TR Daily FCC Adopts 3.5 GHz Band Order Over Rosenworcel Dissent
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Tuesday, October 23, 2018

FCC Adopts 3.5 GHz Band Order Over Rosenworcel Dissent

Over the dissent of Commissioner Jessica Rosenworcel, the FCC today adopted a report and order that increases the size of 3.5 gigahertz band priority access license (PAL) areas from census tracts to counties and extends license terms from three to 10 years and makes the licenses renewable.

The item in GN docket 17-258 also indicates that the FCC plans to seek comment before an auction on whether it should allow package bidding for licenses in counties that comprise complete metropolitan statistical areas in the top 305 markets.

The order also establishes end-of-term performance requirements, ensures that seven PALs can be auctioned in each license area, allows rural and tribal bidding credits, permits PAL partitioning and disaggregation, protects Citizens Broadband Radio Service (CBRS) device registration information through updated security requirements while ensuring public availability of aggregate spectrum use data, and permits transmission over wide channels without significant reductions in power.

The item has drawn praise from CTIA, the Competitive Carriers Association, major carriers that had originally wanted PALs to be licensed by partial economic areas (PEAs), and even entities that had urged the FCC to make PALs available via at least some census tracts, including NCTA, NTCA, and the Rural Wireless Association. They say the compromise licensing area will allow a variety of parties to successfully use the spectrum. But the Wireless Internet Service Providers Association has criticized the item, as have rural advocacy groups, health care providers, and public interest organizations, arguing that counties are too big for many parties to use.

The FCC adopted an NPRM last year seeking comments on possible changes to its PAL rules, which were adopted in 2015 (TR Daily, Oct. 24, 2017). Commissioner Mike O’Rielly was the point person on the item.

In dissenting on the item, Ms. Rosenworcel mentioned the original rules for the CBRS spectrum, noting the census tract licensing area and three-year terms.

“Together, these rules made our scarce spectrum resources more abundant for all. They put this spectrum in reach of non-traditional wireless interests who want to innovate and join the ranks of those who bid on airwaves and support the internet of things,” she said. “This had all the hallmarks of a wild success. We saw interest in the 3.5 GHz band auction from far and wide. In addition to the familiar carriers, we had interest from entities that support industrial operations and wanted to use this spectrum for intelligent manufacturing, power generation and distribution, and healthcare. Our record supported its use for advanced inspection and sensor technologies, including aerial drones, terrestrial crawlers, and robotics.”

“But instead of seizing this opportunity, we are in retreat,” Ms. Rosenworcel complained. “What this agency adopts today is a hollow version of our initial proposal. Instead of doing something new, we are reverting to the old. We take what was most innovative about our 3.5 GHz band model and cast it aside in favor of existing business models. We expand licenses from census tracts to counties and all but bless even larger service territories at auction. We extend the terms for licenses. We adopt last generation build-out requirements for an innovation band that was designed for flexible new services and sensors.

“This is a lost opportunity,” the Commissioner added. “In our effort to reach a messy compromise, we’ve created a band that is not well suited to the services of today and offers too few opportunities for the services of tomorrow. This is like being at the dawn of the Uber age and doubling down on taxi medallions. It’s at odds with the experimentation that spectrum policy needs for a successful future—and it lacks the audacity that has been a powerful part of our wireless success in the past.”

But Mr. O’Rielly disagreed.

“We right the ship today by fixing the CBRS band so that there are opportunities for all, regardless of whether an entity is interested in fixed or mobile, 5G, or another technology,” he said. “Among other changes, we modify the rules to ensure Priority Access Licenses, or PALs, will be available in all markets and change the term to ten years with an expectation for renewal. These will allow winning bidders to freely invest in networks, knowing that if they follow our rules and meet performance requirements, their investments will not be stranded.

“The contentious debate, however, centered on the appropriate geographic license size, ranging from the 74,000 census tracts set by the prior Commission to 416 partial economic areas, with other options in between. After almost a year of conversations and considerable movement by some parties, which I greatly appreciate, it was clear that a consensus agreement could not be reached among all parties, so the Commission had to make the appropriate and justified policy decisions. And we are doing just that by changing the geographic license size to counties, which amount to approximately 3,200 market areas nationwide,” Mr. O’Rielly said. “Contrary to what some are asserting, we did not just throw our hands up in the air, throw a dart at a dartboard, succumb to a ‘political solution,’ or draw straws, because we couldn’t figure out what to do. Nor is this an effort to give licenses to the nationwide providers or turn this into a 5G-only band. As I like to say, such claims are pure gibberish.

