The FCC plans to auction 70 MHz of the spectrum in June 2020 while authorizing the remaining 80 MHz for public use. In all cases, the spectrum must be shared with the military, which gets priority access to the spectrum at any time.
The spectrum also must be shared among users – something that will be monitored by authorized SAS administrators. The FCC named five administrators in the docket: Amdocs, CommScope, Federated Wireless, Google, and Sony. The administrators must report back to the FCC after 30 days to report how their software is handling the tracking and sharing of the spectrum.
The FCC changed their original plans for the auction and use of the spectrum that was originally proposed in 2015. The size of a license footprint is now set at the county level rather than the smaller census blocks. Licenses will now be issued for 10 years with a provision to renew instead of 3 years. Small businesses and rural bidders can get bidding credits. The FCC is also establishing a secondary market by allowing license holders to sell or lease the spectrum to others.
Of most interest to rural carriers are the bidding credits. Small businesses with gross revenues less than $55 million will get a 15% bidding credit. Very small businesses with annual gross revenues under $20 million will get a 25% bidding credit. Rural carriers with less than 250,000 customers will get a 15% credit. There will be additional credits given for serving tribal lands.
Much of the public comments in the docket centered on the size of the service areas. The FCC had originally considered using census blocks, reasoning that rural carriers could pursue reasonably small licenses for offering rural fixed wireless. The cellular carriers wanted much larger areas referred to as partial economic areas (PALs). The FCC finally chose a license size in the middle, using county borders.
The spectrum in each county will be auctioned off in seven 10-MHz bands. Any bidder will be limited to using no more than 4 of the bands, or 40 MHz of spectrum. Interestingly, the ability to lease spectrum from others might mean that a wireless carrier could put together even a bigger swath of the spectrum.
The auction is going to be interesting to watch to see who shows up to bid. The cellular carriers have said that this spectrum is key to their mid-band 5G plans. The industry was already anticipating this order and this spectrum is already built into the new iPhone and a few other devices. The cellular carriers have plans to heavily use the 80 MHz of public spectrum, and they will certainly also chase the licensed spectrum in urban counties. We’ll have to see if they have any need or interest to pursue the licensed spectrum in rural counties, where one might think that the public bands of CBRS ought to satisfy their needs. If the big companies pursue the rural bands, they can drive prices up, even considering the rural company bidding credit.
Spectrum licenses have historically been awarded for much larger footprints and it will be interesting to see how awarding spectrum at the county level will impact the auction. There are already rural carriers using the public portions of the spectrum for fixed wireless service. What is unknown is how much the cellular carriers will also use the public spectrum in rural places, perhaps making the public band too crowded for getting the best use of fixed wireless. WISPs will likely prefer licensed spectrum if they can get it affordably since there will be zero interference. We’ll also have to see if many WISPs will have the financial wherewithal to pursue licensed spectrum.
One of the most interesting aspects of the order is allowing spectrum buyers to lease or sell spectrum. I fear this provision will attract speculators to the auction, which could drive up the cost of buying spectrum and also then drive up the cost of leasing the spectrum. But this also might give small ISPs that couldn’t qualify for the auction the ability to use licensed spectrum.