AT&T has warned the FCC that reducing the license areas in the 3.5 GHz band would negatively impact the industry’s ability to rollout out next-gen networks.

In a filing with infrastructure provider CommScope, AT&T argued to cover the border areas of smaller census tracts, licensees would have to limit their power and deploy more cell sites that would actually be needed. The result would be much denser networks of less powerful sites, which would increase deployment and maintenance costs. The result would be new deployment models which are not as economically attractive for the telcos.

The filing from AT&T has been prompted as the FCC considers how to reallocate the 3.5 GHz band, which was previously reserved for emergency services. As uptake has been so minimal, the FCC has opened itself up to ideas on how to reallocate the band in such areas as whether to expand or decrease the geographical coverage are of the license and change the length of licenses.

AT&T is of course going to object to such an idea, and it is doing its best to paint the FCC into a tight corner. A sceptic reading between the lines might get the impression AT&T is trying to hold the FCC to ransom; make the license areas smaller and we won’t be rolling out the networks as quickly as you want.

However, while AT&T and the other telcos don’t like the idea of smaller census tracts there are those who like the idea. Companies like Google, GE or any enterprise interested in creating self-contained IoT environments are posing a threat to the telcos.

Should the licenses be divided on a more granular basis, it becomes more attractive for these organizations to bid on spectrum in specific locations. Any utility, for instance, might want to protect their own licensed, interference-protected 3.5 GHz spectrum, which can be self-provisioned over a very specific area. Creating these private spectrum allocations over a very specific area would be incredibly attractive for any company considering Industrial IoT applications, though this would not necessarily be a good idea for the telcos.

Should the FCC adopt larger areas for spectrum allocation, it would not be economically viable for these organizations to go head-to-head with a larger telco in a spectrum auction, as it would extend beyond what would be geographically needed by the organization. There would be asset redundancy and therefore not a sensible business decision. In terms of the development of IoT, smaller scale census tracts could make sense, as these organizations are much more innovative than the telcos. New ideas and usecases would be accelerated, but it would hit the wallets of the telcos.

This is where it must hurt the telcos. Not only would there have to be increased equipment costs, but with enterprise organizations obtaining their own spectrum licenses, revenues would be impacted. These are customers of the telcos after all, and this would essentially be cutting them out of the equation.

There has been work to try and find a compromise which would suit both the operators and the larger enterprise organizations, however the CTIA and T-Mobile US have forced the hand of the FCC somewhat by petitioning the regulator for rule changes. The FCC might find itself in a bit of a catch-22 situation; larger bands don’t allow enterprise organizations to bid on spectrum, while smaller bands mean slower roll out of networks.