Analyzing the Spectrum Holdings of US Operators – The Case of Clearwire

(Dec 15 2010)

1. By Phil Marshall, PhD Tolaga Research

   The method of radio frequency allocation in the US has resulted in a highly fragmented and complex array of numerous spectrum licenses spread across multiple operators. Licenses within different bands have been allocated across different geographic areas, often involving multiple FCC auctions. In addition, provisions allowing for spectrum trading and leasing further complicate the spectrum landscape in the US. Analysis of Clearwire’s spectrum holdings in the 2.6 GHz range is illustrative of the unnecessary complexity that the FCC has created. It also demonstrates the significant challenges involved in determining and valuing the detailed spectrum holdings of all wireless operators in the US market.

   In the US the 2.6 GHz spectrum allocations are shared between Broadband Radio Services (BRS) and Educational Broadband Services (EBS) licenses. The BRS and EBS licenses do not align in terms of the geographic coverage of each license. The BRS spectrum is allocated according to Basic Trading Areas (BTA), of which there are 493 nationwide. The EBS spectrum is allocated with a center coordinate and a coverage area that spans 35 miles. Clearwire holds a coveted radio spectrum position in the US market having on average over 100 MHz of spectrum bandwidth across the country within the 2496 to 2690 MHz frequency range. It has obtained this spectrum position by accumulating access to over 9000 licenses. Some of these licenses are owned by Clearwire, while its access to spectrum allocated to other licensees has been obtained via long term leases.

   Leveraging FCC spectrum data, Tolaga Research has conducted an extensive analysis of Clearwire’s 2.6 GHz holdings on a market by market basis. As a result of this analysis, our findings are presented in both a report format and data files estimate Clearwire’s spectrum holdings in each Basic Trading Area (BTA) across the US.

   Using this data we were then able to investigate potential deployment scenarios that Clearwire could consider, encompassing hybrid deployment scenarios with TDD-LTE, FDD-LTE, and WiMAX.

   Our key takeaways from this exercise are:

   • Clearwire now holds over 9000 2.5 GHz licenses and leases that traverse 411 of the 493 BTAs in the US. It claims deep spectrum holdings, with an average of 100 MHz - 150 MHz across major geographic markets, which essentially aligns with our market by market analysis. Both Clearwire and its EBS license leasers must work hard to ensure they meet the FCC’s “Substantial Service” deadline of May, 1, 2011.
   • Clearwire has significant radio spectrum resources and could potentially sublease licenses to other operators, while continuing to maintain a competitive market position.
   • According to the ITU specifications, it would prove challenging for Clearwire to implement FDD-LTE in many markets. However, if the duplex spacing between the FDD channel pairs where narrowed, this challenge would be alleviated in many cases.
   • By deploying FDD-LTE, Clearwire will achieve a time to market benefit relative to a TDD-LTE deployment. However, we believe that TDD-LTE allocations will achieve greater overall efficiencies; particularly as dual mode FDD/TDD-LTE technology becomes available in the 2012 timeframe.

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