The FCC's proposed licensing rules for the 3.5 GHz CBRS (Citizens Broadband Radio Service) spectrum targeted the middle ground, looking to avoid any clear-cut winners and losers.

And though the Federal Communications Commission (FCC) trumpeted the proposal as a compromise that would not please everyone, the cable industry should be particularly satisfied, given the proposed size of the license areas.

The rules, set for an FCC vote on October 23, propose county-sized Priority Access Licenses (PALs), versus the census tracts and Partial Economic Areas (PEAs) that others advocated for.

MSOs that are eyeing CBRS use cases -- such as MVNO traffic offload and private LTE services for business customers -- generally pulled for the county-sized option. That group included Charter Communications Inc. , Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Midcontinent Communications (Midco) , as well as the NCTA – The Internet & Television Association . They argued that county-sized licenses strike the right balance for the efficient deployment of services in areas that aren't too big or too small.

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Others -- including CenturyLink Inc. (NYSE: CTL), Frontier Communications Corp. (NYSE: FTR) and the Wireless Internet Service Providers Association (WISPA) -- argued that counties are still too small for targeted use cases in rural parts of the country. Still others sought a hybrid approach whereby smaller-sized PALs could be used in rural areas, and larger ones in cities.

T-Mobile US Inc. also joined Verizon Communications Inc. (NYSE: VZ) and AT&T Inc. (NYSE: T) in urging the FCC to increase the size to PEAs (there are 416 of them nationwide), claiming it would simplify the licensing scheme and auction process and would mitigate interference risks at border areas.

The FCC, which wants to make the CBRS band 5G-ready (it modified the rules to accommodate wider bandwidths for 5G), concluded that the county-sized angle will give Priority Access licensees the ability to take advantage of economies of scale and reduce deployment costs. The Commission noted that those reasons also align with its approach for licenses in the 28GHz band.

County-sized licensing areas will also provide a "middle ground," as they will be easier to manage, the FCC said, noting that there are 3,200 counties nationwide compared to about 74,000 census tracts.

But the approach does present some challenges for those that want to provide private LTE services in smaller areas (like an airport, hospital or office campus, for instance) using a licensed part of the band.

Potential for 'secondary market' to emerge
The FCC reasoned that more than half the band will be available for unlicensed (General Authorized Access, or GAA) use while pointing toward the potential for a secondary market in which CBRS spectrum license holders could be leased to third parties that don't need county-wide coverage. In that scenario, the FCC rules allow "the ability to partition and disaggregate areas within PALs."

There's also a possibility that this secondary market could open the door for license owners to bundle equipment solutions with access to the licensed part of the CBRS band.

"We believe that's going to be a very vibrant market long term," Kurt Schaubach, CTO of Federated Wireless , said of the potential for this secondary market to emerge.

Still, some aren't thrilled about the proposed license area size, holding that the FCC's rules are biased toward large companies focused on urban areas.

In a statement issued last week, WISPA CEO Claude Aiken outlined his organization's concerns, believing that the proposed rules will hinder the future deployment of fixed wireless broadband networks in the rural US.

"To be clear, the winners here will be large companies that will foreclose meaningful opportunities for rural small businesses to compete for mid-band spectrum," he wrote. He called that spectrum "critically important" for rural providers that aim to provide speeds of 25 Mbit/s down and 3 Mbit/s upstream where it isn't available today.

Aiken also argued that the "long license terms" (extended from three to ten years, with a renewability component) "will shut out a significant number of our members" from using CBRS to deliver affordable, reliable broadband service in underserved rural areas. As such, WISPA is urging the FCC to amend the proposal before the vote.

FCC: census tracts 'ultimately not feasible'
The FCC, however, has already concluded that the longer, renewable terms suited entrants in both urban and rural areas, and the Commission does not appear to be game for any more alterations before the vote.

"Debate over the geographic license size of the PALs has been the most contentious change contemplated to the past rules," FCC Commissioner Michael O'Rielly acknowledged in this October 2 blog post, noting later that census tract licenses in the band were "ultimately not feasible" for the Commission. "No one is likely to be entirely pleased with this outcome, but it achieves a sound and just result," he added.

O'Rielly also claimed that some small providers wanted to obtain licenses and then flip them on the secondary market at inflated prices. "Creating government-sanctioned middlemen is not appropriate," he wrote.

O'Rielly conceded that there was no unanimity among smaller providers, but said many were supportive of the county-sized approach. "Consider that many in the cable industry, which has little to no wireless deployments outside of Wi-Fi, believe that counties make the most sense," he wrote.

"Once this order gets voted on and approved at the end of the month, there is really no outstanding regulatory question regarding the launch of the band," Schaubach said.

While O'Rielly sees auctions for the licensed part of the CBRS band starting sometime in 2019, that's not getting in the way of initial commercial deployments in the GAA portion of the band that are anticipated to get underway later this year. (See FCC's Pai Readies More 5G Spectrum, Will Propose Changes for CBRS Band, Who's Doing What in the CBRS Band? and Unlicensed CBRS 4G Service Coming Q4 2018.)

"GAA spectrum has tremendous value to all of the use cases," Schaubach said. For its part, Federated Wireless has applied for GAA deployments involving mobile and cable operators, tower companies, wireless ISPs and rural carriers spanning nearly 16,000 deployment sites. (See Federated Wireless Sets Plan for Massive CBRS Band Deployment .)

— Jeff Baumgartner, Senior Editor, Light Reading