The world is in a race to deploy the next generation of wireless technology, known as “fifth generation” or “5G”, which promises ultra-high mobile internet speeds and greater capacity. The U.S. won the race to 4G, the current generation of mobile tech, but many fear the Chinese could beat us to 5G. To win this heat, the Federal Communications Commission must make available the spectrum (or airwaves) that 5G technologies need.
The agency recognizes the importance of its role in the 5G race and is working hard to meet 5G spectrum needs. Last week the FCC added 1.7 GHz of spectrum to our nation’s 5G inventory in high frequency bands, and it’s seeking to increase the usability of additional spectrum for 5G in the mid frequency 3.5 GHz band using rules that proved successful in the race to 4G.
The current rules for the 3.5 GHz band weren’t intended to promote investment in 5G mobile networks. The FCC adopted a set of rules for the 3.5 GHz band during the Obama Administration that emphasized experimental uses of spectrum while discouraging investment in reliable 5G networks, especially in rural areas.
The Obama-era rules discourage 5G investment by (1) limiting license terms to 3 years with no expectancy that the license will be renewed and (2) using census tracts as geographic licensing areas.
3-Year Investment Horizon Is Too Short
The FCC ordinarily licenses mobile spectrum for a period of ten years with an expectancy that the license will be renewed so long as the licensee meets all conditions of providing service to the public. A ten-year license term gives licenses a reasonable opportunity to recoup their network investment and the renewal expectancy prevents their investment and subscribers from becoming stranded.
Three years isn’t enough time to recoup the cost of investing in new 3.5 GHz networks in many cases, especially in rural areas that require more powerful (and far more expensive) systems. Rural systems will require the use of higher power base stations and “Category B” end-user devices in this band, which must be professionally installed per FCC rules (like a satellite TV dish). It’s a daunting prospect for an operator to incur the costs of network infrastructure, equipment and “truck rolls” to every rural customer in the face of a 3-year death penalty for the business.
74,000 License Areas Are Too Small
In most countries, there is a single license area for each set of licensed frequencies — i.e., a wireless operator in France only needs 1 license to serve the entire country. This gives a licensee the certainty that it will be able to provide nationwide service once it gets its initial network up and running.
Due to our vast geography, the U.S. has typically divided the country into multiple geographic areas for licensing purposes, which tends to promote the development of regional wireless operators. At the same time, this means that a mobile operator in the U.S. typically requires many licenses to provide nationwide (and even regional) service.
To accommodate the needs of both regional and nationwide operators, the FCC has traditionally offered a mix of license area sizes that divide the country into as many as 734 different areas and as few as 6. Congress codified this approach in the 2012 Spectrum Act, which directed the FCC to “consider assigning licenses that cover geographic areas of a variety of different sizes” in the broadcast incentive auction.
In contrast to this approach, the license area size adopted by the Obama Administration for the 3.5 GHz band divides the country into more than 74,000 different license areas, because it determined these tiny license areas would “align[] well with small cell deployment” in urban areas. In rural areas that require larger cell sizes, however, tiny license areas tend to increase costs and uncertainty while reducing network reliability.
The Fix
The Trump Administration’s FCC has recognized the problems created by its predecessor’s experiment and the harms it’s causing to rural America. The agency has proposed a simple fix: to conform the 3.5 GHz band’s licensing rules to the same standards that boosted the U.S.’s win in the race to 3G. The modified rules would increase the license term in the band from 3 to 10 years and increase its license area sizes to partial economic areas or counties (resulting in 416 to 3,144 different license areas rather than 74,000 plus).
These simple changes will promote the investment in next generation networks that’s necessary to speed the U.S. on its way to victory in the race for 5G without leaving anyone behind.
