Few things in life cause worry and regret like a big, unexpected bill. And America’s mobile network operators were dealt a whopper of almost unparalleled proportions last month. 

The bills likely awaiting Verizon and AT&T following last month’s C-band spectrum auction place even greater pressure on both operators to build yet-to-be-seen services and specialized use cases that could actually deliver substantial new revenue from 5G.

“Assuming these two have spent heavily, they will be under internal pressure to build out rapidly to secure a rapid return,” Rupert Wood, research director at Analysys Mason, wrote in a recent report.

The real cost and new burdens awaiting Verizon and AT&T are even greater, according to Wood. “Total mobile operator revenue and capex (excluding spectrum in the U.S. in 2019) stood at $179.3 billion and $29.1 billion respectively, so the sum paid is collectively 2.8-times higher than annual capex,” he wrote.

Any way you slice it, Verizon and AT&T face a world of hurt following last month’s spectrum auction that shattered the previous high reached in 2015. The C-band spectrum auction, which included airwaves in the 3.7 GHz-3.98 GHz band, ended last month at a total of $80.92 billion.

While the auction winners aren’t expected to be formally announced until next month, the sticker shock is expected to be most painful for Verizon and AT&T because both entered the auction with significantly less mid-band spectrum than T-Mobile US. 

Analysts at MoffettNathanson last month estimated that Verizon could be on the hook for as much as $40 billion. AT&T, days before the auction ended, approached a group of banks to borrow $14 billion to pay for at least some, or maybe all, of the licenses it won in the auction, Bloomberg reported.

It remains to be seen if T-Mobile US will also turn up as a winning bidder in the auction on any grand level, but it’s unlikely. Consider what it got in lieu of spending aggressively in the latest auction by merging with Sprint last year at an effective cost of $21.5 billion, excluding roughly $37 billion of debt Sprint had before the deal closed: a vast trove of nationwide 2.5 GHz spectrum and about 29 million customers.

The entirety of mid-band spectrum recently put up for auction was only slightly larger than what T-Mobile US already owns.

The expectations U.S. operators set for 5G, compounded by additional financial burdens absorbed to gain these spectrum holdings, put AT&T and Verizon at an even greater disadvantage with T-Mobile US, according to Wood.

Many of the traditional means of measuring the technical and commercial value of U.S. mobile networks are in decline, according to Wood. And there aren’t any obvious signs that Verizon or AT&T will outperform T-Mobile US this decade on the mainstream consumer services front, he noted.

All of this makes the weight of 5G expectation in the U.S. all the more heavy, and perhaps to the detriment of AT&T and Verizon especially, Wood argued. “It is therefore all the more important that AT&T and Verizon really do find new wave 5G enterprise revenue," he said.