Before we get into the potential for the secondary market, a little CBRS history: The original proposal in 2015 was that the PALs would be awarded on a census tract basis. This meant that in major urban centers, it would be possible to buy a license for a city block or so. There are more than 11.5 million census tracks in the United States and seven PALs to be auctioned per tract, so this would obviously require a highly flexible auctioning system. The FCC stated at the time that they imagined an eBay-like auction process.
One downside of the census tract approach was the sheer number of licenses required for an operator to cover a meaningful area. For example, if one of the major operators had wanted to get PALs for a Metropolitan Statistical Area (MSA), a large number of licenses would have been needed. (An MSA is a geographic regions with a relatively high population density at its core and close economic ties throughout the area.) Following pressure on the FCC, the final rules stipulated that the PALs would be awarded on a county level. There are 3,141 counties and county equivalents in the United States, so with seven PALs per county, this results in 21,987 PALs being up for grabs.
But although county-level PALs are better for the large operators or larger bidders, they are unworkable for the smaller investor. Consider a commercial real estate investor in downtown Dallas who owns a half-dozen large buildings: Under the original proposal, the property owner could have bid on a few PALs to cover the census blocks his or her buildings are in. But now, that property owner will have to bid on a PAL for Dallas county, which is most likely to be far more expensive and cover a lot of area that the property manager does not need.
Enter the secondary market. This gives the potential for the owner of a PAL to lease access to that PAL to other users and even multiple users in the same county. Consider the following ideas:
· An investor buys PALs in major metro markets and then leases access to the PALs to enterprises, commercial real estate property managers, hospitals, universities and schools. If the PALs are used inside buildings, there will be minimal interference within the PAL. In the past, the investor would have bought a license to later sell to one of the major mobile network operators. Now the business model is slightly different: Realize the value of the PAL by leasing to different entities.
· One of the large public cloud operators or hyperscalers would buy one or two PALs in every county across the United States, thereby securing guaranteed nationwide access. Enterprise customers of that public cloud could then obtain access for use inside their buildings as long as they remain customers of the cloud provider. Imagine Amazon Web Services (AWS) doing this. The company buys PALs across the country and then lets AWS enterprise customers have access. All the enterprise would have to do is install a CBRS network in their building and then use the AWS PAL for guaranteed service.
· A rural telephone operator, telephone cooperative or utility could do something similar. It could acquire a PAL in its county and use the license for outdoor service. But it could also have secondary tenants who use the PAL indoors.
There are many options; these are just a few. Smart people will come up with some creative ideas.
Iain Gillott is the founder and president of iGR, a market strategy consultancy focused on the wireless and mobile communications industry. The company researches and analyzes the effect new wireless and mobile technologies will have on the industry, on vendors’ competitive positioning and on its clients’ strategic business plans. Visit www.igr-inc.com.
This article ran in the April, 2020, issue of Above Ground Level magazine.