Federated Wireless on Wednesday announced the availability of its new Spectrum Exchange, a product the company hopes might create a standardized approach to spectrum license leasing.
Importantly, Frontier Communications has agreed to use the new exchange to potentially purchase 3.5GHz CBRS spectrum leases. The company was not among the dozens of entities that purchased CBRS spectrum licenses during the FCC's auction last year, and may use Federated's new exchange to rectify that situation.
But more broadly, Federated is hoping its new exchange opens the door to a more flexible and automated approach to spectrum ownership, including short- and long-term leases, across multiple spectrum bands.
Such a model could ultimately give rise to a wireless industry that shifts spectrum ownership to different network operators as usage and demand ebbs and flows. That would represent a dramatic shift from the current ownership model that centers on exclusive, use-it-or-lose-it spectrum license ownership.
"We've been talking about it for a while," explained Iyad Tarazi, CEO of Federated Wireless. Federated is one of several companies that provide the Spectrum Access System (SAS) services necessary for sharing in the CBRS band. "We've been testing it and doing demos."
But today marks the first day of the Spectrum Exchange's commercial availability. It will initially allow CBRS spectrum license owners to offer up their unused licenses in a retail marketplace to other companies that want to use those licenses. Customers could range from wireless network operators looking for additional long-term network capacity to venue owners looking to briefly bulk up their internal communications network during a busy weekend.
Tarazi said 20-30 wireless network operators have "expressed strong interest" in the product. He said that, after working out the kinks with those network operators, Federated hopes to then begin sales among enterprise customers. He described the enterprise market as the "next wave" for Federated's Spectrum Exchange.
Tarazi said the company is working with the FCC – the federal agency in charge of managing the nation's spectrum licenses – to obtain an official sign-off on its leasing effort. He said he expects final FCC approval of the product by the end of the year. "All of that is being worked out," he said.
But Tarazi said Federated's approach includes an important distinction: "We're not looking to make a profit off this," he said, explaining that Federated isn't looking for a "finders fee" on the leases. Instead, the company is simply fulfilling transactions rather than taking ownership of spectrum licenses.
Broadly, Tarazi said that Federated's hope is to develop a marketplace for spectrum licenses that would add value to the industry. "This system is able to carve out holes" where spectrum might otherwise lie fallow and unused, he said.
To be clear, there are routine spectrum transactions on the so-called "secondary market." For example, Verizon recently signaled its desire to acquire the mobile network and spectrum of Missouri's Chariton Valley Communications Corporation (CVCC). But such transactions – which sit outside of the FCC's primary auction process for spectrum license allocation – are relatively few and far between. Tarazi, with Federated's new Spectrum Exchange, hopes to change that situation.
With the new exchange, Federated hopes to provide spectrum licenses on-demand, just as Google scales its cloud computing services up and down based on customer demand.
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