Will CBRS Spectrum Cost Less, the Same or More than Other Licensed Spectrum?

It is hard to say at the moment how much CBRS spectrum (shared spectrum using the Citizens Broadband Radio Service) will cost. In part that is because the use scenarios vary from highly-rural areas with sparse population to dense urban areas.

The other issue is that a rational bidder will consider spectrum cost in relationship to other ways of supplying the same capacity and coverage using unlicensed spectrum, other available spectrum or rival platforms.

Also, there is the matter of expected financial return under competitive conditions, including new forms of competition that are likely to emerge.

A rational bidder might consider bidding up to a point where the cost of spectrum, plus new radios (especially beam-forming radios), towers and backhaul are equal to the cost of acquiring CBRS spectrum and building new towers and backhaul.

In other words, there are some key trade-offs if existing tower sites can be made to work.

So even if some believe 3.5-GHz shared spectrum using a priority access license will cost less than other licensed spectrum, some of us would guess it is possible CBRS spectrum could well cost more than traditional licensed spectrum.

That could happen if the business case shows that mounting new beam-forming antennas on existing towers using 2-GHz to 2.5-GHz spectrum, and thereby matching 4G signal coverage with a simple CBRS overlay, is possible.

In that case, the savings from avoided tower sites, structures and backhaul can be applied to spectrum license payments, up to the point where it makes more financial sense simply to bid lower amounts for spectrum, and build the new towers.

On the other hand, many bidders in most parts of the country, which are rural, might not be willing to spend much at all, because the logical business arrangement is simply to contract with a local network operator for roaming.

In such cases, the business case for owning CBRS spectrum is quite a bit reduced for all potential bidders except for an incumbent facilities-based mobile service provider. It likely will make most sense for all the other mobile service providers to simply execute roaming agreements with such providers.

Millimeter Wave Spectrum is the Future

Even a quick look at 5G spectrum globally will make a couple of things clear: most of the new spectrum--by amount of capacity--is in the millimeter wave regions (30 GHz to 300 GHz. Most of the available “coverage” capacity is in the 600-MHz and the 3.5 GHz regions.

As always, there is an inverse relationship between frequency and capacity: lower frequencies propagate further, and are better for coverage; higher frequencies have more capacity, but propagate less far, and so are better for capacity needs.

source: Qualcomm

It is equally clear that even with extensive spectrum refarming from 2G and 3G, plus spectrum sharing and small cell architectures, most of the future new capacity will have to come from the millimeter wave regions.

Even with robust spectrum refarming, small cell architectures and spectrum sharing, most of the “capacity” will lie in the millimeter wave regions. With no end in sight to mobile data demand, it already is clear that even full spectrum refarming of all 2G, 3G and 4G spectrum will not match expected demand.

source: Researchgate

In the United Kingdom and virtually all other global markets, total mobile spectrum in the pre-millimeter-save era has been less than 1 GHz. Compared to that, potential usable millimeter wave spectrum could reach 100 GHz. That is two orders of magnitude more spectrum, not including spectrum sharing, spectrum aggregation, small cell architectures and use of unlicensed spectrum.

source: Seeking Alpha

The bottom line is that millimeter wave spectrum is where capacity will come from in 5G and all future mobile generations.

Is 4G a Separate Network, or Part of 5G?

There are two ways of looking at 4G mobile networks: the precursor to 5G or part of 5G. So 4G coverage, latency and speed might be viewed either as a problem 5G will fix, or part of the way 5G will improve user experience over 4G levels.

If one takes the latter view--that 4G is a part of the 5G experience--then countries with better 4G are going to have better 5G as well. On a speed dimension, that includes South Korea, Norway, Canada, the Netherlands, Singapore, Austria, Switzerland, Denmark, Belgium and Japan, among others.

source: Opensignal

On the coverage front, South Korea, Japan, Norway, Hungary, the United States, the Netherlands, Taiwan, Hungary, Sweden and India, among others, have 4G coverage that will help them in the 5G area as well. Perhaps the most-surprising fact is that India is among the nations globally with the most-extensive 4G network coverage.

source: Opensignal

Many other decisions, including capital investment commitments by mobile operators, as well as investments in spectrum sharing and spectrum aggregation mechanisms, will play a key role in determining how much 4G contributes to 5G experience. 

