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28 March 2019

Pricing for CBRS fixed wireless becomes clearer, Alliance looks towards 5G

There are many potential applications for the USA’s CBRS spectrum in the 3.5 GHz band, but the most conventional is fixed wireless access (FWA), and that is likely to offer the first indications of the economics of the unlicensed portion.

The CBRS band (Band 48) has been opened up by the FCC with a three-tier priority system. While federal incumbents have guaranteed access, they use the spectrum only sporadically and in limited areas (mainly for naval radar), so there is plenty of capacity available for the other two tiers –PAL (Priority Access Licensed), whose licences will be auctioned this year; and GAA (General Authorized Access).

Some WISPs already use spectrum in the 3.65 GHz band, and will be able to transition to either PAL or GAA operations. So FWA services will be the first to go commercial in CBRS, and Google is setting some TCO expectations already for service providers, and in doing so, is laying down some ground rules for how shared spectrum cellular will measure up against WiFi or licensed 5G in the home broadband and multiplay markets.

Google is one of the six companies authorized by the FCC to provide a Spectrum Access System (SAS), which will allocate vacant channels according to priority. It has announced that it will charge WISPs $2.25 per month per household, in the FWA market, for SAS services.

This is important, as pricing for SAS services had remained a poorly understood aspect of the CBRS business case. Other SAS providers – the most established being Federated Wireless – may announce their own fees now though it is more complex for Federated as its SAS product is generally bundled into wireless equipment from FWA providers like Telrad, Cambium or Motorola.

“Ultimately we want abundant wireless services for everyone,” Mathew Varghese, senior product manager of wireless services at Google, said. He added that the firm may adopt different pricing structures when it looks beyond FWA to other services such as IoT, but pointed out that FWA is very price-sensitive, as most WISPs operate with very small margins. Affordable SAS charges were essential then, said Varghese, to make CBRS attractive to these WISPs.

According to one study, conducted last year by Senza Fili, a WISP would break even in three years when deploying FWA in CBRS spectrum (a mixture of PAL and GAA), and by year five, could expect a profit margin of 51%. This assessment assumed that, if WISPs bought PAL licences, they would not bid any higher than $200 per base station; and that the SAS fees would represent about 7% of total costs, a figure which Google’s pricing suggests will now be lower.

At the recent WISPAmerica trade show, Google also announced other products – including a network planning tool and a CBRS installer certification program. The former will rely on Google’s geospatial database to help operators assess how far their signal will reach from various locations and heights of towers.

Google will also offer an online Certified Professional Installer (CPI) training program for CBRS devices, to boost the number of qualified technicians and so prevent a possible bottleneck on deployment (anyone who installs a CBRS system must have a certification to connect that equipment to a SAS). This training program will cost $599.

Such developments will allow Google to make revenues from its role in the CBRS value chain, but of course these will be marginal in its overall business, and its primary motivation is likely to be to accelerate deployment in the CBRS band, which will help to introduce new competition to the MNOs in the 4G/5G sector; prove the case for deployability in shared spectrum; and expand affordable Internet access in order to boost usage of Google’s services. The announcements also see Google defining the rules for this market, in a way that could set precedents for similar initiatives elsewhere.

While no date has yet been set for the PAL licence auctions, the CBRS community is seeking to drive as much as momentum as possible behind the GAA model. In the medium term, the shape of the CBRS landscape will depend heavily on who acquires most of the licences. If the biggest buyers are established MNOs, we could see the licensed spectrum element making little difference to the market structure – they could use the airwaves to bolster LTE or 5G capacity, lowering their own costs but not necessarily delivering new services.

However, if industrial players, cloud operators or cablecos gain a large share of the licences, there may be a bigger swing towards enterprise sub-nets and in-home services that go beyond what the MNOs plan to offer. In that eventuality, there would be likely to be more commonality between the use cases supported by the GAA and PAL tiers, and greater ability to use both resources on a dynamic basis according to channel availability and the quality of service requirements of a particular application.

For now, there will be no 5G opportunity in GAA, since standards for unlicensed 5G will not be set until Release 16, so that raises some interesting questions over how long an LTE-based (or WiFi-based) solution will stand up against 5G in the FWA sector – the first to be addressed in CBRS. But in the services which we believe will make CBRS truly disruptive, in enterprise sub-nets and private local networks, there is plenty of life left in LTE. This is especially true as most of the 5G specifications which will put it ahead of 4G in enterprise and IoT environments will – like 5G-Unlicensed – only be finalized in Release 16 or beyond, which means they will not be in mainstream commercial equipment until the latter part of 2020.

However, the CBRS Alliance is already preparing for 5G. It said last week that it had started work on technical specs to support 5G NR in the 3.5 GHz band. This work will be enshrined in CBRS Release 3 and will address coexistence requirements for interoperability between LTE and 5G NR in and out of Band 48. The CBRS Alliance hopes to finish Release 3 by the fourth quarter of 2019, with 5G service availability in 2020.

At Mobile World Congress, the Alliance also signed a formal deal with the Small Cell Forum to work on a range of initiatives to boost large-scale adoption of small cells, by accelerating adoption of CBRS solutions for densification. The relatively high frequency of the band, and the tight power limitations when indoors, mean it is best suited to small cells.

Around the world, 3.5 GHz is emerging as the dominant new midrange band for 5G, but in the USA it will have a very different band plan because of the federal usage. Some operators, most vocally T-Mobile, have criticized the emphasis on unlicensed usage, and therefore 4G, in CBRS, arguing that this threatens to keep the USA outside the global 5G ecosystem.

But the CBRS scheme is showing promise of injecting a new source of innovation and competition into the broader US wireless market. Indeed, analysts at Dell’Oro Group believe CBRS RAN investments, for 4G and 5G, will exceed $1bn by 2023 on the back of this broad base of interest from different service providers and sectors. This would equate to over 20% of US small cell spending by 2023.

“We continue to believe the CBRS band, with its unique spectrum sharing characteristics, includes many of the right ingredients to change the status quo about how networks are built,” said Stefan Pongratz, senior director at the research firm. “And recent announcement by the CBRS Alliance to support OnGo [the brand name for certified CBRS systems] over 5G underpins projections that 5G NR deployments in the CBRS band are set to accelerate in the outer part of the forecast period.”