Proposed FCC Rules Could Threaten Local Broadband Competition

Localities could see their internet options limited by proposed Federal Communications Commission rules that would increase priority access license areas and lengths for the 3.5 GHz “innovation” band.

In 2015, the FCC established a new framework for sharing the underutilized wireless spectrum, called the Citizens Broadband Radio Service, which created three tiers: incumbent access, priority access, and general authorized access.

Incumbents like naval radar, fixed-satellite service and wireless internet service providers previously operating in the band would be protected from harmful interference by other users. The rest would bid on PALs for service areas known as “census tracts,” the size of small cities or towns, or else try their luck in the unlicensed portion of the spectrum.

T-Mobile tried to convince the FCC to license the entire band earlier this year, and when that didn’t work petitioned for rule changes, along with CTIA - The Wireless Association, that would condense about 70,400 census tracts into about 400 partial economic areas.

“This is designed for urban areas; it is not designed for non-urban areas,” Richard Bernhardt, Wireless Internet Service Providers Association national spectrum adviser and Wireless Innovation Forum CBRS Operations chair, told Route Fifty by phone. “The system shouldn’t be rigged so it only provides for the large providers.”

WISPA predicts large providers like T-Mobile will outbid smaller ones for the most important PEAs, the value of which will skyrocket from a few thousand dollars to millions in some cases depending on the contents. Parts of New York City, New Jersey and Connecticut are contained in one enlarged PEA for instance, Bernhardt said, and no bidding credits have been offered to smaller entities.

If a WISP loses out on one of the seven 10 MHz slots that make up a PAL, they can still operate in one of eight GAA slots, but like the 2.4 GHz and 5 GHz bands there’s more interference that makes executing commercial applications difficult. PAL spectrum that isn’t used is shared until a license holder chooses to exercise their priority.

Another rule change the FCC is considering would increase PAL terms from three years to 10 years with right of renewal for a second, 10-year stint and additional renewal unclear—a 20-year minimum hold on each PEA.

The cumulative effect is to further consolidate the mobile industry while providing localities, particularly those that don’t regulate internet providers, with less flexibility of choice, Bernhardt said, adding WISPA advocates for synergy between small, midsize and large providers.

“Municipalities thought it was a great deal because they could form their own local networks,” said Ron Quirk, The CommLaw Group’s senior managing attorney, by phone. “Now, if you want your service, you’d have to go through the big guys.”

Rural, and to a lesser degree suburban, areas will suffer the most because large providers have previously proven reluctant to serve them—unlike smaller providers. Under most spectrum auctions the FCC requires winning providers to prove they’ve built out infrastructure to serve 40 percent of the population within three to six years, but bigger PEAs mean they’ll be able to hit that mark serving urban areas primarily.

Auction rules have yet to be set after the previous auction was nixed to address T-Mobile and CTIA’s petitions under new FCC Chairman Ajit Pai—pulling the rug out from smaller providers that had already invested in updated equipment in preparation for CBRS.

“The record in response to the petitions received shows that many entities looking at larger scale deployments require certainty that their investment will not be stranded,” said FCC Commissioner Michael O’Rielly, a Republican who Pai tasked with revisiting the 3.5 GHz rules, in his official statement accompanying the agency’s notice of proposed rulemaking.

“Opponents have stated that the proposed changes are intended to turn this into a 5G-only band for large nationwide providers. That is ridiculous,” he added. “The Commission implements flexible use policies, meaning a winner at auction can deploy whatever service or innovation they choose.”

Both T-Mobile and CTIA argued in their petitions that the changes would dramatically improve the environment for fifth-generation wireless broadband, which remains hypothetical, as well as investment viability.

While incumbent WISPs will be grandfathered into the CBRS if they re-register, their protected spectrum rights will still expire in April 2020, when they’ll become regular users. Any new equipment they install during that time won’t automatically receive protection once that happens.

“The expectation with CBRS is, if it can work … it would be replicated into other spectrums,” Bernhardt said.

That raises the stakes considerably and could lead to legal action if unfavorable rules are ultimately approved.

The public has 30 days from the time the rules were published in the Federal Register to comment, and they were posted so that the comment period bleeds into the holidays with a deadline of Dec. 28. The deadline to reply to those comments is Jan. 29.

For a D.C. Circuit judge to hear the case, comments must be filed to have “skin in the game,” Quirk said. If anyone were to take the FCC to court arguing the new rules are “arbitrary and capricious,” he said it would likely be an association that could afford the legal fees.

Bernhardt couldn’t speak to the plausibility of future litigation.

A significant outcry during the comment period could at least help smaller providers secure the bidding credits they need to level the playing field a bit.

“With as much effort that is being put into getting rural Americans quality internet service, why would the commission modify the rules to accommodate Cellular companies. Cellular already controls ALL quality spectrum for their specific use,” reads one comment from Crystal Beach, Texas-based WISP 3rd Coast Internet. “How are we to compete if the commission allows them to monopolize the newly created CBRS band?”