Access licensing is a new spectrum licensing mechanism that enables a party to obtain a license for spectrum that is not utilized by the incumbent license holder. Canada recently released the framework that governs access licensing. It identified the Cellular 800 MHz and PCS 1800 MHz bands for this licensing framework in designated rural and remote Tier 5 service areas.
The purpose of access licensing is to increase the utilization of spectrum in rural and remote areas. Incumbent spectrum holders, often large mobile network operators, have acquired spectrum over the years but did not find it profitable to serve rural areas with low population density. This led to idle spectrum spread across different geographies. Access licensing seeks to make this spectrum available to third parties who are in a better position to develop a positive business case for services in rural and remote areas. The framework is not a new: In 2019 the UK introduced Local Access license. Both the Canadian and UK schemes have the same intent and share a few similarities (e.g. a 3-year license term).
Framework highlights
The Access Licensing framework allows a party, on a first come first serve basis, to acquire a 3-year spectrum license to operate in a Tier 5 service area. ISED identified 236 such service areas and the available channels in the Cellular (824-849 MHz/869-894 MHz) and PCS (1850-1910 MHz and 1930-1990 MHz). The spectrum could be used for fixed or mobile services, including enterprise private wireless networks. This is promising for the oil & gas, mining and hydroelectric power generation verticals.
Spectrum availability
Access licensing will to cover approximately 3.1 million people in designated rural and remote Tier 5 service areas. The median available spectrum is 20 MHz (duplex). 71 of the 236 Tier 5 service areas will have 2×5 MHz allocation. This accounts for around a third of the population. Another 30% of population will have 2×10 MHz coverage.
The PCS band accounts for most of the available access licensing spectrum with 98% of the available MHz-PoP (674 of 701 frequency channels). The Cellular band account for only 2% of the MHz-PoP (27 of 701 frequency channels).
The available frequency bandwidth would not be sufficient for broadband speeds in most service areas. However, it could serve for basic connectivity services as well as targeted enterprise connectivity in some locals. On the plus side, an active ecosystem for infrastructure equipment and user devices exists. This will help to lower the cost of operations. Also, there are plans to identify additional spectrum bands for access licensing in the future.
Deployment requirements
Access licensing comes with deployment requirements based on the population of the corresponding service area. This is calculated at 1 site per 10,000 people per channel. In aggregate, this leads to a total of 1,155 sites. The same deployment requirements apply irrespective of the use case for spectrum (fixed, mobile or private network).
Pricing
Access licensing is currently priced at $0.042/MHz-PoP per year, with a minimum of about C$1,200/year. The pricing model means that spectrum cost per tower decreases with the number of towers. Whether the business case turns positive or negative is dependent on the specific service area, and specifically on the distribution and density of users. Therefore, it will be hard to be confident of the potential success of access licensing for fixed and mobile services. It is likely that the cost of spectrum is too high in the context of deployments in remote and rural areas. On the other hand, enterprises have different pricing sensitivity than consumers, and may find the framework very suitable for their needs.
Note on 900 MHz band
Access licensing will also be available for the 900 MHz band between 897.5-900.5 MHz and 936.5-939.5 MHz under the same rules. The FCC made this band available for broadband licensing in 2020. Anterix holds much of the spectrum in the US. The narrow band nature of this spectrum limits it to IoT and voice connectivity, which nonetheless is a fit for many enterprise applications especially by utility companies. Ecosystem support is available from some of the large vendors and niche players like Azcom Technologies.
Concluding thoughts
The Cellular and PCS bands are the first two bands awarded for mobile services: Cellular in 1983 and PCS in late 1995. The idea behind selecting these two bands must have included their long-time active use by service providers. Available spectrum in these two bands means that the license holder did not find a business case for over two decades! Therefore, it is possible to consider these two bands as a test case for newer spectrum.
Access licensing is a novel spectrum licensing mechanism, so it may take additional iterations to get the formula right. There are still some issues to iron out such as the ones related to access windows. Another issue is whether access licensing qualifies a party to provide MVNO services. Therefore, the current form of access licensing is a first step that helps in testing market reception and traction. Having directly experienced how the incumbent network operators deploy their wireless infrastructure, there is room for a lower cost entity to make a business of these spectrum assets.
Note: Access Licensing could complement NCL spectrum which targets enterprise private wireless network applications. For information on NCL spectrum click here.