CBRS Rules Illustrate Old Story

Communications policy inherently is political, and every decision “in the public interest” necessarily has corresponding winners and losers. Communications policy also inevitably involves tradeoffs between stimulating investment and promoting competition; moving the deployment needle or connecting the least-connected, at least in open and competitive markets.

Those tradeoffs are unavoidable in oligopolistic markets, such as telecom. No matter how one looks at the data, most of the market share is held by just a few providers, whether fixed or mobile, internet access, voice or entertainment video.

source: Strategy Analytics

source: www.leichtmanresearch.com  

source: Market Realist

So it is with Citizens Broadband Radio Service, the new 150-MHz block of wireless capacity to use spectrum sharing and a tripartite licensing scheme (incumbents with highest priority; licensed secondary use and unlicensed best effort access).

To reach the largest number of potential users, the licensing rules would favor larger blocks of spectrum and longer license terms. To favor smaller users, the rules would instead use smaller license areas and shorter licenses. Basically, the larger geographic licenses and longer terms favor larger firms; smaller license areas and shorter terms favor smaller firms with less capital.

So the fundamental policy challenge is whether to create incentives for widescale adoption by the service providers serving most potential users, or, conversely, to provide more incentives for smaller suppliers, even if that means less or slower adoption that actually makes a difference in national statistics and adoption.

The reason is simply that smaller suppliers, collectively, serve less than 10 percent of the total customer base, and very-small providers serve only a percent or two.

To get rapid and widespread adoption, policy should create incentives for the few larger providers who serve most people. Alternate rules favoring small independents, by definition, will not “move the needle.”

Such tradeoffs are common in all telecom policy efforts. Either investment or competition; mass adoption or more adoption in rural areas; support for small firms or advantage for the few large suppliers who serve most customers.