But to a degree not true in the 3G era, the difference between 4G and 5G will not be as clear. 

Coordinated Spectrum Sharing Using Licensed, Unlicensed Spectrum

Coordinated sharing results in higher performance than uncoordinated sharing. 5G NR in shared and unlicensed spectrum (NR-U) can be used with coordinated multi-point (CoMP) in local private 5G networks to provide higher performance.

Why Mid-Band Spectrum Might be Really Important

Few would quibble with the notion that extensive use of millimeter wave spectrum at 24 GHz and higher will require use of optical fiber connections. What is not so clear is whether that also is true for mid-band spectrum in the 3.5 GHz to 4 GHz region.

Frequency and signal propagation are inversely related: the higher the frequency, the shorter the range. There also is an direct relationship between frequency and capacity: the higher the frequency, the greater the potential bandwidth.

source: Researchgate

But there is a really important reason why better radio technologies and mid-band spectrum are important: those technologies can allow a macrocell network designed to support 4G to also support 5G, using the same cell sites.

source: Pivotal Commware

Lower “coverage” frequencies are valuable not only because of propagation distance, which means fewer cells have to be built, but also because lower frequencies provider better indoor coverage. That is one reason why indoor coverage networks are going to be more important as millimeter wave spectrum is put to commercial use.

source: Surecall

5G Spectrum Costs Generally are Falling Below 4G, 3G Prices

The cost of spectrum always matters for mobile operators in competitive markets. Prices of 5G spectrum in Italy, an outlier so far, were driven by a new competitor eager to get into the market. In that scenario, high prices are unwelcome, but the cost of breaking into the market at scale. Spectrum auctions in most other countries have been more restrained.

If supply and demand continues to operate, spectrum prices should fall. First, the huge amount of new spectrum vastly increases supply, which should drive prices down. Also, mobile operators in some markets seem not to believe new incremental revenues are possible. That dampens appetite for paying higher prices.

source: Light Reading

To make an analogy, spectrum is beachfront property, but we are making more beach.

Over the past few years, some have worried about the cost of 5G spectrum, although spectrum prices are dropping, generally speaking, in part because there is a huge increase in supply, and because mobile operators must now more carefully weigh the cost of new spectrum against expected financial return.  

But spectrum prices were dropping even before the recent 5G auctions.

Why 5G Millimeter Wave is Not Some Sort of "Mistake"

If you have ever looked at the National Telecommunications and Information Administration frequency allocation chart, you’ll immediately see that there is very little spectrum in the United States that remains unallocated.

An easier way of looking at where spectrum might be found is to look at where unused mobile spectrum exists. In this illustration, the orange color indicates unencumbered spectrum available for 5G, the green, purple and blue colors representing mobile spectrum already used by other mobile networks. In principle, all that 2G and 3G spectrum eventually can be reclaimed for 5G use.

But that will take some time.

source: Ericsson

So when critics claim that U.S. regulators, AT&T and Verizon have “made a mistake” by launching early 5G using millimeter wave assets, they miss the point.

There is very little spectrum left in the U.S. market in the 3.3 GHz to 4 GHz mid-band range that actually can be used to launch 5G, and AT&T and Verizon control very little of that resource.

The 3.5-GHz band, for example, will likely not be ready for commercial use until 2020, at the earliest. Most other countries have more unallocated spectrum in the 3.3 GHz to 4.2 GHz range.

source: Huawei

Other mobile operators have other options. T-Mobile US has new 600-MHz spectrum it can use. Sprint owns licenses for lots of 2.5 GHz spectrum. But AT&T and Verizon, to move early, had to rely on new millimeter wave assets.

There simply was not enough available spectrum, ready to go, in the other bands, if 5G was to launch early. That does not mean methods of repurposing, sharing and aggregating low-band and mid-band spectrum will be ignored. But neither AT&T nor Verizon could hope to launch early 5G, at scale, without relying on millimeter wave assets.

