CBRS is "Mobile Plus" Spectrum

As U.S. auctions of 3.5-GHz Citizens Broadband Radio Service have gone through 47 rounds of bidding, we now have a better idea of buyer estimation of the value of priority access licenses. To wit, those PAL licenses already are valued very close to 2-GHz mobile spectrum, and the auctions are not over yet..

At a high level, that suggests buyers see CBRS has having as much value as 2-GHz mobile spectrum. And, as was the case for the early 2-GHz spectrum awards, that is the ticket to market entry on a facilities basis for new competitors. Both Sprint and what became T-Mobile US were launched on the basis of new 2-GHz spectrum allotments. 

CBRS also will be supported by best effort spectrum access without a license, on the pattern of Wi-Fi. How big a revenue opportunity that activity might create is another question. Some internet service providers will undoubtedly explore the use of unlicensed CBRS to support rural internet access. That is something many wireless ISPs have done before.

But CBRS also is expected to support at least some private networks as well. Such private networks offer value to users and operators, but no often no direct revenue upside for the network operator.

Of course, there are many in the value chain who are not in the "connectivity as a service" role. All such private networks will create demand for infrastructure, maintenance, upgrades, design, perhaps connectivity and other services supporting other parts of the ecosystem. Consider radio instrastructure.

A 2019 report on the indoor market opportunity for CBRS, from Maravedis and EJL Research predicted that the CBRS radio node market will grow from revenues of about $3 million to $100 million by 2024, “driven primarily by private LTE deployments.” Keep in mind that is a prediction about mobile-type radio infrastructure used to support indoor market communications. 

Other estimates of CBRS radio capex illustrate the fact that--interesting as it is for some parts of the ecosystem--CBRS represents a very-small percentage of total mobile radio spending. According to Mobile Experts, CBRS CBRS radio infrastructure spending will not hit $1 billion in annual spending for five years or so. 

That makes CBRS an interesting and important market for some, not for all, on a global level. 

source: Dell'Oro Group

Other parts of the CBRS value chain represent various amounts of new sales activity as well, but it might be fair to note that many opportunities which are transformative or important for some suppliers (access system administrators, infrastructure, software, integration and consulting) might not prove especially large for connectivity service providers.

The value of CBRS obviously is a non-zero number, though, and the value often will come in the form of avoided cost, not direct incremental revenue. Cable TV operators are expected to benefit primarily from avoided mobile wholesale capacity costs.

Some internet service providers, though, may be able to use CBRS to support their internet access businesses, using CBRS for fixed wireless access. System integrators, network designers and consultants might in some cases see meaningful revenue upside as well. 

Of course, not all CBRS spectrum will likely be used using PAL. As with Wi-Fi, CBRS spectrum also includes “best effort” access without a license. For some use cases, best effort access might be sufficient, especially for many private networks. 

Also possible are many collaborative ventures where a PAL license holder might be willing to allow use of its license for a big private network, in some business arrangement. That might be interesting for large areas such as port facilities where a mobile operator can expect little financial return for providing direct service. 

In some cases, some apps or use cases might benefit from licensed access with less risk of signal interference and therefore unpredictable or less predictable performance. Collaborative networks (private on the premises but connected to the public network; private network but with rights to use PAL on the site; private network built and maintained by a public provider) might make sense in those cases. 

The point is that the new commercial value of CBRS networks will have a wider range of value drivers than has been typical for mobile spectrum.