On the Block: CBRS PAL Licenses Set for Auction

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Expectations are high for Citizens Broadband Radio Service (CBRS). The so-called Innovation Band will open the doors for a variety of new and interesting applications from private LTE to industrial IoT, while testing a new spectrum-sharing framework.

K.C. Halm and Heather Moelter, of Davis Wright Tremaine, and Mark Gibson, of CommScope, led a webinar hosted by WIA Feb. 20 that explored what is ahead for the dynamic CBRS space, including details of the CBRS band, how licenses will be auctioned by the FCC and what opportunities for spectrum acquisition may be presented by the anticipated secondary market for CBRS spectrum. To view a replay of the Webinar, click here.

CBRS Overview

The CBRS band encompasses 150 megahertz of spectrum in the 3.5 GHz band that will be dynamically shared among three tiers of users – incumbents, Priority Access License (PAL) users and General Authorized Access (GAA) users. Incumbents have the highest priority access in the band, followed PAL licenses who will have intermediate priority, and GAA users who can access the spectrum on an opportunistic basis.

The auction of PAL licenses marks the first significant auction of mid-band spectrum in recent years, and there are high expectations for the value of the spectrum based on its usefulness for 5G, said Moelter. Not only does this mid-band spectrum provide favorable propagation characteristics, but 70 megahertz of spectrum will be available per county in 10 megahertz blocks in the form of PAL licenses.

“That’s going to make it possible for a wide number of users to get involved – not just larger entrants that can handle massive bids, but people who can get involved at the local and regional level in a highly tailored way,” Moelter said.

At the heart of the CBRS sharing model are the algorithm-enabled automated frequency coordination systems, or Spectrum Access Systems (SAS), that will manage the allocation of spectrum among all users and prevent interference among the tiers. The FCC recently certified five SAS providers — Amdocs, CommScope, Federated Wireless, Google and Sony.

“One of the things that’s unique to this band is the presence of incumbents that aren’t going anywhere for the most part,” said Gibson. He outlined several of the protected areas around incumbents that will be managed by the SASs, including Dynamic Protection Areas (DPAs) around Navy radar stations primarily on the coasts as well as a couple of inland stations; Grandfathered Wireless Protection Zones (GWPZs) that protect existing wireless broadband providers including several wireless internet service providers and private utility networks from co-channel operation use inside and adjacent channel use within 40 kilometers of their zone; and 150-kilometer protection zones around fixed satellite systems that require negotiated agreements for operation near facilities.

PAL Auction Details

CBRS PAL licenses will be offered via FCC Auction 105, an ascending block round auction scheduled to begin June 25. Seven 10-megahertz channel blocks will be auctioned per county. Licenses will have a 10-year renewable term and are subject to network buildout requirements.

Entities that are considering participating in the auction will have to submit a short-form application — FCC Form 175 — between March 26 and April 9. K.c. Halm noted that applicants must select the license areas for which they plan to bid in their short-form applications.

“You are not permitted to amend that list at a later date and time,” said Halm. “Just because you select a number of counties does not mean you are required to place bids on any or all of those selected counties, but if you don’t select them at this initial stage, you cannot at a later date add counties to that list.”

Applicants may choose all counties if they want to take a broad view of entering the auction, said Halm, but they should be aware that upfront payments will be required for each county on May 21, so their potential financial exposure could be significant. Applicants will owe a “deposit” of 1 cent per megahertz pop with a minimum obligation of $500 per county, or roughly half the minimum opening bid, said Halm.

Successful bidders will have to file a long-form application and ownership report – FCC Forms 601 and 602– 10 days after the FCC publishes the winners of the auction.

The FCC is offering bidding credits in three categories – a 15% bidding credit for Small Business entities with annual gross revenues below $55 million the past three years; a credit of up to 25%  for Very Small Business entities with gross revenues less than $20 million for the past three years; and a Rural Service Provider credit for entities serving less than 250,000 subscribers in primarily rural areas.

Secondary Markets

The FCC has allowed for a secondary market for the CBRS band with hopes that it will promote spectral efficiency, serve market demands and facilitate new entrants. Licenses can be partitioned and disaggregated and sold or leased through private-party transactions subject to FCC approval.

The secondary market is likely to be driven by the “use-it-or-share-it” principal built into the CBRS model. If a licensee, for example, acquires 40 megahertz of PAL spectrum in a particular county but only intends to serve half of the county, the spectrum for the other half of the county will be available to GAA users until the licensee establishes a PAL protected area and builds out its network, said Halm.

“Unlike other traditional spectrum licenses that provided exclusivity, the use-it-or-share-it principal actually creates incentives for PAL licensees to sell portions of the license they may not otherwise use or lease portions of that license,” said Halm.

The panelists noted that licenses acquired in the secondary market remain subject to the original terms of the license, which means new owners must meet buildout obligations and other operational requirements. The FCC has adopted a light-touch leasing process for CBRS, which involves three or four steps intended to be completed quickly and allow lessors and lessees to consummate a spectrum lease transaction and hand over the spectrum relatively quickly.

Want to learn more about the CBRS PAL auction? Click here for a replay of the Webinar.

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