Entry and Investment in CBRS Shared Spectrum

The Citizens Broadband Radio Service (CBRS) recently adopted in the U.S. enables commercial users to share spectrum with incumbent federal users. This sharing can be assisted by Environmental Sensing Capability operators (ESCs), that monitor the spectrum occupancy to determine when the use of the spectrum will not harm incumbents. An important aspect of the CBRS is that it enables two tiers of spectrum access by commercial users. The higher tier corresponds to a spectrum access (SA) firm that purchases a priority access license (PAL) in a competitive auction. The PAL holder obtains dedicated licensed access to a portion of the spectrum when the incumbent is not present. The lower tier, referred to as generalized Authorized Access (GAA), does not request a PAL and is similar to unlicensed access, in which multiple firms share a portion of the spectrum. Entry and investment in such a market introduces a number of new dimensions. Should an entrant bid for a PAL? How does the availability of a PAL impact their investment decisions? We develop a game-theoretic model to study these issues in which entrant SAs may bid in a PAL auction and decide on their investment levels and then compete downstream for customers.