Analyst Iain Gillott, founder and president of iGR, said he was disappointed in the recent CBRS spectrum auction because it didn’t get as much involvement from enterprises as it might have.
In terms of the goal of having a multitude of organizations and enterprises bidding for spectrum and driving up the prices, Gillott said, “I don’t think it did what it was supposed to do.”
Yes, Deere & Company and Chevron won priority access licenses (PALs), but Gillott pointed out that only four universities got licenses, even though educational institutions around the country are active users of the unlicensed portion of the CBRS spectrum. “In that respect I think the CBRS PALs were a failure. I don’t think four universities was a success.”
He speculates that the reason more universities and enterprises didn’t participate in the CBRS Auction 105 was that the county-sized licenses covered too much geography and cost too much for these entities. Many organizations only need spectrum to cover their campuses, public venues or industrial locations. They couldn’t afford to buy a PAL for the entirety of LA County, for example.
When plans for the CBRS auction were being hammered out a few years ago, regulators considered auctioning licenses at the smaller census level rather than the county level, but it would have been a more complicated auction, and that plan got nixed.
“Carriers want to get as big an area as possible and have as few other bidders as possible,” said Gillott.
Mobile Experts analyst Kyung Mun said if the FCC had made the geographic areas smaller it would have driven up participation and decreased costs. “But that was already discussed for years and would have decreased the appetite for the bigger players," said Mun. "The FCC made a compromise.”
In terms of the final $4.5 billion proceeds of the auction, Mun said, “It was higher than I expected.” He had been forecasting CBRS auction results for a couple of years. In June 2019 he estimated $2.2 billion, and in June 2020 he boosted his forecast to $3.4 billion. “I knew it was going to go up, but it was bigger than I thought despite the fact that AT&T didn’t participate,” said Mun.
Gillott also thought the final proceeds “were actually pretty good.” But he wonders about the proceeds from the upcoming C-BAND auction in December. Organizations and enterprises aren’t expected to participate in this auction. With only mobile carriers and cable operator participation, how much competitive bidding can be expected?
Just because more enterprises and other organizations didn’t obtain PALs, doesn’t mean that they won’t use CBRS spectrum for private wireless networks. They can still use the unlicensed general authorized access (GAA) portion of the CBRS band. And they are also likely to obtain PALs through the secondary market, leasing PAL spectrum from other companies that own it.
The mandatory “quiet period” for CBRS spectrum — where companies were not permitted to talk about their bidding plans or spectrum-use plans — ended last week. So, we may start to see some activity on the secondary market.
The spectrum access system (SAS) administrators could be poised as the perfect entities to create secondary market exchanges, bringing spectrum lessors and lessees together for potential financial transactions. Their SAS databases and algorithms already manage the sharing of CBRS spectrum, making sure there’s no interference in the band.
Mun said of the SAS administrators, “I think they’re very well-positioned to do that. They’re in good position to be that broker. They’d have to create that exchange platform software system.”
Speaking of the secondary market: Dish acquired a lot of PALs, and could be well-positioned as a lessor in the secondary market. Gillott said Dish got 10 MHz of CBRS spectrum in “nearly every county in the U.S.” He noted that many of these counties have a major highway running through them. “We can speculate on their strategy all day long and probably get no closer to the truth,” said Gillott.
But Dish has the potential to be an active player in the CBRS secondary market.
Mun said of Dish, “Their appetite for spectrum seems to be never ending. It’s a strategic asset for them that does not depreciate over time.”