Wireless internet service provider (WISPs), which previously survived on a diet of unlicensed spectrum, made a strong showing in the Citizens Broadband Radio Service (CBRS) auction to purchase priority access licenses. Almost 70 WISPs placed winning bids for more than 3,600 licenses, representing 17 percent of the total, in more than 1,350 counties, according to the Wireless Internet Service Providers Association (WISPA).
“Instead of the action focused on the metro areas, 91 percent of all licenses sold, revealing that significant interest and investment went to the rural areas of America, too,” said Mike Wendy, WISPA director of communications. “WISPs spent $100.4 million in Auction 105, an unprecedented amount when considering the fixed wireless industry’s historical reliance on Part 15 unlicensed spectrum to serve its customers.”
The CBRS auction success is a sign of how the WISPs are evolving through more access to capital and aggressive market entry, according to Wendy.
Six-year Uptick in Leasing Revenue from WISPs at Vertical Bridge
Vertical Bridge is one tower company that may benefit from the WISP success in the CBRS auction. It saw increasing growth in WISP revenue from 2014 to 2019, and 2020 may be the best year yet.
“This year, we have already had a lot of activity and have a lot in the hopper, and it will probably be better than last year,” said Michael Belski, Vertical Bridge co-founder and executive vice president of leasing and marketing. “Rural markets need more internet coverage, and even suburban markets want more options.”
Vertical Bridge has a nationwide portfolio, including Alaska. It owns or has exclusive management rights to 19,000 towers, of which approximately one third are in rural America. Add to that its management of rooftops and other unique assets and the number rises to more than 288,000 locations.Fifty percentage of new builds for the company occur in rural America.
Belski said he expects business from WISPs that won spectrum in the CBRS auction will occur a year from now. “We are very hopeful that it will have a positive impact on our portfolio,” he said. “A lot of companies put a lot of money into it. They will put it to use. When they will build it out, that is what we don’t know. Hopefully, our asset base is in the right position.”
WISP Revenues Benefit Tower Companies’ Bottom Lines
Although many carriers are seemingly restraining coverage buildout, some tower companies are still beating their revenue projections through increased lease-up from WISPs.
WISPs that are starting to deploy the money they won from the CAF II [Connect American Fund] auction are bringing new leasing business in the Midwest and in the Texas market, according to one source More than 100 bidders won $1.49 billion over 10 years in the CAF Phase II auction in 2018 to provide fixed broadband and voice services to over 700,000 locations in 45 states.
Cable One, made investments in two WISPs during the second quarter. It purchased 40 percent of Wisper ISP, a winner in the CAF II auction that covers six states served by Cable One. Also during the second quarter, a 10 percent interest in Nextlink Internet, another fixed wireless provider and CAF II winner, was purchased by Cable One.
The investment from the cable industry could lead to smaller companies are being absorbed by larger companies. That is how companies grow into nationwide players. These WISPs are serving a need, because the wireless and other broadband providers have not been able to get into some of these rural areas and WISPs have exploited their absence.
The time for providing wireless coverage in rural areas seems to have come. The desire in government circles to fund the close of the digital divide is higher than ever – witness the Department of Justice’s rural coverage requirement in the Sprint/T-Mobile merger settlement. WISPs are well positioned to provide much of that service. They know the territory and the customers in those places most people have never heard about, Belski said.
“With COVID-19 and everything that is going on in the world, WISPs are going to be more important, not just to the tower business, but to the country in general,” Belski said. “Everybody wants to be connected and WISPs provide one of the best opportunities to make that happen.”