Some of the more interesting bidders in the CBRS PAL Auction
September 8, 2020 | As just about anyone in the wireless industry knows, the latest FCC spectrum auction finished a couple of weeks ago and the results were released last week, including the winning bidder names. I am, of course, talking about Auction 105, more commonly known as the CBRS PAL auction.
The goal here is to not to rehash the details of the auction, how 70 MHz of the 150 MHz CBRS band was available for ‘priority’ use, nor how this band can be used for enterprise, WISP, fixed wireless and mobile applications. Also, we do not want to repeat what the wireless press has been discussing since the results were known: that total bids were nearly $3.6 billion; that Verizon spent the largest amount; that Dish bought a bunch of licenses; and the amounts spent by the top 10 bidders.
Rather, we want to talk about some of the other bidders that were interesting and what this means down the road, especially for the CBRS PAL Secondary market.
Four major universities won licenses in their respective counties: Texas A&M University, Duke University, Virginia Tech and the University of Virginia. Texas A&M has a sprawling campus in College Station, about two hours east of Austin; the university dominates the town (and the adjoining Bryan) and there was likely little competition for the PAL licenses in this rural area. Duke, VT and UVA are in larger towns but were also successful in getting PALs. Other universities were likely interested but if they are located in a major metro market, they would have been competing with Dish, Verizon and the other major spenders, and this would likely have priced them out of the market for the relatively small area they wanted. That said, it is likely that the universities will be very active in the PAL secondary market, since they will only need coverage on their campus in a small part of the county. Higher education appears very interested in private 5G networks and in CBRS in particular.
As with the universities, a handful of utilities also won PALs in specific areas:
- Alabama Power Company (multiple licenses in all counties in Alabama)
- Amplex Electric (up to four PALs in seven counties in Iowa)
- Muscatine Power & Water (two PALs in one Iowa county)
- Tampa Electric (two PALs in two counties)
- San Diego Gas & Electric (one or two licenses in Imperial and San Diego counties)
- Southern California Edison (one or two PALs in 15 counties).
As with the universities, smaller utilities or utilities in larger, more expensive counties were likely priced out, although San Diego Gas & Electric and So Cal Edison clearly have big budgets and plans. It is therefore likely that the utilities will also be active in the secondary PAL market.
The original plan for the PALs was that enterprises large and small would be able to acquire licenses at reasonable cost; remember, the original plan was to sell PALs based on census blocks, not counties. But only three enterprises won PALs in their own names (we do not know if other enterprises used investment companies to acquire licenses on their behalf): John Deere, Chevron and Oxy. There are many, many enterprise use cases supported by private networks and CBRS, and many companies have deployed solutions already. But only these three won PALs. What gives? Simply, that the PAL license area (county) and the resulting higher price are too much for the needs of most enterprises. Why buy a license for an entire county when you may just need to cover a couple of warehouses or manufacturing plants?
Given the few enterprises that won PALs, this aspect of the auction must be considered a failure: companies did not bid en masse and win the majority of licenses. Far from it. The opportunity now is for the PAL secondary market to subdivide the licenses into parcels that meet the needs of the enterprises, in terms of coverage, business model and price tag.
4. WISPs, rural telcos and regional mobile operators
These groups were expected to bid heavily and they did not disappoint. It appears that most of the regional mobile operators won PALs in their operating areas (thereby adding to their spectrum holdings), and the WISPs and rural telcos were active. The latter groups are likely to use the PALs to supplement their existing fixed wireless or broadband services. It will be interesting if these groups are active in the PAL secondary market - not as a tenant but rather as a landlord. After all, a university operating in a small town may want a PAL to cover its campus and the WISPs/telcos/MNOs are likely to have a license the university can use.