“Counties are appropriate because they are big enough that larger mobile providers will be able to successfully aggregate PALs, especially with an option for package bidding, but small enough that they are attractive to small and rural wireless companies, cable operators, and new entrants. I thank the nationwide providers, small and rural mobile operators, the cable industry, and wireline carriers for supporting these efforts and being constructive partners in this endeavor,” Mr. O’Rielly said.

The Commissioner also said that he is disappointed “by some parties’ arguments that their investments will be stranded due to their inability to access to this spectrum. Those claims are simply false. First, no one is ever guaranteed to win licenses at auction, so it rings hollow that these investments were solely contingent on their ability to win PALs. Regardless, I hope the skeptics of these new rules will still participate in the auction, because outcomes are unpredictable, and, despite their protests, they do not know if they will be outbid. No one would have guessed that the largest two mobile providers would basically take a pass on the 600 MHz auction. Additionally, we are providing bidding credits, to those qualified, to help offset costs. Second, these investments were made in large part to access the 80 MHz of GAA [general authorized access], or unlicensed-like, spectrum that will remain available. Nothing we do today changes the availability of this spectrum. Ironically, I put the idea on the table of converting some GAA spectrum to licenses, even trying to find a way to offer them by census tract in a much later auction, but that was a non-starter, as these entities understandably wanted GAA. Further, with our use-or-share policies, if PAL spectrum is not being used, it can be accessed by GAA users.”

FCC Chairman Ajit Pai said, “Striking a balance wasn’t easy. Some wanted the Commission to maintain its previous decision to license the PAL tier by census tracts. Others wanted the Commission to change the license size to a significantly larger geographic area called Partial Economic Areas. Others called for county-based licensing. And still others proposed a hybrid of these zones. “After extensive deliberations, and under Commissioner O’Rielly’s leadership, the Commission charts a middle course,” he added. “On one hand, it finds that census tracts are too small. For example, there are over 2,000 census tracts in New York City alone, which would make it incredibly difficult to acquire the necessary licenses to deploy 5G at scale. On the other hand, the Commission finds that Partial Economic Areas are too large. They would significantly limit the range of potential licensees interested in making this band work. And so we find that county-based licenses are just right. This compromise will allow most interested parties, large and small, to bid on 3.5 GHz spectrum in order to provide 5G services.”

Mr. Pai added, “To be sure, some have claimed that our decision today is bad for rural America. But that’s just not true. For example, the county-based approach has been endorsed by the Rural Wireless Association, which told us that ‘the use of county-based license sizes will allow rural providers to participate in the 3.5 GHz auction for Priority Access Licenses (“PALs”) and further deploy rural broadband service.’ This compromise has also been endorsed by NTCA-The Rural Broadband Association. It’s also been argued that our decision today will benefit large carriers at the expense of small carriers. But the Competitive Carrier Association, which represents smaller carriers, backs our decision today, saying that ‘[c]ounty license sizes provide competitive carriers, especially those that serve rural areas, with a meaningful opportunity to bid on and acquire spectrum to provide these areas with the latest broadband services.’” Commissioner Brendan Carr also stressed that the item finds a middle ground.

“In the end, we adopt an approach that is not tailored to any particular technology or business model. Rather, our approach is targeted at ensuring robust investment and deployment from big cities to rural communities. It’s suited for a wide variety of business models from broadband to next-gen IoT and industrial applications,” Mr. Carr said. “Commissioner O’Rielly deserves credit for his leadership on these issues and in this band. He worked hard to bridge the gaps between stakeholders and to ensure that this critical piece of mid-band spectrum will work in the real world.

“And while there’s no doubt we’ll hear overheated rhetoric about the decision to license spectrum over counties versus census tracts, remember this: We’re doing something we’ve never done before. We’ve never auctioned licenses over geographic areas as small as counties. We’ve never used a SAS [spectrum access system] to coordinate spectrum access. And we’ve never implemented a ‘use-or-share’ regime that can both guard against spectrum warehousing and allow a WISP, a manufacturer, or any other entity to access the entire 3.5 GHz band — even channels that have been licensed to another provider,” Mr. Carr said. “I am confident that our innovative and experimental approach to 3.5 GHz will succeed.”

Wireless Telecommunications Bureau Chief Donald Stockdale told reporters after today’s meeting that there were “no significant, substantive changes” in the item between the draft circulated to Commissioners and the version adopted today. He said any changes mostly involved “clarification” and “clean-up.”

