November 16, 2020
Clearing the Air(waves): on 5G, Licensed Spectrum Efficiencies, and Wireless Investment .
Over the past few years, America’s wireless industry has been hard at work, investing in and building 5G networks. Just in the past month, our third nationwide network was launched and new signature 5G smartphones were released.
Despite all this success, there’s still a few misguided folks suggesting we switch direction and take a different approach to how we allocate spectrum. To make matters worse, they base their calls for a radical shift in how we build networks in this country on some real misconceptions.
We’ve already debunked the notion of DoD-controlled wholesale networks, so let’s set the record straight on the lingering misunderstandings and inaccuracies:
Commercial spectrum license holders build out fast.
Wireless providers often invest billions to secure spectrum licenses so they can recoup that investment by providing wireless services to Americans. Which means that wireless providers are highly incentivized to put those often pricey spectrum licenses to use quickly. There is a strong factual track record of quickly deploying spectrum.
There is some misconception that the FCC does not have requirements for license holders to put spectrum to use. That fallacy is easy to disprove.
Just take a quick look at the Code of Federal Regulations, which lists the requirements for construction and commencement of service or operation. The FCC’s webpage is also quite helpful in providing information about the construction/coverage requirements for commercial licenses.
Exclusive commercial licenses make for highly efficient spectrum use.
Spectrum efficiency is a hallmark of the U.S. focus on flexible, exclusive-use licensing. Far from being an inefficient approach, exclusive-use licensed bands are often the most intensively used and serve as a “runway” for the launch of innovative services as the FCC has recognized.
The wireless industry tirelessly works to re-farm existing spectrum, deploy new spectrum assets, build denser wireless network infrastructure, and upgrade to new generations of networks. The industry spends billions on these efforts and for a simple reason: to make commercial wireless networks even more spectrally efficient. In fact, U.S. wireless providers have increased their spectrum efficiency by a factor of 42 since 2010 on a MBs/MHz basis.
One major reason for that efficiency is refarming, which is a time-intensive, highly-coordinated, and complex networking effort to repurpose spectrum bands from one generation of wireless technology to newer, more efficient generations. Right now, U.S. wireless providers are transitioning its 3G and 4G spectrum for 5G.
Federal government spectrum use is far from efficient.
The federal government has long been the largest spectrum user in the U.S. Federal communications systems, however, often rely on decades-old wireless technologies, have limited capabilities, and are less spectrally efficient.
Compounding this inefficiency is the significant imbalance between commercial and government use of mid-band airwaves. Out of the 5,400 megahertz of mid-band spectrum between 3.0 GHz and 8.4 GHz, DoD alone occupies a total of 3,600 megahertz – 66.67%. Today, licensed spectrum for commercial mobile services has access to just 70 megahertz, or 1.3%, of that critical mid-band spectrum.
There is bipartisan recognition of the inefficiency of federal agencies’ spectrum use. Rather than empower DOD with control over our commercial wireless networks, policymakers have instead sought ways to drive greater efficiencies in government use of spectrum, so that additional resources can be made available to the commercial sector.
That’s why policymakers created a spectrum clearing and reallocation framework to free up federal spectrum for commercial wireless use while making federal users whole with comparable—and often enhanced—wireless systems. For instance, that framework provided nearly $4.6B to federal agencies to upgrade their systems to modern, state-of-the-art digital systems, IP-based technologies, and fiber, following the AWS-1 and AWS-3 auctions.
Another way that commercial licenses spur spectrum efficiencies is through an active secondary market, which allow for a wide variety of dynamic spectrum leasing arrangements and sales.
We saw this earlier this year, as COVID-19 drove significant increases in network demand. Wireless providers quickly tapped additional spectrum assets, on loan from other providers or the FCC, to provide additional capacity where demand was surging. For instance, U.S. Cellular customers in parts of Wisconsin, Iowa, Illinois, New Hampshire, Maine, and North Carolina received a major capacity boost, thanks to a partnership with Ericsson and a borrowing of spectrum from other wireless companies.
Over the course of 2020, wireless providers signed 265 leases to tap spectrum resources efficiently and quickly. In terms of secondary market purchases, there’s been over 80 spectrum transfers, ranging from small deals covering barely a million MHz-pops to larger acquisitions covering tens of millions of MHz-pops, and covering all parts of the country, from North Dakota to New York.
Without a doubt, exclusive licenses and the secondary market mean a far more effective use of spectrum assets than a government-designed mandatory wholesale approach.
Other forms of sharing remain novel and untested, and initial attempts have proven complex and time-consuming. The 3.5 GHz/CBRS sharing framework took ten years to complete, and that was with relatively straight-forward and limited sharing with U.S. Navy radar systems.
U.S. wireless networks demonstrate their spectral efficiency thanks to a policy framework that favors spectrum clearing, exclusive-use spectrum licenses, flexible rights, private sector investment and competition. This framework has shown it can bring spectrum into use faster—often much faster—than spectrum sharing.
Compared to the decade-long 3.5 GHz/CBRS framework, clearing and relocating AWS-1 took eight years, the 600 MHz band took seven years, and the C-band took just four years.
The U.S. wireless industry is a capital investment leader.
Providers have invested over $286B in America’s wireless networks since the start of 2010. America’s wireless providers invested $29.1 billion last year—a four-year high—to meet consumers’ unprecedented demand for mobile data. This year’s investment of $29.1B is equal to $89 per capita. By contrast, China invests $21.85 per capita.
This non-stop investment cycle differentiates our industry—and pays real dividends as providers continue building the next generation of wireless, creating jobs and helping our economy recover.
Wireless providers spent billions earlier this year on 3.5 GHz spectrum and are preparing to spend tens of billions in the C-band auction that will begin this December. They tap this level of capex because these mid-band airwaves will be the foundation for the U.S. 5G economy over the next decade, creating millions of jobs and hundreds of billions of economic growth over that time.