Why Verizon and AT&T Couldn’t Wait Any Longer for U.S. C-band to Go Live

Key takeaways

• Verizon and AT&T’s concessions on 5G around affected airports marks a breakthrough in a situation that could easily have escalated further and ended up in court, with subsequent delays to their planned C-band launch.
• The opportunity cost of any delay is significant, as T-Mobile continues to extend its lead on 5G performance, which has helped the self-styled “Un-carrier” attract more postpaid net additions than its key rivals combined. This is why both Verizon & AT&T had little choice but to placate the FAA.
• Further mid-band spectrum auction results announced on January 14, saw AT&T and DISH in particular increase their holdings, and underline just how critical mid-band spectrum is to operator performance.
• Comparable international benchmarks from operators in France, Germany and Taiwan show that similar C-band spectrum holdings can drive 5G performance well over 100 Mbps, offering a means for Verizon and AT&T to close the gap with T-Mobile and potentially even move ahead.

Verizon and AT&T play catch-up with T-Mobile

Opportunity cost of further C-band delay too great

Back in February 2021, Verizon and AT&T paid $45.4 billion and $23.4 billion, respectively, for C-band spectrum for 5G use in the most expensive spectrum auction in history. Fast forward almost a year, and both telcos voluntarily agreed in early December to postpone their C-band deployment for a month due to Federal Aviation Administration (FAA) concerns that the use of these 5G bands could interfere with existing radio-based safety equipment, a delay which was subsequently extended to January 19.

In early December, Verizon CEO Hans Vestberg and AT&T Communications CEO Jeff McElfresh were bullish about the prospect of being able to launch in early January following a “short delay,” and that it would have no meaningful impact on their businesses. However, their insistence on a January 19 launch belies obvious concerns over T-Mobile’s increasingly strong lead on 5G performance — a lead which it continued to extend throughout the second half of 2021 — and coinciding with stronger postpaid net adds than its two main rivals combined during the year ended Q3 2021.

Averting an impasse with the FAA was critical

It was critical for both telcos that the delay to their C-band launch was only temporary, despite any skepticism over the potential impact on aircraft passenger safety. Part of the frustration evident from the network operators lies in the fact that C-band spectrum is already widely used elsewhere in the world for 5G, without showing any detrimental impact on aircraft passenger safety. C-band spectrum has already been deployed, and commercial networks launched, by a total of 136 network operators in 56 countries worldwide, according to the Global mobile Suppliers Association (GSA). This includes almost 11,000 airports (assuming nationwide coverage in each market). It’s also not new — the earliest use of C-band spectrum for 5G was in South Korea, which launched in Q4 2018.

Both have sought to compromise by agreeing not to turn on 5G equipment in the vicinity of affected airports. The delayed launch in these locations will enable the FAA to analyze proposed 5G cell site deployments and the impact on airports nationwide. One of the affected airports is Dallas/Fort Worth International Airport. If we look at Verizon’s current 5G (excluding C-band) footprint around the airport using Ookla Cell Analytics below, we can see widespread 5G coverage across its terminal buildings, as well as surrounding highways. The operators have been at pains to point out that their C-band spectrum includes a 220 MHz wide guard band, utilizing the lower portion of the C-band, from 3.7 GHz to 3.8 GHz.

C-band spectrum resets the playing field for 5G in the US

C-band spectrum is considered a sweet spot for 5G, as it strikes a good balance between capacity and coverage. While its reach isn’t as wide as the lower frequency spectrum, it allows operators to add much more capacity while also allowing for significantly better geographical reach when compared to mmWave. At launch, AT&T and Verizon won’t be able to utilize all their C-band assets, being limited to 40 MHz and 60 MHz, respectively, until the end of 2023. Despite this, deployments in the 3.7 GHz band will drive a considerable uplift in performance, helping them begin to close the gap on T-Mobile. The recently announced results of a further auction of mid-band spectrum (3.45 GHz) highlight the importance of mid-band holdings among the US network operators, with AT&T and DISH emerging as the main winners, in the third most expensive spectrum auction in US history. Once made available, this spectrum will allow them to gain further ground on T-Mobile and Verizon (which holds a greater share of C-band spectrum).

If we look internationally at other markets where operators have deployed 5G in the C-band with similar bandwidths, we see 5G median download speeds well in excess of 100 Mbps for O2 in Germany and SFR in France. At the top end of the scale, Taiwan Mobile has deployed 5G in 60 MHz of C-band spectrum, but has pursued an aggressive 5G densification strategy in what is a very competitive 5G market to achieve median speeds approaching 300 Mbps.

Examining the transition from LTE to 5G in France, which launched 5G in the C-band in late November 2020, shows a considerable uptick in performance from day one. Median LTE download speeds in France were 35.30 Mbps in Q4 2020, while 5G median speeds were 94.66 Mbps once launched and have since advanced strongly to a high of 194.69 Mbps in Q4 2021.

While this indicates that both Verizon and AT&T may continue to play catch-up with T-Mobile upon the initial launch of 5G in the C-band, the margin of difference will be substantially reduced, and then it will largely come down to how many 5G cell sites each operator deploys, and when they can turn on additional spectrum resources — the race is on.

This is good news for consumers and businesses alike, and over time will help propel the U.S. up the Ookla Speedtest Global Index™, where it sits in 24th place as of December 2021, and languishes well behind global leaders such as South Korea and China in terms of absolute median speeds.