A broad range of parties praised the FCC’s action today, while a few criticized it.

“The U.S. stands at a critical juncture on the road to next-generation 5G technologies, like self-driving cars, smart home devices, and telemedicine. We can’t afford to sit back and let global competitors take the reins, and today’s vote by the FCC demonstrates America’s commitment to leading the way. The Energy and Commerce Committee will continue to support these efforts and more to ensure the necessary spectrum is available to allow 5G innovation and growth,” said Chairman Greg Walden (R., Ore.) and communications and technology subcommittee Chairman Marsha Blackburn (R., Tenn.).

“We commend Commissioner O'Rielly and the FCC for making targeted changes to the 3.5 GHz band to facilitate the deployment of next-generation wireless networks,” said Meredith Attwell Baker, president and chief executive officer of CTIA. “Mid-band spectrum is essential to spurring the innovative 5G services of tomorrow, and the FCC’s approach represents a better balance that will make this first-to-market mid-band spectrum more investment friendly for a wide array of users.”

“I thank Commissioner O’Rielly and the entire Commission for adopting the Order, which will license PALs at the county-level,” said CCA President and CEO Steve Berry. “The 3.5 GHz band is incredibly valuable spectrum and offers real opportunities for deployment of next-generation and 5G technologies. As Chairman Pai noted from a letter signed by CCA and over twenty CEOs and senior-level officials, today’s Order will provide competitive carriers, especially those that serve rural areas, with a meaningful opportunity to bid on and acquire spectrum to provide these areas with the latest broadband services.”

NCTA said it “strongly supports the Commission’s adoption of the 3.5 GHz Order today. County-sized licenses strike the right balance to incent investment in 3.5 GHz licenses by a wide variety of existing network operators and new entrants in both urban and rural markets. We applaud Commissioner O’Rielly for his leadership in developing this compromise solution and look forward to working with other stakeholders and the Commission on next steps to make deployment in the band a near-term reality.”

“The targeted rule changes adopted today by the Commission represent a reasonable compromise that will increase the economic viability of services using Priority Access Licenses (PALs) while preserving opportunities for innovation across all tiers of CBRS users,” said Cinnamon Rogers, senior vice president-government affairs for the Telecommunications Industry Association. “The 3.5 GHz band represents a win-win opportunity to make vital mid-band spectrum available for next-generation services while also promoting innovation through the use of small cells and new spectrum sharing techniques.”

Joan Marsh, AT&T, Inc.’s executive vice president-regulatory & state external affairs, said, “The Commission’s Order on the 3.5 GHz band are welcomed changes that will increase the incentives for investment in auctioned licenses without affecting small providers or General Authorized Access to the band. These are targeted and sensible changes that will support the delivery of new and innovative LTE and 5G services for consumers. We thank the Commission for providing the necessary clarity and certainty for use of this band as we plan for our rollout of fixed 5G wireless technologies in U.S. cities beginning in late 2019.”

Will Johnson, SVP-federal regulatory affairs for Verizon Communications, Inc., said, “Today's vote on the 3.5 GHz band Report & Order is another important step toward bringing 5G services to American consumers. The adjustments to the Priority Access License (PAL) licensing regime will ensure that this valuable mid-band spectrum is available to providers deploying 5G networks. These targeted changes strike the right balance between fostering innovation and encouraging sustainable investment in the band. We appreciate that the FCC recognizes the critical role of mid-band spectrum in delivering the promise of 5G.”

“The FCC took an important step today making the 3.5 GHz band more usable for mobile broadband. The changes announced will provide additional certainty to drive investment and innovation as we move toward #5G,” said Kathleen Ham, SVP-government affairs for T-Mobile US, Inc.

“Today’s action by the FCC, which adopts improved licensing rules for the 3.5 GHz band, is an important step forward for next generation connectivity including 5G,” said Charter Communications, Inc. “We thank Chairman Pai and Commissioner Mike O’Rielly for their leadership on this issue. The 3.5 GHz band is an important component of Charter’s mobile strategy and also has the potential to provide a cost-effective solution for delivering fixed wireless broadband, including in rural areas. Preserving significant opportunity for GAA [general authorized access] unlicensed use as well as adopting a counties-based Priority Access Licenses (PAL) areas will promote increased competition and broadband deployment, bringing new innovations and the future of connectivity even closer for consumers in urban suburban and rural communities across the U.S.”