Also, if you look at what the International Telecommunications Union is working on, namely identifying millimeter wave bands for 5G and beyond, it is clear that on a global basis, millimeter wave spectrum will have to be used by 5G and all subsequent mobile generations. There simply is not enough spectrum in the low band and mid band, unless there is massive spectrum realloation over time.

5G Capex Will Not Exceed 4G, Jefferies Now Believes

Many older assumptions about 5G are proving to be incorrect. Though many feared 5G capital investment would be many times higher than 4G, there now is growing recognition that, in fact, 5G capex costs might be no higher, and might well be lower.

“We expect that any 5G cycle will be muted; at least over the next two to three years until business models further develop,” say analysts at Jefferies. “To be clear, we still believe that 5G infrastructure deployment will happen.”

But Jefferies analysts also believe 5G capex will be a replacement  of existing 4G spending, so budgets will not grow.

“We don’t expect the overall capex expenditure pie will grow due to 5G,” they say.

Technology developments such as better radios using massive multiple-input, multiple-output radios also help, as they increase the range of 5G signals using 3.5-GHz spectrum, for example, to match signal propagation of 4G signals at 1.8-GHz frequencies.

That means existing cell tower locations might well be the same locations needed for 5G. At the same time, that also reduces the need for dense small cell networks.

source: Qualcomm, Nokia

FCC Okays T-Mobile US Merger with Sprint

The decision by Federal Communications Commission Chairman Ajit Pai to support the merger of T-Mobile US and Sprint, though not the last and most-fundamental hurdle for the plan, clears a major obstacle. In his public comments, Pai has emphasized the value of the deal for accelerating 5G and improving broadband coverage in rural areas, as well as deploying more mid-band 5G spectrum quickly.

“Two of the FCC’s top priorities are closing the digital divide in rural America and advancing United States leadership in 5G, the next generation of wireless connectivity,” he said. “The commitments made today by TMobile and Sprint would substantially advance each of these critical objectives.”

“The companies have committed to deploying a 5G network that would cover 97 percent of our nation’s population within three years of the closing of the merger and 99% of Americans within six years,” said Pai.

“Additionally, T-Mobile and Sprint have guaranteed that 90 percent of Americans would have access to mobile broadband service at speeds of at least 100 Mbps and 99 percent would have access to speeds of at least 50 Mbps.”

As a matter of policy, it is hard to quibble with those positions, as all would be deemed “in the public interest,” which is the test the FCC must apply.

The non-public background might well include other elements, such as speeding 5G deployment in the wake of the U.S. ban on technology sales to Huawei, seen as the global leader, in shipments and price, of 5G infrastructure. Critics of such policies have argued such actions would slow 5G progress.

Also, some might speculate, Sprint’s ability to avoid bankruptcy could hinge on a successful deal. So the unstated issue there is the public interest impact, were Sprint to go out of business. Nobody would ever expect such a consideration to appear in the public record, but it obviously is one of the potential implications of denying the merger approval.

Some of us long have held that the Department of Justice approval, not FCC blessing, was the key hurdle. The problem is the HHI screen always used by the DoJ when looking at antitrust implications of mergers. There have been recent signs that the merger as structured would not be approved by DoJ.

What room T-Mobile US and Sprint might have to meet such objections is not clear. Spectrum divestments have been suggested as a possible merger concession. But if rapid mid-band 5G and faster rural broadband are among the desired outcomes, new T-Mobile US cannot divest much of that spectrum.

Other possible structural remedies, such as divesting accounts, would seem to fly in the face of the objective of gaining scale, though the firms have agreed to divest Boost Mobile, a big MVNO supported by the Sprint network.

The big problem is that the DoJ’s methodology shows the U.S. mobile market already is concentrated, and the T-Mobile US deal with Sprint would increase the amount of concentration.

The Justice Department will generally investigate any merger of firms in a market where the Herfindahl-Hirschman Index (HHI), a test of market concentration, exceeds 1000 and will very likely challenge any merger if the HHI is greater than 1800.

