Interest Seen High, Despite Unknowns, in CBRS Auction Starting Thursday

The outlook is mostly positive. Yet questions remain, industry officials said in recent interviews. The CBRS rules divide the 3.5 GHz spectrum into three tiers: incumbents, PALs and general authorized access (GAA).

More than 40 operators and 30,000 devices are deployed in CBRS, said Jennifer McCarthy, Federated Wireless vice president-legal advocacy. “There’s obviously a lot of demand for this spectrum and a lot of folks interested in it,” she said: “It’s really an interesting mix of companies” that qualified for the auction. McCarthy predicted the auction will last several months because of the large number of bidders, with licenses awarded next year.

“I’m cautiously optimistic,” said Key Bridge Wireless CEO Jesse Caulfield. “The private LTE seems to be kind of the killer app for CBRS spectrum,” he said. "Adoption of CBRS spectrum into the LTE channel plan seems to be kind of a critical path.” It “remains to be seen” if the carriers will go big, he said: “The carriers themselves are giving some mixed signals.”

“It’s fairly clear that Verizon and the cable operators are very committed here,” said Craig Moffett, analyst at MoffettNathanson: “The question is whether the other bidders, including the electric utilities, are as serious.”

The interplay between the PALs and the GAA spectrum “will be interesting to watch,” Moffett noted: “You could argue that it only makes sense for an operator to build facilities if they have a PAL license. But once they do have a PAL license, then all of the GAA spectrum is suddenly usable as well. That could create an unusual dynamic, where a bidder’s first license is incredibly valuable, but their second license much less so.”

“There seems to be an enormous amount of interest from all kinds of players, including nontraditional participants,” said Jonathan Adelstein, president of the Wireless Infrastructure Association. “We’re really excited by the possibility for a lot of new wireless infrastructure to accommodate all the interest in CBRS. It looks like it’s going to be really active.”

Recon Analytics’ Roger Entner compared the auction to a three-dimensional chess match. “In the largest markets there will definitely be interest in PALs,” Entner said: “The smaller the market the less interest exists unless someone has a particular market need. Also the size of the counties, which represent a market, plays a role, which we never had before.” The CBRS auction is “definitely not business as usual for the auction teams at the operators, potential operators and financial investors participating,” Entner said.

“The broad interest in this spectrum for a variety of applications should result in a positive result for the FCC,” said LightShed’s Walter Piecyk. “Spectrum doubters have been claiming the industry has enough spectrum for decades, yet interest in spectrum purchases have not only not waned but the buyer list has broadened.”

“The PAL auction is a very important indicator on adoption of CBRS,” said Federated Chief Technology Officer Kurt Schaubach. “The volume of interest certainly speaks similar volumes about how CBRS has really taken hold in the industry.” Schaubach said the company is the only player that will offer environmental sensing capability services in every market in the continental U.S., with 240 sites nationwide. “We’re now a little over a year into our ESC network launch,” he said: “We’ve been very pleased with the capability we’ve seen with the network to date.” Google, the next biggest ESC, doesn’t provide service in some big population centers on the East and West coasts, he said.

Key Bridge was approved as an ESC and it's still starting its deployment, with its first phase launching in the next week, Caulfield said. “I would take all power-point assertions with a grain of salt,” he said: “We’ve seen a well-funded, speculative play flood the zone. … Whether they’re ultimately successful remains to be seen.” Upfront investment won’t guarantee customers with what is likely to be a five-year or longer adoption cycle, he said: “We’re not going to speculatively deploy our ESC network. We will deploy where and when there is demand.” ECS is “not a revenue generator,” he said. “It’s a cost center.”

“CommScope's FCC-certified ESC network is available coast to coast and is currently being used by customers,” said Mark Gibson, director-business development. Google didn't comment Monday.

Federated doesn’t expect a second PAL auction since spectrum that goes unsold becomes part of the GAA tier, McCarthy said. She “could see” the FCC “revisiting that if a really large number of licenses weren’t sold and folks were waiting to see how it all played out.” but “it seems like they’ve already got a mechanism in place,” she said: “There’s a way to make sure that spectrum is usable” and that’s the commission’s “ultimate goal.”