NTCA CEO Shirley Bloomfield said that her group “welcomes the FCC’s approval of this report and order following robust discussion and engagement with providers of all sizes and stakeholders of all kinds in seeking to maximize the benefits that can be realized through the Citizens Broadband Radio Service (CBRS) spectrum band. Today’s action represents a balanced approach to making such spectrum available for effective commercial use throughout the country. NTCA’s small, rural operator members look forward to the opportunity to obtain this valuable spectrum to complement and enhance the broadband services they already offer in their communities.”

RWA said it “applauds adoption of county-based licenses for the Priority Access Licenses in the CBRS band, and appreciates Commissioner Michael O'Rielly's efforts on this item. The choice of license size is of critical importance in a spectrum auction context. In RWA's view, county license sizes and the inclusion of a rural service provider bidding credit acknowledges the needs and realities of wireless broadband customers in rural America and will ensure that PALs remain affordable and accessible to the small, rural providers that serve these customers.”

Zac Champ, vice president-government affairs for the Wireless Infrastructure Association, said his organization “applauds the FCC’s dedicated efforts to encourage investment in the CBRS band, ensuring it is fully utilized to benefit consumers. Today’s action to establish an efficient licensing process will prove key to the successful and expeditious deployment of service in the 3.5 GHz band. The FCC has provided critical incentives for innovation as the wireless industry deploys 5G services. We commend the leadership of Commissioner O’Rielly and the entire Commission in making this band ripe for investment.”

But WISPA President and CEO Claude Aiken complained that “the new combination of county-sized licenses, package bidding, long license terms, and renewal expectancy will shut out a significant portion of our members from using licensed CBRS spectrum to bring affordable, reliable broadband services to under-served rural areas.”

“This is a bitter pill to swallow, especially at a time when 24 million Americans lack robust fixed broadband service, and when small, local fixed wireless operators often offer the only business model that can reach them in a sustainable way,” Mr. Aiken said. “Many of our members have made significant investments in the CBRS band and were poised to reach millions more consumers who are within reach of their towers today. Now they will have to review their business plans in a significantly changed business and regulatory environment.”

“WISPA members also are disappointed that the FCC rejected our proposal to provide a 35 percent bidding credit for very small businesses, which would have given some of our members more of a fighting chance at acquiring CBRS licenses; or why the FCC is signaling approval of package bidding for multiple counties, which would further enhance the large companies’ power to shut out smaller competitors,” Mr. Aiken added.

“Despite these negatives, we are pleased that that the FCC is preserving at least 80 megahertz of unlicensed General Authorized Access (GAA) spectrum nationwide, which is enough to accommodate a fair amount of growth for many of our members. Also, some of our larger members have expressed an openness to pursuing county-based licenses,” Mr. Aiken acknowledged. “We now look forward to the commercial launch phase; and we will continue to advocate for auction procedures that will allow as many of our members as possible to participate in the CBRS auction.”

“The FCC’s vote to upend its CBRS spectrum license rules takes spectrum that was earmarked to accommodate a wide variety of users, deployment models, and use cases and instead changes the rules and re-allocates the 3.5 GHz band solely to benefit the deployment models of large wireless carriers and cable companies,” said Phillip Berenbroick, senior policy counsel for Public Knowledge. “As a result, rules that were intended to help small, rural broadband providers acquire spectrum to serve their communities and close the digital divide have been replaced with licensing rules that have repeatedly failed to provide rural America with real, reliable, and affordable broadband access.”

He continued, “The Commission’s build-out requirements for the CBRS licenses will not promote deployment to rural communities. Instead, large wireless carriers and cable operators are more likely to acquire these licenses and serve densely populated cities and towns to comply with the license performance requirements, while leaving outerlying, more sparsely populated areas without any service. As a result, the Commission’s rule changes are likely to widen, rather than narrow, the digital divide. Changes to the CBRS license rules have been explained as critical for speedy deployment of next-generation 5G networks. In reality, today’s vote will likely lead to additional challenges to the 3.5 GHz rules, further delaying any auction of the PALs and delaying, rather than speeding, licensed use of the CBRS spectrum. Undoubtedly, the FCC’s changes significantly reduce the likelihood that these frequencies are ever used to serve rural communities – for any generation of wireless service, let alone 5G.”

General Electric Co. also weighed in on today’s FCC action. The company was a member of both the Industrial Internet of Things Coalition and the CBRS Alliance, which sought PAL licensing at least in part by census tracts.

“We’re disappointed in today’s decision. It’s a missed opportunity for U.S. manufacturers, but we are committed to finding ways to provide our customers with the technology and support they need regardless,” a company spokesperson said. —Paul Kirby, [email protected]

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