The U.S. market has an HHI of about 2500.

Three years ago, the very same proposed transaction would have occurred where the U.S. market had an HHI score of about  2,766. But following a merger of Sprint and T-Mobile, the score would be 3,252.

The last time Sprint and T-Mobile US tried to merge, three years ago, Craig Moffett of MoffettNathanson calculated that the wireless industry currently had an HHI score of 2,766.

But following a merger of Sprint and T-Mobile, the score would be 3,252. That suggests an increase in concentration of about 486 points. So the DoJ opposition should not come as a surprise.

Is 5G "Safe?"

“To date, no adverse health effects have been established as being caused by mobile phone use,” says the World Health Organization. That might be worth reiterating, in light of concern in some quarters about whether 5G is “safe.” Keep in mind that power levels for cell phones and even cell towers are low.

Consider that a cell tower radio emits energy 100 to 5,000 times lower than a TV transmitter, for example. Some liken the power level to that of a light bulb.

Still, if you really are concerned about the possible health effects of using mobile phones, use them less. Text instead of holding the phone against your head and talking.

Radio signals weaken (attenuate) logarithmically, by powers of 10, so the power levels decay quite rapidly.

Basically, doubling the distance of a receiver from a transmitter means that the strength of the signal at that new location is 50 percent  of its previous value. Just three meters from the antenna, a cell tower radio’s power density has dropped by an order of magnitude (10 times).

At 10 meters--perhaps to the base of the tower, power density is down two orders of magnitude. At 500 meters, a distance a human is using the signals, power density has dropped six orders of magnitude.

source: Professor Girish Kumar

Using the internet on a smartphone, for example, puts the device a much-safer distance away from one’s head, in case your worry is possible health effects to the brain, as the phone is both a transmitter and a receiver.

Workers who climb cell towers, radio or TV transmission towers do have to take precautions against the high power levels emitted by such radios, as do other workers who regularly work around high-power sources.

But RF signals as encountered by consumers using phones, TVs and radios are quite low, as power levels drop sharply with distance, even the distance of your arm.

Physical objects also affect signal decay. Even for the low and middle-frequency radio signals used by cell phones, an office wall can reduce signals by 75 percent. A concrete wall can reduce signals by 94 percent. So physical barriers matter.

To be sure, it might always be difficult, if not impossible, to determine long-term effects, as the sources of low level non-ionizing radiation occur naturally, from the sun, as well as from use of consumer devices. There simply is no way to conduct controlled experiments.

It might be good advice to recall that all technology use carries some risk, and that there always are ways to reduce risk, to obtain benefits.

Verizon Builds on Small Cells, Deep Fiber, Millimeter Wave

Verizon’s commitment to dense fiber networks is the natural complement to its spectrum holdings and the importance of the mobile business. Simply put, Verizon has chosen to provision new capacity in large part by using smaller cells and dense fiber networks, rather than buying lots of new spectrum.

Other mobile operators--with different sets of assets--are making different choices. T-Mobile US is focused mostly on low-band spectrum for 5G. Sprint will use mid-band assets. AT&T and Verizon added lots of millimeter wave spectrum by buying firms that held such licenses.

Hans Vestberg, Verizon Communications Chairman & CEO says Verizon is deploying more than 1,000 fiber miles a month, in 60 markets. That is the natural complement to millimeter wave assets, which prior to the conclusion of 28-GHz and 24-GHz spectrum auctions, was an area of huge Verizon asset ownership.

source: New Street Research

So it is logical for Verizon to use that spectrum, built on small cells, and entailing dense fiber networks, that are suited for urban areas, as that is where the heaviest capacity demand exists.

The other big change is dynamic spectrum sharing, allowing a single phone to use both 5G and 4G networks, from two different cell sites. ”Then we don't need to discuss if it's 4G or 5G,” said Vestberg. That is another practical example of how 5G is built on 4G.

Using dynamic spectrum sharing, the 5G experience literally will be built on the ability to directly use 4G capacity.

