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.