Market Questions Remain as Experts Predict Robust CBRS Bidding

Carriers will lead the bidding in the July citizens broadband radio service band auction, but questions remain about the COVID-19 pandemic's effect on credit markets, said Joe Madden, chief analyst at Mobile Experts. The FCC delayed the auction for a month to July 23 (see 2003250052). Speakers Tuesday said another delay isn’t likely.

“If everyone keeps their wallet in their pocket because it’s uncertain times, maybe the auction prices will be lower than we otherwise expect,” Madden said, responding to our question during the Besen Group webinar. “We don’t know really where the market is going to be.” The demands made on networks used by more people sheltering in their homes point to the need for mobile capacity, he said.

Bidders need to take a “long-term” view, said Spectrum Management Consulting CEO Steven Stravitz, noting the FCC is offering renewable 10-year licenses. “Telecommunications is an extremely capital intensive business,” he said: “If you’re really interested in a PAL license … most likely you’re going to have a deep enough pocket to make this happen.” PAL is a priority access license.

Besen estimates the 3.5 GHz spectrum will cost about 5 cents MHz/POP in rural areas, 14 cents suburban, 20 cents in urban and 24 cents in the densest markets, said CEO Alex Besen. The overall cost will be 17 cents MHz/POP across the U.S., he predicted.

Madden sees growing interest. Carriers “essentially are running out of capacity” and need spectrum in urban markets, he said. Cable operators will use the spectrum to own their licenses and stop paying carriers to use their networks at a “premium price,” he predicted: “They’re pretty highly motivated to build their own LTE network and to avoid paying such a high price to Verizon.” Some companies may view the band as a chance to buy more reliable fixed-wireless connections or to run shared networks, he said. “There are some interesting cases out there as you look county by county.”

Marashlian & Donahue IoT lawyer Ron Quirk noted a bidder can buy up to four of the seven 10 MHz blocks in any county, but unlike other licenses, spectrum assignments will be made dynamically. The FCC is unlikely to further put off the May 7 due date for short-form applications or grant waivers, he said. Smaller companies will be unlikely to win any of the more expensive markets, he predicted. “There are a lot of entities that have a lot of money … that will be outbidding everybody.”

Because the FCC is selling licenses on a county-size basis rather than by census tracts in the original CBRS rules, carriers and wireless ISPs have an advantage, Stravitz said. With 5G and the need for wider channels, 40 MHz is the minimum a provider will likely pursue anywhere, he said. Some are asking whether they should use unlicensed 6 GHz spectrum instead of paying for PALs, he said. “That’s a valid question.”