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Giant wireless sale in US offers 5G spectrum sliced into 22,631 pieces

[WASHINGTON] The US is moving into the new era of fast 5G wireless Internet and the Muscatine Power & Water utility in Iowa wants to join the ride. So does the Arctic Slope Telephone Association Cooperative . that serves Kaktovik and Atqasuk in remote northern Alaska.

They are among more than 200 companies registered to bid in an unusual government auction set to begin on July 23. At stake is potentially US$10 billion worth of lucrative spectrum that can be used for wireless Internet and is assigned by the US Federal Communications Commission (FCC) through competitive bidding.

The number of registered bidders makes it one of the biggest auctions of its type in history. Combined with another sale scheduled for December, it represents a giant leap towards a future of super fast Internet and connected cars, appliances and mobile devices.

Past sales offered licences covering entire metropolitan areas at prices that only wealthy corporations such as AT&T and Verizon Communications could afford. This one offers smaller licences - seven in each county in the country for a total of 22,631.

That means companies with modest finances - such as Muscatine Power and the Alaskan co-op - can get rights to spectrum in just their area. The FCC designed it that way to assure the next generation of wireless service isn't limited to a handful of telecom behemoths, and to give companies with new uses for the technology a shot.

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"It's really a game changer for all of these non-traditional users," said Kurt Schaubach, chief technology officer with Federated Wireless, a company based in Arlington, Virginia, that helps coordinate use of the airwaves being auctioned.

It is the first offering by the FCC in recent years of airwaves suitable for the advanced 5G systems. Proceeds will go to the US Treasury and estimates range to as much as US$10 billion by Raymond James.

"We've never had an auction of this size," said Michael O'Rielly, an FCC commissioner who guided the auction's design. In an interview he ticked off participants - the big national wireless providers, cable companies "of all shapes and sizes", electric utilities and companies beaming broadband over the air.

The frequencies are in the so-called midband range of airwaves, where signals travel well and also can carry abundant data. Both features suit the 5G networks that will link billions of devices in automated factories, homes and elsewhere. Auction winners can only buy four of the seven licenses available in each county, ensuring that no single user can snap up all of an area's airwaves. Each of the seven licences provides rights to use the airwaves across an entire county.

The Muscatine municipal utility, which offers Internet service and runs an electrical grid and water system, could buy airwaves covering just Muscatine County, where there are fewer than 17,000 households.

Utilities and electricity distributors could use their winnings to expand wireless broadband networks, manage electricity distribution, and install remote meter-reading.

Tractor maker Deere & Co is poised to take part. Its products include tractors and combines that link with mobile Internet service.

The airwaves can be used for more rural broadband coverage, enhancing what farmers can do in the field, and supporting manufacturing operations, said Jennifer Hartmann, a spokesperson for Deere, which is based in Moline, Illinois.

A cohort of petroleum companies and utilities have registered to bid.

"Utilities for decades have struggled to acquire the amount of spectrum they need" because they lack the capital available to big telecom providers, said Rob Thormeyer, spokesman for the Utilities Technology Council that advocates for utilities' communications systems.

National mobile carriers enrolled in the sale including AT&T, Verizon and T-Mobile US may be most interested in airwaves to supplement urban coverage.

Largest US cable providers Comcast and Charter Communications are also registered to bid. Each has seen a swell of subscribers who buy wireless service that rides on Verizon's airwaves. If the cable providers can buy airwaves and set up nodes for their customers' use, they could pay Verizon less.

It's the first big sally into airwaves auctions by cable companies in over a decade.

"This is the only good 5G spectrum they could get their hands on for awhile," said Gregory Williams, an analyst with Cowen & Co.

The airwaves to be sold are in the so-called CBRS band. The acronym stands for Citizens Broadband Radio Service. It's located in the 3.5 gigahertz band. The auction runs as long as bidders are competing, a process that typically takes weeks to unfold.

An auction in December is expected to produce even higher bids for spectrum in the so-called C-Band. It will offer swathes of airwaves congenial to mobile broadband, and to allow higher power transmissions that can send signals farther.

The FCC bars participants from publicly signalling bidding strategies, and many declined to discuss the sale. Verizon, Comcast, Charter, AT&T, the Muscatine utility and the Arctic Slope cooperative all declined to comment or didn't respond to queries.

A robust sale with high total bids would bode well for 5G auctions to follow, including the C-band sale on Dec 8 of airwaves to be surrendered by satellite providers, said Harold Feld, senior vice-president for the Washington-based policy group Public Knowledge.

"We're going to see how much are companies willing to pay for this kind of 5G spectrum," Mr Feld said.

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