cellular and Inland Cellular.

It’s equally illuminating to note who’s not on the lists of bidders. Comcast and Charter did not file applications. However, Cox did file an application for the 24 GHz auction. BTIG analyst Walter Piecyk noted in a blog post that cable operators have largely been skeptical about the usability of millimeter wave spectrum despite the launch by Verizon’s competitive Home 5G broadband service using 28 GHz. It’s also telling, he said, that cable operators that have fiber and backhaul cable infrastructure close to the end user have talked about being mobile 5G providers, and yet they don’t even plan to show up for these auctions.

Bill Ho, analyst at 556 Ventures, said he expects Verizon, AT&T and T-Mobile will bid on the 28 GHz licenses because they’ve already invested in 28 GHz trials. But it’s a cost-benefit analysis for each bidder. And the 600 MHz auction—the most recent one in which to compare it to—is really an apples-to-oranges comparison. The 600 MHz band spectrum provides range and penetration but the bandwidth is small. At 24 GHz and 28 GHz, it’s a fatter pipe but much less desirable in terms of propagation characteristics.

“It makes sense for AT&T and Verizon to get heavy (for the right price) in markets where they’re thinking fixed wireless will provide growth and revenue opportunities,” Ho told FierceWirelessTech. “T-Mobile, if the Sprint merger goes through, can count on the 2.5 band to address their fixed wireless ambitions. But, as all CTOs say, there is never enough spectrum.”

What are they bidding for?

Brian Goemmer, president of AllNet Insights & Analytics, analyzed the list of markets that are available in the 28 GHz auction and said he thinks Verizon will want to get at least one channel in all of the top 100 markets. Essentially, where the FCC has 28 GHz spectrum is where Verizon is missing it. “I think they want to get Honolulu,” he told FierceWirelessTech.

That means it could be looking at acquiring licenses that include not only Honolulu, but also counties that include Omaha, Grand Rapids, Michigan, Bakersfield, California, Allentown, Pennsylvania, the Rio Grande Valley in Texas, Baton Rouge, Louisiana, Little Rock, Arkansas, Charleston, South Carolina, Colorado Springs, Colorado, Fort Meyers, Florida, Mobile, Alabama, Wichita, Kansas, Harrisburg, Pennsylvania, and Melbourne, Florida. That’s 14 markets out of the top 100 that it appears Verizon needs, Goemmer said, noting the population size in the top 100th market is just over half a million people.

The 24 GHz auction, however, offers New York, Los Angeles, Chicago, San Francisco, the Baltimore-Washington area, Philadelphia, Boston, Dallas, Miami and Houston, and that’s just the top 10 markets. If a bidder wants to get a presence in the major cities, the fastest way to do it would be to swoop in and grab 24 GHz licenses.

Both AT&T and T-Mobile have 39 GHz licenses, but neither has the kind of scope that Verizon has at 28 GHz. “I think the 24 GHz is going to be a battle royale between AT&T and T-Mobile,” Goemmer said.

Sprint has a boatload of 2.5 GHz spectrum, and it’s not clear how aggressively it’s going to go after the millimeter wave spectrum. Regardless, Piecyk said it’s in the interest of T-Mobile politically to be involved in the auction. The FCC granted a waiver, in part, to the two carriers so they can participate in the auctions even while they’re in discussions about a proposed merger. FCC anti-collusion rules generally forbid bidders from talking to one another during the auction process.

What’s somewhat surprising in the list of participants is the number of regional or smaller operators. They may not be looking to use the spectrum for broad coverage but more for Point-to-Multipoint (P2MP) systems, or last mile coverage, which is ironic given how many of these frequencies were originally destined for those types of deployments but they ended up reverting back to the FCC. Auction rules allow for both the 28 and 24 GHz bands to be used for either mobile or fixed wireless services.

How much will they spend?

The big question is how much these two auctions will bring in for the U.S. Treasury. Just based on the FCC’s opening bid requirements—with New York garnering the highest minimum opening bid of over $5 million in the 24 GHz auction—it’s clear the government expects another windfall. But it’s still hard to say for sure until the final bids come in. Not all the carriers participated in the 600 MHz auction that closed in 2017; T-Mobile turned out to be the biggest bidder there, and it’s already putting its 600 MHz spectrum to use far earlier than many expected and branding it for 5G to boot. Opening bids in the 600 MHz auction were about 188 times higher per MHz than what the FCC set for minimum bids in the 24 GHz band, which is $438 million, according to Wilkus.

While 5G will apply to low-, mid- and high-band spectrum, millimeter wave offers a lot of bandwidth—big channels are good for speed and capacity. What it’s not as good at is penetration through things like Low E glass, structures and foliage, typically requiring more cells because the signals don’t travel as far as they do in lower bands and therefore potentially increasing costs for build-out and maintenance.

Even though operators have been using millimeter band spectrum for some time now, this marks the first time these bands are going out for auction under a multi-use, 5G model—which means it’s the first time the industry will get a sense of the kinds of money the higher bands will demand at auction. Of course, millimeter wave spectrum has changed hands in secondary market deals, with Verizon spending $3.1 billion to buy Straight Path in February 2018—after a bidding war with AT&T—and $2 billion for XO the year before.

What’s this mean for future spectrum bands?

Indeed, it’s a rare time in the U.S. as there’s quite a bit of spectrum in motion. The 3.5 GHz band is being teed up for a unique spectrum sharing regime, and the licensed portion of that band could go up for auction in 2019 or 2020. The 37, 29 and 42 GHz bands are set to be auctioned the second half of 2019, and the FCC is still considering what to do with other bands, like the 3.7-4.2 GHz band, or C-Band. The wireless industry has displayed in recent months a strong desire for midband spectrum, and that could affect the decisions bidders make about the millimeter wave auctions.

Just as the 600 MHz incentive auction was a first of its kind, the 28 and 24 GHz auctions promise to bring their fair share of firsts—and they will no doubt inform the commission’s decisions about how to auction future spectrum bands as well.