Secondary market for spectrum primed for big change thanks to CBRS

With the closure of the Citizens Broadband Radio Access (CBRS) auction, expectations are fairly high for a robust secondary market for CBRS licenses.

How big it will end up being depends on the actual winners of Priority Access Licenses (PALs), which the FCC is expected to reveal pretty much any day now. The licenses, when not used by the licensees, can be transferred and used by another party. Systems are being set up now to handle those and other types of transactions.

In a sense, it’s a whole new world for wireless, with the FCC actively encouraging engagement. “We’ve never had that before” with a streamlined process, noted industry analyst Iain Gillott, president of iGR.

Some examples of how it might work: The PALs are based on counties, but not everyone who gets a PAL needs to cover an entire county at all times, especially if it’s a particularly big one. A big sporting venue – when they’re back in business again – might want to use some CBRS spectrum to support a point-of-sale system during a basketball game. The idea is the spectrum could be subleased for a predetermined number of hours in the evening, Gillot explained.  

A school district could determine it wants access to more spectrum from 3 to 6 p.m., Monday through Friday – and not on the weekends – just surrounding their schools. Or universities could order up spectrum to use during their big football games, but only around their stadiums or campus environments; they don’t need an entire county.

Although a lot of work already has been done and there’s still more to do, those are the kinds of things that a Spectrum Access System (SAS) administrator like Federated Wireless envisions. Federated has been in the process of setting up a sort of Airbnb for spectrum, an analogy that Jennifer McCarthy, VP of Legal Advocacy, uses to describe how trading spectrum can be as easy as arranging vacation rentals through an app or a website.

RELATED: Federated readies ‘Airbnb’ for secondary CBRS spectrum market

Of course, while it’s meant to be easy for the user, a lot of complexity needs to happen in the background. The plan is to have someone log into a website, see what inventory is available and review the terms, such as price and longevity. The entire transaction would be done via the web, including interacting with the FCC’s databases, which will be an important component.

Federated and other SAS administrators will be meeting with FCC staff in September to hammer out more of the details. The FCC has to qualify the entities that lease the spectrum from the PAL holders.

RELATED: CommScope eyes CBRS secondary market options

For the time being, Federated and other CBRS stakeholders are in a holding pattern, waiting to find out the results of the auction. Based on how things have proceeded in the past, McCarthy said her best guess is the licenses might be issued by early to mid-October, but it’s unclear what impact COVID-19 will have on the process.

As for its marketplace for secondary transactions, no date has been announced, but “I think our goal is to have that up and running by the end of the year,” which wouldn’t be too long after the licenses are issued.

Will wireless carriers lease their PALs?

One big question is the extent to which big wireless carriers participate in the secondary market. Kyung Mun, principal analyst at Mobile Experts, said he doesn’t see large wireless carriers actively participating in the secondary market; spectrum is a strategic asset for them, and they’ll keep that in-house for their network capacity buildout.

McCarthy said she thinks wireless carriers will be involved in the secondary market to some extent; they’ve historically done spectrum swaps, and regional leasing already occurs. It’s not usually an entire market or license area, but they have been known to carve off part of what they don’t need.

CBRS is different in that the geography of a PAL license is so much smaller than the traditional Partial Economic Area (PEA) licenses. “We’ll see, but I do think there will be interest from the carriers in leasing their PAL spectrum,” she said.  

RELATED: Verizon’s haul in CBRS auction pegged at 40 MHz – analyst

As for the size of the eventual CBRS secondary spectrum market, that’s anyone's guess. So far, the conversations have been somewhat theoretical, but once the quiet period for auction bidders ends, there will be a better sense of how licensees are formulating their business plans. “I think there’s a good amount of potential,” McCarthy said. “We really think this is going to change the way spectrum gets used and leased.”

5G is going to fuel more private network and secondary market activity – more than what's ever happened in the past, noted Jyotin Basrur, senior director, product management for Federated Wireless. Plus, with so many different players bidding for licenses than a normal auction, that's going to shake things up as well. 

Industry analyst Monica Paolini, president of Senza Fili, said she sees scenarios where getting involved in a secondary market makes sense for an operator. That said: “We don’t know. This is something that is entirely new. We haven’t seen it yet.”