With PAL auction set to start, the final phase of CBRS commercialization is not far off
The Priority Access License auction for the Citizens Broadband Radio Service spectrum at 3.5 GHz will begin on Thursday, with a field of 271 bidders vying for the largest-ever number of licenses that the Federal Communications Commission has put up in a single auction: Seven licenses per U.S. county, or 22,631.
Federated Wireless is following auction developments closely, having already enabled the turn-up of thousands of CBRS sites across the country and the deployments of dozens of CBRS tests, trials and early commercial networks. Federated has been a central player in the development and commercialization of CBRS from its earliest days, and that involvement is paying off as the ecosystem has burst out of the starting gate after years of anticipation in the lead-up to the Initial Commercial Deployment (ICD) period last fall and the subsequent FCC approval of full commercialization in January 2020.
But the company is also already looking past the auction, to how as a Spectrum Access System administrator, it will enable a PAL secondary spectrum market that has been designed to be unlike anything the industry has seen.
According to Federated Wireless executives, there are an estimated 25,000+ CBRS base stations (Citizens Broadband radio Service Devices, or CBSDs) that are deployed across the United States, and around 15,000 of them are utilizing Federated’s network. Its SAS and Environmental Sensing Capability (ESC) together allow the company to enable managed spectrum access to the full 150 megahertz of the CBRS band in nearly the entire country. Federated said it’s supporting deployments from 40+ customers in various stages (although CEO Iyad Tarazi added that most of the site volume is driven by three or four customers).
That amount of deployment in the roughly 10 months since ICD began “really shows how much enthusiasm there is for getting access to this spectrum, even on the [General Authorized Access] tier,” said Jennifer McCarthy, VP, legal for Federated Wireless.
The FCC’s unique rules around CBRS mean that there are some pretty radical differences between this auction and others, and the secondary spectrum market is expected to be much more dynamic than anything the industry has seen before. The band is shared, so rather than single ownership, bidders are buying priority access to the spectrum. The extraordinary number of licenses, in county-sized chunks, is already attracting a large number of bidders beyond the national wireless carriers and sets up an unusually large number of potential secondary transactions. Additional players who don’t necessarily want to deal with the intricacies of an auction may seek out spectrum from the winners after the fact. To facilitate a more active secondary spectrum market, the FCC has also set up rules for “light-touch leasing” facilitated by SAS administrators, instead of the standard paperwork-heavy process of secondary spectrum rights purchases and transfers overseen by the agency; and it has established a “use-it-or-share it” principle to govern use of the band, even for PAL holders.
“What we think that ‘use it or share it’ set of rules does, it really provide very big incentives for the PAL licensees to either put the spectrum to use themselves, very quickly … or, if they’re not planning to use the spectrum, either throughout the license area or only in a partial geography, it creates a big incentive for them to lease that spectrum to other folks and generate revenue from it, and take advantage of that deployment to count toward their buildout requirements for the FCC,” McCarthy said. The PAL provisions, she added, “are going to help really drive further deployment of the spectrum very quickly.”
Another motivation for PAL holders to lease portions of their license that they don’t plan to deploy is that those deployments will ultimately count toward build-out requirements. “I think you’re going to see a lot of these licensees relying on their leased spectrum deployments to [demonstrate] that they’ve met the rules. So it’ll be a combination of their own deployments and what their lessees are doing as well,” McCarthy said.
As far as the auction itself, McCarthy said that given the large number of licenses and bidders, Federated is expecting it to last “at least a couple of months, if not longer,” so that it could be well into fall and even into the fourth quarter before the bidding is wrapped up. Once that happens, there will be a short period during which the FCC processes final applications and payments, and then issues the PALs. That could perhaps come before the end of the year, McCarthy said, but it’s more likely to be January of 2021.
At that point, she said, Federated (and the other SAS administrators) will have to stand ready to implement PAL Protection Areas (PAAs) on the edges of each PAL and authorize GAA use on the remaining spectrum. That will also be the point at which Federated will turn to enabling the secondary spectrum market. The company has been working on creating a marketplace where those transactions can take place.
McCarthy described that marketplace as an online platform into which PAL licensees can put their inventory of spectrum that’s available for lease into Federated’s system, and then people who are interested in leasing spectrum can visit the website and see what spectrum is available in the areas they are interested in, what the prices are, what the terms are, and “easily and quickly transact a lease for that spectrum — and get it all done in the same day,” she said. “This is a really quick turnaround process that the FCC is allowing, and we think that by combining our Spectrum Controller, which helps to manage the sharing of the spectrum, and helping the PAL licensees to manage their use of the spectrum with the marketplace for PAL spectrum to be leased, that it really provides a very efficient and streamlined process for folks to manage their spectrum going forward.
“I think it’s going to transform how spectrum is used, going forward, and should be a really good lesson for future bands, that this is the right way to make sure spectrum is accessible and put to use as quickly as possible,” she said.
The PALs auction is also unique in that it is offering up access to spectrum that already has a working ecosystem, with dozens of network equipment and end-user device options available; and the band doesn’t need to go through a lengthy clearing process, because it is shared and already in use under the GAA rules. “If you’re already deployed, you can take advantage of that PAL license immediately,” said Federated CTO Kurt Schaubach. “You’ll be able to activate that capability right after the FCC conveys the licenses.” McCarthy added that many companies who win PALs and are already operating in the spectrum under GAA rules “are probably just going to transition a lot of those deployments over to their PAL and then combine it with GAA going forward.”
Asked about how the PAL spectrum marketplace fits in with Federated’s recent move to offer CBRS-based connectivity-as-a-service solutions through Microsoft Azure marketplace and AWS marketplaces, Schaubach said that while some of the customers who would use the service offering would be served well with GAA access, but some might benefit from having access to a PAL for additional “surety of access” — and Federated “would be looking to combine the market capabilities with the connectivity-as-a-service offering to be able to bring the end-to-end network capabilities, but also the attribution of a PAL.”
What the outcome of the PALs auction will be, remains to be seen. Will WISPs or utilities be more active than anticipated as they try to get their hands on county-level licenses that have never before been available? Will Tier 1 wireless and cable operators attempt to establish a nationwide footprint with PALs, or will they be satisfied with GAA in some or most areas outside of urban centers? Will all seven PALs be sold in every county in the country? Even if that doesn’t happen, McCarthy noted, the nature of the CBRS rules means that the spectrum reverts to GAA and can still be used by anyone who requests it, rather than being held unused by the FCC.
Regardless of how the auction pans out, Federated will be right in the middle of whatever comes next for CBRS. As McCarthy put it, “We’ve been waiting for this and getting ready for it for quite some time.”
Looking for more information on CBRS? Keep an eye out for RCR’s upcoming special report on CBRS and join us for next week’s CBRS webinar, featuring Federated Wireless.
