The USA’s two most recent auctions were both focused on midband spectrum, vital for the economics of 5G but in desperately short supply for two of the big three MNOs. The CBRS auction introduced an innovative three-tiered approach to allocating spectrum in the 3550-3700 MHz band. The recently finalized C-band sale, in 3700-3980 MHz, hit records for the amounts paid by operators – reflecting the midband spectrum hunger of Verizon and AT&T. But those two auctions, both historic in their way, are not the end of the saga of the USA’s 5G allocations.
Next on the block will be the 3.45 GHz band (3450-3550 MHz), which sits just below the other two, and is already the focus of heated debate over the terms and conditions of allocation. This will be important to companies – potentially including Dish Network and the larger cablecos – that were expected to win large amounts of C-band spectrum, but may have been deterred by the high spending of the two telco leaders. If, as some analysts believe, these companies decided to keep their powder dry for the 3.45 GHz sale, the prices in that process could also be inflated beyond expectations.
That will only happen if the band is allocated in a way that suits the operators’ requirements however. A group of cablecos – together with Google and some other industry players – is lobbying Congress to apply the rules adopted for CBRS to the 3.45 GHz band also.
The cable contingent is led by the NCTA (National Cable and Television Association), major cablecos Charter, Comcast and Cox, and some smaller players.
They want a version of the CBRS rules to be adopted because that would provide flexibility to support a variety of operating models, including smart cities, rural expansion and enterprise networks, and would lower barriers to participation by smaller operators.
In the auctions for the licensed portion of the CBRS band (priority access licences), county-sized licence areas were adopted, which struck a middle way between very localized franchises, which some advocated to encourage small and specialized service providers, and the larger market areas that are usually adopted for major auctions, but which are generally affordable only for big players. The CBRS PAL auction attracted a record 271 qualified applicants, while the more traditional C-band structure attracted only 57, with only 21 successful bidders.
The cablecos and their allies are concerned that the FCC’s draft order concerning rules for the 3.45 GHz auction will limit participation as these are closer to the C-band rules, particularly in adopting larger geographic areas.
“The large partial economic area licenses proposed would not foster the kind of robust participation and innovation that made the CBRS auction a success and could also result in tepid investment and build out in rural areas where Americans need broadband more than ever before,” the group told Congress.
The biggest fear for the cable operators is probably that they will lose out to T-Mobile USA and Dish. These MNOs largely sat out the C-band auction, especially after the prices were driven sky-high by AT&T and Verizon’s hunger for midband airwaves. But the big two telcos will not need to spend large sums in the new auction (nor can they afford to), while the large licence areas proposed for 3.45 GHz will suit TMO and Dish better than the cablecos or smaller providers. This should put those two operators in the cat-seat.
Analysts at New Street Research wrote in a client note that TMO and Dish should take full advantage, saying that the upcoming spectrum allocation is “almost as important as the C-band … It’s the same spectrum, available sooner” (because it does not have such a complex refarming challenge as C-band, which is occupied by satellite providers, while 3.45 GHz is used by naval radar).
However, there will still be costs associated with helping the incumbent federal users to clear the band – the NTIA has estimated these costs will be more than $13.4bn. Those won’t be borne by the spectrum winners, unlike some of the C-band clearance costs, but that sum effectively means the auction will have a total reserve price of about $15bn.
The cable-led group is calling on Congress to work with the NTIA and FCC to encourage adjustment to the auction rules, even at this late stage, and to reduce the costs of relocation. Despite these challenges, they want the auction to start in October 2021, two months before the December deadline set by Congress.
“Wireless providers’ large financial commitments in the recent C-band auction and related build-out obligations make it all the more appropriate to encourage other sources of capital in a second midband spectrum auction in the same year,” the group said.
Other parties signing the letter to Congress included smaller cablecos Mediacom and Midco, plus the American Petroleum Institute, Celona, Dynamic Spectrum Alliance, Edison Electric Institute, Energy Telecommunications and Electrical Association, Enterprise Wireless Alliance, Federated Wireless, Google, HP, Next Century Cities, Open Technology Institute at New America, Public Knowledge, Rural Wireless Association, Southern Line, Utilities Technology Council and the Wireless Internet Service Providers Association.
Meanwhile, Dish has its own agenda for the 3.45 GHz band and is also petitioning the FCC to change its proposed rules, though in different ways from those envisaged by the cablecos. And it is going further, also asking the FCC to change the CBRS rules retrospectively.
“Dish urges the Commission to think holistically about midband spectrum in order to maximize the efficient use of these valuable airwaves,” it wrote.
Dish acquired only one licence in the C-band auction but spent $913m on 5,492 CBRS licences last year, prioritizing breadth over depth to end up with about 20 MHz across the whole country. This complemented its existing holdings in sub-GHz and midband spectrum well, but now it wants a change of rules related to power levels, to make it easier and more cost-effective to build a network in its CBRS airwaves.
It argues that current power limitations would limit CBRS build-out to small cells alone. It wrote in a filing with the FCC: “The current CBRS EIRP [radiated power] limit of 47dBm/10 MHz … is likely to thwart a wide variety of desirable use cases, effectively limiting CBRS users to small cell deployments … Dish’s technical analysis found that no party is likely to be harmed by higher power use cases in the CBRS band.”
The changes Dish wants would not only allow for larger cells and stronger signals, but would enable it to align its CBRS spectrum more easily with any airwaves it acquires in the 3.45 GHz auction – which has similar power limit rules to those of the C-band.
Dish said that keeping the CBRS band “relatively encumbered” with lower power limits leaves it “sandwiched between the 3.45 GHz band and the 3.7 GHz band, both of which would have services rules optimized for large-scale, wide-channel 5G service offerings … This is akin to connecting two cities with a new eight-lane high-speed roadway, but constructing a stretch of single lane road in the middle. The current US approach undermines the overall usefulness of the entire 3 GHz band, and places the United States at odds with our major global competitors, especially China.”
Dish added that TDD synchronization would have to be mandated across the CBRS band and the 3.45 GHz band to prevent interference.
“If the FCC were both to require TDD synchronization and increase CBRS power levels, the US could create 530 MHz of contiguous midband spectrum (3450-3980 MHz) with compatible power levels, which as explained above would position the US to compete at global scale for 5G technology and services,” Dish concluded.