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FCC Steps Up 5G Push With First High-Band Spectrum Auction

Zacks Equity Research
The Federal Communications Commission is pursuing a comprehensive strategy to implement the 5G FAST Plan.

The United States is progressing well to lead the world in 5G — the next generation of wireless connectivity — which will enable faster speeds and low latency wireless broadband services. Leveraging state-of-the-art communication network architectures, 5G is touted to be the primary catalyst for next-generation Internet of Things services. These include connected cars coupled with augmented reality and virtual reality platform, smart cities and connected devices that revolutionize key industry verticals.

The Federal Communications Commission (“FCC”) is pursuing a comprehensive strategy to implement the 5G FAST (Facilitate America’s Superiority in 5G Technology) Plan, which includes pushing more spectrum into the marketplace, updating infrastructure policy and modernizing outdated regulations. The 5G FAST plan is critical for boosting economic growth, job creation and America’s global competitiveness.

On Nov 14, 2018, the FCC launched its first high-band 5G spectrum auction, paving the way for next generation super-fast networks. Bidding began on the same day on spectrum in the 28 GHz band followed by bidding for spectrum in the 24 GHz band. The FCC is making 1.55 GHz of spectrum available through these two auctions that will be followed by the auction of three more millimeter-wave spectrum bands — 37 GHz, 39 GHz and 47 GHz — in 2019. These airwaves will be critical in deploying 5G services and applications. The FCC intends to push almost 5 GHz of spectrum into the commercial marketplace over the next 15 months. Last month, President Trump inked a memorandum directing the Commerce Department to develop a long-term comprehensive national spectrum strategy to prepare for the introduction of 5G.

Players in the national wireless industry are developing their 5G networks and are working to acquire spectrum to outstrip competition. The industry should benefit from the favorable macroeconomic environment and solid sector dynamics as leading carriers seek to deploy 5G technology in select cities across the country by the end of 2018. So, it might be a good idea to bet on this space right now.

AT&T Inc. T is gearing up to launch the first standards-based 5G services in multiple U.S. markets by the end of 2018. The company is ramping up its FirstNet program and revamping its lineup of video products, pricing and promotion initiatives. The stock currently has a Zacks Rank #3 (Hold) and a long-term earnings growth expectation of 3.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Verizon Communications Inc. VZ plans to launch next-generation 5G wireless residential broadband services in three to five U.S. markets in 2018 and expects to gain traction with the 5G boom. It currently has a Zacks Rank #3 and a long-term earnings growth expectation of 4.9%. The stock has returned 31.7% on an average in the past year.

T-Mobile US, Inc. TMUS has received shareholder approval for its merger with Sprint, which is a step forward in creating the New T-Mobile. This will enable the company to bring robust competition in the 5G market. T-Mobile has inked deal with Ericsson and Nokia to accelerate the deployment of a nationwide 5G network. It currently has a Zacks Rank #3 and a long-term earnings growth expectation of 9.1%. The stock has returned 13.9% on an average in the past year.

Sprint Corporation’s S strategy of balancing growth and profitability while increasing network investments and adding digital capabilities will likely drive its financial performance in the coming quarters. The company’s multi-year plan to improve cost structure, and its "Unlimited for All" plan designed for customers, bode well. The stock has returned 21.3% on an average in the past six months.

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