PSA Discovery Patterns Weekly News Summary

Fri May 13 11:59:51 2016

It has been a relatively quiet week in the Public Safety communications space. That is not to say there is not a lot happening around the wireless industry… The FCC says it is confident it can free up 126 MHz of 600-MHz spectrum for the forward auction. This spectrum has been used for TV stations for many years. Each analog channel required 6 MHz of spectrum but the new digital systems do not require the same amount of spectrum per station. Some of the TV stations that have agreed to relocate from the 600-MHz band (channels 32-52 except for channel 37, which is reserved for radio telescopes) will move down to other open channels in their areas while others will share a 6-MHz channel with another TV station, and in some cases the TV stations could opt for taking the cash due them at the end of the forward auction and turning out the lights and locking the doors.

However, as I mentioned, the FCC is confident it will be able to auction 126 MHz of spectrum, and 100 MHz of it will be set up into 10 blocks of 5 MHz by 5 MHz, but in reality, any serious bidder will want to bid on at least a 10X10-MHz block for capacity and data speed reasons. The price for this spectrum on a per-megahertz basis will probably be a lot less than prices paid during the AWS-3 auction where participants seemed to be in a bidding war with one another and drove up the price of the AWS-3 spectrum to the highest prices ever paid in the United States for spectrum at auction. That auction raised $44 billion for the federal government. Some of this was used to fund FirstNet, some next-generation 9-1-1 activities, and $300 million for research and development for Public Safety systems, devices, and applications. The paired spectrum in the AWS-3 auction went for an average of $2.72 per MHzPOP. In the 700-MHz auction the highest price paid was $2.57 per MHzPOP but the average was in the $1.29 range. The AWS-1 auctions went for MHzPOP prices averaging in the less than $0.50 range.

The 600-MHz spectrum is better for wireless broadband than the 700-MHz spectrum already in use because the 600-MHz spectrum provides the capability of larger cell sites in non-metro areas, and better building penetration in urban areas. The downside is that the spectrum won’t be available until at least 35 to 48 months after the final round of bidding, and then it will have to be built-out and devices made to cover the new 600-MHz band. Thus a safe guess for this spectrum coming online is probably 48-60 months after the auction is completed. Based on all this, AT&T, T-Mobile, and others have said in public statements that they are fairly confident they will be able to purchase 10X10 nationwide spectrum for around $10 billion. This puts the price for 20 MHz of spectrum at about the same price Verizon paid for its 12X12 MHz of 700-MHz spectrum in the 700-MHz auction.

That naturally brings us back to what the 20 MHz of FirstNet spectrum is worth on a secondary basis. That is, as they used to say, “the 64 thousand dollar question” (or in this case, perhaps the $30 billion question). The positive for this spectrum is that it is available right away. Once the bidder is selected and the contract is in place the successful bidder can start building and using the spectrum immediately while those who won the 600-MHz spectrum can only start their planning and then wait, wait, and wait.

There are some downsides to the FirstNet spectrum as well. Even though the RFP is to award a contract that runs for 25 years, the winning bidder cannot put the spectrum on its books as an asset like winning bidders can with spectrum they bought at auction. Next is the question that has perplexed Public Safety, FirstNet, the FCC, and potential bidders: How much of this spectrum will be available for secondary use by non-Public Safety users in the larger metro areas where it seems the network operators will never have enough spectrum with the burgeoning demand for broadband services and streaming video.

The more spectrum that is available for secondary use in metro areas the more the value of the spectrum to the RFP winner. But if you track the need for secondary spectrum on a Friday and Saturday night against the Public Safety need for the same spectrum in the same locations, it is anybody’s guess how it will turn out. On one Friday night in Times Square the demand from Public Safety could be relatively light and therefore those who will have access for secondary usage will be higher. However, the next night, Public Safety might have multiple incidents occurring in that area requiring them to restrict how much spectrum can be set aside for secondary users. That is one of the issues many people have been wrestling with for a number of years. In reality, until the network is built out there is no way of knowing the answer.

Even if you look at Harris County, Texas, where there is a fairly extensive system up and running on the FirstNet spectrum, at the moment it is not being shared with anyone, there are not as many applications devoted to Public Safety as there will be, nor are there as many cameras as there will be. This will sort itself out over time I am sure, but it may be that the winning bidder will have to overbuild some of the larger metro areas in order to ensure it really does have access to the spectrum when consumer demand for broadband is highest and could run up against high demand from Public Safety. The way the network is designed, and by law, in these cases Public Safety wins, end of story.

I suspect that over time the entire concept of Public Safety and the winning bidder sharing only the FirstNet spectrum will change. With today’s LTE carrier aggregation it is possible to combine two or more non-contiguous portions of the spectrum to gain more capacity and speed. I cannot imagine that Public Safety and the successful bidder won’t see the advantages of mixing the FirstNet spectrum with other spectrum perhaps at first to off-load voice and text traffic from FirstNet to free up some of FirstNet’s spectrum for broadband services. Then at some future point as 5G or small cell technologies become proven, I can imagine that over time the FirstNet spectrum will essentially become part of the total spectrum allocation for the winning bidder and that Public Safety will have full priority access no matter what spectrum it is on.

In other words, while the FirstNet spectrum is licensed to FirstNet, I believe it is a starter kit for the Public Safety community, and with carrier aggregation as the demand shifts between Pubic Safety and consumers on the network, the technology will enable spectrum usage to shift across multiple portions of the spectrum making use of macro networks, small cell technologies, and satellites for true rural and redundant coverage. There will most likely be services that will remain on the FirstNet spectrum including broadcast dispatch and other zoned or precinct-type services.

None of us know exactly what wireless services and networks will look like even ten years into the future let alone in year twenty of the contract. It is even possible Public Safety will be making use of TRUE mission-critical or Public Safety grade Push-To-Talk services exclusively over FirstNet and other commercial spectrum but my bet is that Land Mobile Radio systems will still continue to provide voice communications for the Public Safety community. Others, of course, disagree. The bottom line is no one knows for sure what lies ahead for voice services, but it is safe to say voice will continue to play a major role going forward.

Wireless technology is moving quickly. To put this in perspective, the first cellular phone system launched in the United States was a 1G analog system in 1981, 35 years ago, or 10 years longer than the FirstNet contract. The first handheld, the DynaTAC, was introduced by Motorola (Marty Cooper) on the Ameritech cellular network in 1983. None of us who were involved in the first cellular systems in the United States could have imagined where we would be today, so it is difficult to grasp what Public Safety and consumer wireless communications will look like in 25 years.

There is no need to take out your crystal ball to look at ten or twenty years from now. The most important thing is how much progress we can make in the next three years.

Andrew M. Seybold

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