Modelling the Impact of Spectrum Sharing on Spectrum Value: The US Citizen Broadband Radio Service Ecosystem
12 Pages Posted: 16 Mar 2018 Last revised: 22 Aug 2018
Date Written: March 15, 2018
In 2015, the US Federal Communications Commission released a Report and Order to enhance the availability of spectrum across the nation with a particular focus on wireless broadband services.The decision consisted of designating the 3.5 GHz band (3550 to 3700 MHz) as a three-tiered spectrum sharing space, knows as Citizens Broadband Radio Service (CBRS). The tiers are occupied by incumbent users in the upper tier (mainly federal aeronautical uses and non-federal fixed satellite services and terrestrial wireless operations), new entities known as Priority Access Licensees (PALs) on the middle tier, and a non-licensed access mode called General Authorised Access (GAA) on the bottom tier. Fast, and seemingly chaotic, technological progress and the pressing interests from stakeholders demand a closer, sharper consideration of an integral approach to determining the value of the spectrum. The assumptions in this paper rely strongly on stating that the goal of efficient spectrum management is to maximize the social and economic value of spectrum subject to conditions and constraints set by policy makers, possible via a spectrum authority. The proposed US 3.5 GHz ecosystem, or CBRS, provides a rich structure that allows for an assessment of spectrum value distribution among the ecosystem actors and uses. Building upon recent work in the UK that proposes three components for spectrum value, namely private use value, private external use value, and broad social value, our paper presents and discusses a descriptive model of spectrum value aimed to investigate the effects of spectrum sharing on the value of spectrum perceived by the players sharing the band. The short story of utilization of the upper part of the 3.5 GHz band by Wireless Interent Service Providers, or WISPs, in the US, and the spectrum regulatory changes occurred over the last 10 years are used to exemplify the complex arrangements that need to be considered in order to assess the value of spectrum. The case reveals the importance of using the above mentioned three components of value. The fact that no definitive clear boundaries can be defined between the value components adds to the complex task of assessing how valuable spectrum is and how changes to permitted uses affect its value. Currently divergent interests clash over what pathway to regulatory conditions must be adopted for tier-2 PALs. The struggle centers on the license terms and auction conditions. Currently PALs would be allocated via an auction in census tract areas if there is enough competition; upon assignment, a PAL would get 3-year licenses with no assurance for renewal. Big telecommunications companies, thirsty for more spectrum capacity for 5G services, want longer terms with assurance of renewal, a change from census tracts to larger “Partial Economic Areas”, and the abolition of “enough competition” for PAL assignment so that even when there is only one license seeker, the FCC will have to grant a license. In a new notice of consultation the FCC is also considering hybrid solutions that might allow combinations of such competing terms to apply to different geographical areas. Our model of value allows us to understand not only how value is distributed across the CBRS but also how the proposed changes may affect such distribution, hence the social and economic goals expected from the 3.5 GHz ecosystem.
Keywords: Spectrum sharing, spectrum value, 3.5 GHz ecosystem, Priority Access Licenses, General Authorized Access
JEL Classification: L96
Suggested Citation: Suggested Citation