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Solution Notes

Monetary Value of Spectrum

July 16, 2024

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Can giving something away for free prove more valuable than selling it? Consider the interesting case of spectrum management. Spectrum auctions bring in a lot of money but allocating free spectrum for WiFi generated a lot of economic value. Can something that combines auctions and free usage prove to be the best of both worlds?

Thoughts on spectrum

Can giving something away for free prove more valuable than selling it? Consider the interesting case of spectrum management.  Auctions have proven to be a great way for the US government to raise money. The FCC has completed close to 90 auctions by 2017, raising over $100 billion. More recently, C-band spectrum auctions brought in $117 billion.

On the other hand, the FCC has given out about 2GHz free for WiFi. An analysis by the Rand Corporation in 2022 on potential benefits from allocation of the 5.9GHz band for WiFi claims “…Opening the 5.9 GHz band for WiFi could provide gains to economic welfare in the form of consumer and producer surplus of $82.2 billion to $189.9 billion.”

So, what is better? Or is there a third way? The FCC has an interesting experiment going with the CBRS band where what they are offering is a combination of free and sharing. Here the approach taken is that rights to 7 channels out of 15 have been auctioned and the remaining 8 are free. And the 7 channels that have been auctioned are available for others to use provided that the “free” usage does not adversely impact any existing deployments by owners that have paid to have priority access to spectrum.

Initial indications are mixed, but as with any new experiment in this space, it takes time before the value of the approach becomes clear. Per the Techneconomy blog, “… shared-licensed spectrum (Auction 105) is valued at a lower USD-per-MHz-pop (i.e., 0.14 USD-per-MHz-pop) than exclusive-use license auctions in 3.7 GHz (Auction 107; 0.88 USD-per-MHz-pop) and 3.45 GHz (Auction 110; 0.68 USD-per-MHz-pop),” however this isn’t an apples to apples comparison as the license duration and the transmit EIRP levels are different.

The CBRS requirement of transmitter registration with a spectrum administration authority to manage interference with incumbents is likely to be replicated in future spectrum releases. The initial rules for deployment used very conservative models used for estimating interference to incumbent services and required transmitter reauthorization every few minutes.  As these networks are rolled out, it is becoming clear that the rules can be relaxed. Reauthorization restrictions have already been relaxed (once every 24 hours) outside DPA (Dynamic Protection Area). On DPAs, it was refreshing to see that there is a revision of the propagation models that will be used for assessing interference. One consequence of this is, DPAs are going to shrink substantially. Look for announcements from the OnGo alliance, FCC and others on these changes which will be rolled out in the SAS implementations. 

Based on what we’ve seen so far, there is room for further changes in rules, and interestingly, significant consensus that these changes should be pursued. 

Independent of the growth in usage of the CBRS band, requiring new users of re-farmed spectrum to register their radios allows faster rollout of new usage of spectrum. The need to register new radios enables an assessment of the interference these deployments will cause to legacy services, and this enables the new rollout to start well before all legacy services have been cleared from the spectrum. This requirement also provides an impetus to develop and improve technologies to estimate interference and monitor compliance with spectrum assignments. Given how valuable spectrum is, there could be a whole new set of business built to satisfy the needs for dynamic management of spectrum.

While the requirement to register with a spectrum access service started in the cellular space with the CBRS band, it has carried over to WiFi in the 6 GHz band and I expect elements of this to show up in the next batch of spectrum to be released. What this also means is that the next generation of wireless networks will have each radio connected to a spectrum manager which will control access to the spectrum. For a snapshot of auctioned vs free spectrum allocations, see this figure from a report published by Accenture in 2022

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