Google-led plan to upend wireless industry gains momentum
Carriers spent more than $50 billion in recent years buying exclusive spectrum rights then charging users for cell service. What if, instead of buying and hoarding, spectrum is shared in new ways?
Google-led plan to overhaul how valuable airwaves are used for calls and texts is gaining momentum across the wireless industry, giving the company the chance to play a central role in networks of the future.
Citizens Broadband Radio Service, or CBRS, is a fat slice of the US airwaves being freed this year from the military's exclusive control. Instead of just zipping messages between aircraft carriers and fighter jets, the spectrum will be shared by the Navy, wireless carriers like Verizon, cable companies including Comcast, and even hospitals, refineries and sports stadiums.
Alphabet Inc.'s Google, with help from some smaller tech companies, is leading the charge on ways to make the new service work seamlessly. They've built databases and sensor systems that switch users to different CBRS channels to avoid interference, especially when the Navy sails into town.
This could upend the wireless business. Carriers spent more than $50 billion in recent years buying exclusive spectrum rights then charging users for cell service. What if, instead of buying and hoarding, spectrum is shared in new ways? It could become an abundant resource, making mobile internet connectivity more available and potentially cheaper.
"This will be a huge psychological hurdle for US wireless companies to overcome," said industry consultant Chetan Sharma. "These operators want to own the spectrum clean and not worry about interference."
What's changed is that the U.S. wireless industry is so desperate for new spectrum it's willing to try the idea — and even work with Google, which has been viewed skeptically by the industry. Unlimited wireless plans have caused data usage to soar. Throw in pressure to build new 5G networks and companies like Verizon Communications Inc. and AT&T Inc. can't afford to ignore CBRS, even if it disrupts decades of spectrum orthodoxy.
CBRS has three tiers. At the top is the military, which has gets spectrum whenever it needs it. The second is a priority level that will be sold to the highest bidders in hundreds or thousands of mini auctions covering different parts of the country. At the bottom is a free tier that any company can use. That final tier won't get protection from interference.
Imagine you're on a call with your smartphone in Los Angeles and it's using CBRS to connect you. An aircraft carrier churns past. Systems run by Google, startup Federated Wireless or a few other companies, will spot that, give the Navy a prime bit of the spectrum to use, then move you onto a slightly different channel without dropping the call. When the ship leaves the area, the Navy's spectrum is sent back into the mix. There's enough spectrum to go round — 150 MHz is the largest chunk of contiguous airwaves to be released in years. And the Navy is unlikely to sail past Denver, Kansas City or most other U.S. locations.
The key is that if a company buys a priority slice and doesn't put it to work, the spectrum is free for others to use. This prevents hoarding and changes the supply and demand equation, making spectrum more plentiful.
"Spectrum is like drinking water. There's only so much of it and you better use it efficiently," said Joel Lindholm, an executive at Ruckus Wireless, a unit of Arris International Plc that's building CBRS gear.
Verizon, AT&T, T-Mobile US Inc., Comcast Corp. and Charter Communications Inc. are testing CBRS. Verizon, the largest U.S. wireless player, has told smartphone makers to include chipsets in their latest handsets that can handle the new spectrum band and switching technology, according to people familiar with the matter. That's a key requirement to make the idea a reality.
The Federal Communications Commission is due to approve parts of the plan soon and the first commercial deployment is expected to come later this year. The market value of the spectrum is $7.5 billion to $15.6 billion, while the total value to consumers could be as much as $260 billion, a former FCC commissioner recently estimated.
It's the culmination of almost a decade of research, development and lobbying by Google veteran Milo Medin, colleague Preston Marshall and other industry players like former Sprint Corp. executive Iyad Tarazi.
"There's a huge amount of industry momentum on this," Medin said. Google and other providers of databases to run the new spectrum system applied for certification by the FCC in February, he noted. "We hope to be approved in the next six months or so, with deployments on the heels of FCC approval," Medin added.
The FCC is on board. Chairman Ajit Pai mentioned the new sharing approach at Mobile World Congress in February, and Commissioner Michael O'Rielly recently stressed the importance of the spectrum. CBRS uses airwaves in the 3.5 gigahertz band, which could become a global standard for 5G networks.
For Google, the project is the most successful in a long series of efforts to increase internet availability — the digital oxygen that sustains its search engine, YouTube video service and the ads that generate almost 90 percent of the company's revenue. When CBRS goes live, the company will be in a powerful and somewhat familiar position. As a Spectrum Access System provider, it will be paid to sit in the middle of information flows about valuable spectrum and decide what happens to the airwaves in real time. To avoid interference, Google has even installed special sensors along U.S. coastlines to spot when Navy ships are near (although the exact locations are digitally scrubbed).
That power doesn't sit well with the wireless industry, so Medin spent years building partnerships with other companies in the business.
"Is Verizon really going to fall in love and let Google touch all their data? No," said Lindholm of Ruckus Wireless.
Part of the solution is Federated Wireless, a startup backed by communications industry stalwarts like Charter. It was founded in 2012 to develop and run a database and other technology needed to make CBRS work. If wireless giants don't want Google controlling part of their network, they can hire Federated instead, Lindholm explained.
Tarazi, the former Sprint executive, runs Federated. He said Google brought credibility to persuade the government and industry that the technology would work, while Federated worked closely with companies to develop standards and equipment to bring the idea to life.
"Milo is the visionary behind this. He led most of the lobbying efforts," Tarazi said. "With just one entity like Google it was hard to recruit lots of players like carriers and equipment makers. We are a small startup and a neutral body."
The wireless industry is not entirely comfortable yet, though. It's making a late push to change the rules to favor their existing business models. Wireless carriers argue the areas for priority licenses need to be larger. But that could cut out smaller companies that want to use the spectrum in new ways.
"The key to maintaining robust investment and innovation in CBRS is for the rules to enable a variety of use cases — including smaller, innovative applications," Medin said.
While that debate swirls, the FCC is likely to approve the general, third tier sooner — the most-promising part of CBRS, Lindholm and others say.
Organizations like hospitals, hotels and refineries could use this instead of spottier Wi-Fi. Currently, if they want better service, they have to pay wireless carriers handsomely for Distributed Antenna Systems that connect to existing cellular networks.
DAS solutions can cost more than $2 per square foot of coverage, depending on the data capabilities, while Ruckus's new CBRS service for enterprises will be about 76 cents, Lindholm says.
By 2025, there will be about 200,000 CBRS access points set up each year by telecom companies, making that part of the new market worth roughly $500 million, according to Mobile Experts, an industry research firm. Other businesses will be deploying almost 1 million access points and will be spending about $1 billion annually by then, the firm estimates.
"That latter market is nearly infinite," said Joe Madden, founder of Mobile Experts. "We've talked to hotel owners with hundreds of locations and they're keen to try CBRS. When guests stay and the coverage is poor they don't come back."