I attended the Connectivity Expo event earlier this month for the first time. It was an informative gathering of infrastructure players that make up the “OPEX” side of the mobile service equation comprised of the tower, fiber, and “edge” players versus “CAPEX” side of technology and equipment suppliers with whom I spend a lot of my time. So, it was an informative look at that side of the business. Many discussions centered around tower leases, the T-Mobile/Sprint merger outcome, etc… One of the topical discussions was around different CBRS/OnGo use cases. At one of many CBRS panel discussions, a question around CBRS PAL spectrum arose and whether or not PAL is really needed. There was a healthy debate around this topic. Some argued that the CBRS rules’ “use it or lose it” provisions and active secondary market envisioned would make the PAL auction bids less important. Others chimed in that spectrum is a vital commodity that should be had if the opportunity presents itself.
In our recent Expert INSIGHT paper, we have estimated the PAL spectrum valuation county by county, based on demand analysis of the different use cases. We included mobility, fixed wireless access, and private LTE enterprise applications and various stakeholders who may bid for seven 10-MHz PAL licenses. Below is a snapshot of the top 50 counties by estimated total PAL proceeds. While the Los Angeles County is a bit of an anomaly with its extensive geographic footprint and high population count, we believe PAL spectrum cost will be reasonable in most counties. As the regulators have intended, we believe the CBRS PAL spectrum cost won’t be a big barrier to entry and allow many potential bidders to participate.
We acknowledge that spectrum valuation is more of an art than science, but we have clear visibility around the merits of CBRS “mid” band, ecosystem maturity, and regulatory risks as we near commercialization – which help boost confidence in our valuation figures. While the initial commercial use cases in fixed wireless access and private LTE enterprises may not require PAL licenses, we expect some stakeholders will bid for PAL licenses to “guarantee” priority access to the CBRS spectrum.
With the CBRS sharing rules that encourage spectrum reuse, we expect the CBRS PAL licenses will be reasonably priced in the majority of counties. By our estimate, the top 50 most expensive counties will hold 60% of total PAL proceeds. In other words, the majority of 3000+ counties will offer low-cost PAL licenses for a multitude of applications envisioned by the CBRS participants.
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