With different asset and customer profiles, neither Sprint nor T-Mobile US is going to take the Verizon deep fiber approach.

Spectrum Sharing for Rural Broadband

Unlicensed spectrum has been the foundation of the wireless ISP business for decades. CBRS will help. 

IoT Drives New Telephone Numbering System in Japan

To support 5G, Japan plans to change its telephone numbering system from 10 digits to 14, allowing creation of 10 billion new telephone numbers supporting internet of things devices that will use mobile network connectivity.

Currently, 11-digit numbers starting with “090,” “080” and “070” are used for mobile phones.

IoT devices have used 11-digit numbers starting with “020” since January 2017.

Millimeter Wave is Necessary, if Growing Pains are Obvious

Verizon has faced criticism in some quarters related to the performance of its millimeter wave fixed wireless service, which remains in early commercialization. The general tenor of the critique is that signal propagation is not good enough, and take rates too low, to support the business model.

We also sometimes forget that the state of the art for fiber to the home was 10 Mbps, and that deployment costs were double what they are today.

The conclusion some seem to reach is that millimeter wave is not useful for 5G. That flies in the face of global movement to commercialize millimeter wave spectrum for 5G and all following mobile network generations. At WRC 2019, the International Telecommunications Union is looking at a wide range of millimeter wave spectrum.

In the following illustration, the width of the blue bars roughly illustrates the amount of capacity at different frequencies. The horizontal axis represents the frequency spectrum from approximately 1 GHz to 90 GHz on a relative scale (mobile services tend to use frequencies at 600 MHz to 800 MHz at the low end).

The orange bars show the approximately 11 GHz (capacity, not frequency)  of new spectrum released by the FCC for both licensed and unlicensed use. Note that the total amount of new bandwidth is orders of magnitude more than all bandwidth presently available for mobile purposes.

Europe and Asia are working towards commercialization of much of that spectrum as well.

The red and green blocks show frequency allocations for the aerospace, defense and satellite communications industries, parts of which might ultimately be available using shared spectrum mechanisms.

source: Anokiwave

The point is that there will be growing pains as millimeter wave technology--never used commercially before--is deployed. But there also can be little doubt that in addition to small cell architectures, there is little additional spectrum available to accommodate growing mobile data use, except in the millimeter wave regions.

And that is why the strategic direction (use millimeter wave and small cells) Verizon is taking is correct, absolutely correct. Starting with 5G, and continuing forward, ability to support ever-higher data demand will hinge on use of millimeter wave resources.

source: Accton

Bands under consideration for mobile service on a primary basis include 24.25-27.5 GHz, 37-40.5 GHz, 42.5-43.5 GHz, 45.5-47 GHz, 47.2-50.2 GHz, 50.4-52.6 GHz, 66-76 GHz 81-86 GHz.

Bands under consideration that may require additional allocations for mobile service on a primary basis include 31.8-33.4 GHz, 40.5-42.5 GHz, 47-47.2 GHz.  

As with any major new platform, and especially for deployment of spectrum resources that in the analog era simply could not be used at all, millimeter wave platforms will go through an experience curve (learning curve). By moving early, Verizon might well get ahead of others on that experience curve. AT&T is on the same curve as well.

That is not to say other alternatives, in an ideal world, might not have been preferable. Verizon and others might well prefer mid-band solutions that are coming, but not available today.

Since capacity and coverage always are inversely related, mid-band is a blend of coverage and capacity, where low-band is better for coverage, but lacking in terms of capacity. Millimeter wave frequencies are best for capacity, worst for coverage.

Though we might prefer not to have to rely on millimeter wave assets, ultimately we have no choice. Capacity is an obvious and growing need, and there is little low-band or mid-band spectrum left to use for that purpose, absent a major reconfiguration of usage rights.

Spectrum clearing is both expensive and time consuming. And we might not have either time or sufficient capital for such major spectrum clearing.

Also, we are 10 years away from 6G, in any case, as we launch the next-generation mobile network about every decade. Millimeter wave involves no significant spectrum clearing hurdles.