UPDATE New Street Research (NSR) has thoughts about the implications of the recently released DoD spectrum report on DISH and the big three wireless carriers. Inside Towers reported the DoD stresses in the document that sharing the 3.1-3.45 GHz band between federal and commercial systems is not currently feasible “unless certain regulatory, technological, and resourcing conditions are proven and implemented.” It also makes clear that meeting the conditions will be challenging, notes Jonathan Chaplin, who leads the U.S. Communications Services research team at NSR.
The report concludes that commercial 5G systems cannot operate in the same band at the same time as government systems without degrading performance to an unacceptable level. It says geographic exclusion zones and frequency separation are not sufficient to prevent unacceptable interference. A Dynamic Spectrum Management System (DSMS) would need to be established to ensure the government systems have exclusive use of the spectrum when they require it. The efficacy of the DSMS would have to be proven through rigorous, real-world testing before an auction.
In a recent client report, Chaplin brings up questions such as: can the conditions be met? If so, at what cost? Does the value of the spectrum to the carriers exceed the cost? The wireless industry doesn’t know the answers yet.
Carrier trade association CTIA produced a report in which it claims the carriers need 400 MHz of additional spectrum by 2027 and 1400 MHz by 2032, Inside Towers reported. However, some believe those projected figures are exaggerated, states Chaplin.
Because the FCC lost its auction authority, there’s no new spectrum below 5 GHz in the auction pipeline for wireless carriers. “Given that it often takes a decade from identifying a band to having it cleared and released to carriers, we would assume that any new spectrum below 5 GHz, apart from the 3.1-3.45 GHz band, will not be available until after 2032,” he states.
That means between now and 2032, supply consists of whatever can be shared in the 3.1-3.45 GHz band. It’s something between 350 and zero MHz, or half of the required capacity. It’s unclear how limits on the 3.1-3.45 GHz will impact how much of the 350 MHz would be available to carriers. That would drive up the value, “given steadily rising demand and very limited supply,” says Chaplin.
DISH has 124 MHz on average nationally of exclusive use spectrum licenses, and another 19 MHz of shared CBRS licenses, for a total of 143 MHz. “This spectrum will be critical to meeting the demand placed on wireless networks over the next five years, either because DISH builds a successful business and draws capacity away from the three national carriers, or because this spectrum ends up in their hands.”
“If DISH sells spectrum, it will likely be within the next three years,” notes Chaplin. He says it’s unlikely there will be certainty with respect to 3.1-3.45 GHz within that time. “DISH’s spectrum will likely be the only source of additional capacity, and the three national carriers will likely compete vigorously for it,” states Chaplin.
In contrast, NSR doesn’t think the fate of the 3.1-3.45 GHz “matters” to the big three carriers for the next three years. “They should have gained enough capacity through recent 3 GHz purchases and the 5G network upgrade to meet their demand needs,” states NSR.
However, if the 3.1-3.45 GHz band is auctioned, it will “consume” balance sheet capacity at the carriers, according to NSR. “The equity markets tend to look through spectrum acquisitions, treating the outflow of cash as an exchange for an asset of equal value. The range of potential values is extremely wide,” according to Chaplin. “If all 350 MHz is shared, an auction could fetch anywhere from $24BN (at the CBRS price) to $118BN (at the C-band price), or more.”
By Leslie Stimson, Inside Towers Washington Bureau Chief
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