A wireless internet service provider (WISP) could break even on an investment in CBRS band technology within three years, according to a CBRS profitability analysis from Senza Fili Consulting. By year 5, the analysis shows the WISP earning a profit margin of 51%.
The CBRS band includes 150 MHz of spectrum in the 3550 to 3700 MHz band that will be shared with incumbent government users. A portion of the band is slated for an upcoming auction and a portion will be available on an unlicensed basis.
The band is of great interest to WISPs because fixed LTE equipment operating in that band is expected to offer excellent performance at attractive pricing.
CBRS Profitability Analysis
Senza Fili’s CBRS profitability analysis was based on the following assumptions:
- Base stations are added to an existing WISP network
- Service area is “medium-density”
- Subscribers pay $55/month for 30 Mbps service
- WISP acquires a CBRS band license at a cost of $200/base station
- Contention is 10
- Wireless backhaul is used
- Subscribership rises to 80% of capacity in the fifth year
Researchers also looked at a lower-density, more rural deployment scenario, which yielded a 31% profit margin by year 5. Additionally, researchers looked at the impact of carrier aggregation, which boosted year 5 margins, and the impact of fiber backhaul, which reduced margins.
It’s important to note that the cost of the CBRS band license is difficult to forecast – in part because wireless auctions often yield unexpected results and in part because the FCC has not yet decided whether to change the previously established rules for the auction. Mobile carriers have argued for larger license areas but WISPs say they will only be able to afford licenses if the licenses are for smaller areas.
If they are closed out of the auction, WISPs will be able to offer service in the unlicensed portion of the spectrum and also may be able to use the licensed portion of the spectrum in areas where license holders are not offering service. But WISPs say the band would be much less attractive under that scenario because of the uncertainty involved.
The Senza Fili report is titled “The Total Cost of Ownership (TCO) for Fixed OnGo in the 3.5 GHz CBRS Band,” using the brand name “OnGo” that the CBRS Alliance has established for the CBRS band and which possibly will be used in the future for other spectrum bands that will be available for service providers to use on a shared basis with incumbent government users.
Image courtesy of flickr user Stefano Brivio.
