US utilities investments set to drive the deployment of private IoT networks

Omdia view

Introduction

In February 2021, Anterix signed a $50 million contract to provide San Diego Gas & Electric (SDG&E) with 900Mhz broadband licenses in its service territory for 30 years. This announcement was made only two months after Anterix announced a similar $48 million contract with Ameren—a power and natural gas company based in Missouri and Western Illinois—to offer a 900MHz spectrum license for 30 years.

The Anterix deals follow activities from the second half of 2020 (2H 2020), in which several regional utility companies also made significant investments— cumulatively more than $170 million—to win licenses that were part of the Citizens Broadband Radio Service (CBRS) spectrum auction.

Taken together, these announcements indicate that electric utility companies in the United States are taking the lead in deploying private networks to support the Internet of Things (IoT) use cases. This article will provide a brief history that led to these spectrum licensing announcements and the potential impact of these announcements on the IoT market.

900MHz spectrum

In September 2014, Anterix—formally pdvWireless—purchased a 900MHz spectrum from Sprint for $100 million. Since that acquisition, Anterix has owned approximately 60% of all the licensed spectrum in the 900Mhz band in the United States.

At the time of the purchase, Sprint's spectrum was fit for narrowband and wideband applications but was not aligned for broadband applications. In the subsequent years, Anterix pursued initiatives at the Federal Communications Commission (FCC) to realign the spectrum, so it was suitable for broadband applications. After many years of petitioning, attending hearings, and submitting proposals, the FCC finally approved Anterix's request to realign the 900MHz spectrum for broadband applications in May 2020.

After the FCC's spectrum realignment decision, Anterix announced two significant spectrum licensing agreements: a $48 million contract with Ameren and a $50 million deal with SDG&E. The summary table below lists the utility companies that currently license Anterix's 900MHz spectrum and the licensing details.

Table 1: US utility companies using Anterix 900MHz spectrum

Company	Region	Comments
SDG&E	San Diego, California	30-year spectrum license agreement with Anterix for $50 million (02/2021)
Ameren	Illinois and Missouri	30-year spectrum license agreement with Anterix for $48 million (01/2021)
New York Power Authority (NYPA)	State of New York	A pilot private LTE deployment (11/2020)

Source: Omdia

CBRS spectrum

CBRS refers to the shared license spectrum band in the United States. In 2015, the United States launched the CBRS initiative to allow shared access of 150Mhz of spectrum in the 3.5GHz spectrum band (3.550–3.700GHz). Since the launch of the FCC's initiative, the CBRS ecosystem has evolved to adopt the cellular 4G and 5G standards.

CBRS spectrum is structured as a three-tier priority system. The 150Mhz of the spectrum is shared between the spectrum users that have three priority levels. In Tier 1, “Incumbents” have the highest priority. In Tier 2, “Priority Access License” (PAL) users follow, and Tier 3, “General Authorized Access” (GAA) users have the lowest priority.

In August 2020, the PAL  spectrum auction was successfully held, granting 22,631 of 10MHz spectrum licenses in 3,233 counties (seven blocks of PAL licenses were assigned per county) in the United States. The PAL is valid for 10 years and is renewable. In the end, the PAL auction raised a total of $4.58 billion.

The major investors at the PAL auction were mostly network operators, including Verizon ($1.89 billion), Dish Wireless (bidding as Wetterhorn with $913 million), Charter Spectrum ($464 million), and Comcast ($459 million). However, in addition to the operators, regional utility companies made significant investments and won several PAL licenses in their respective regions. The summary table below lists the notable utility companies that won the PAL licenses from the CBRS spectrum auction.

Table 2: Utility companies - CBRS PAL auction winners

Company	Number of PALs	Number of counties	Net payment (US$ million)
South California Edison Company	20	1	$119.0
SDG&E	3	2	$21.3
Alabama Power Co.	271	103	$18.9
Hawaiian Electric Company	10	4	$9.5
Guadalupe Valley Electric (GVEC)	31	15	$3.1
Illinois Electric Cooperative	15	4	$1.1

Source: Omdia

Omdia analysis

Below are the three trends involving private network deployments of utility companies in the United States.

1. US utility companies are now closely following their counterparts in Europe on private network deployments

Until now, most of the notable private network announcements in utilities have been concentrated in Europe—as shown in table 3 below. With the recent auction of the CBRS PAL spectrums and the realignment of the 900MHz now completed in 2020, a growing number of electric power companies in the United States will deploy private networks in various regions.

Table 3: Private LTE, 5G announcements by utility companies in Europe

Company	Country	Year announced	Company
Stromnetz Berlin	Germany	2017	5G R&D project
E.ON (Innogy)	Germany	2019	A pilot private LTE network
Orsted	UK	2019	Private LTE network for offshore windfarms
SNAM	Italy	2019	5G R&D project
Innopolis	Russia	2020	5G R&D project
Northumbrian Water	UK	2020	5G R&D project
PGE Systemy	Poland	2020	Private LTE network deployment

Source: Omdia

2. Advanced IoT use cases in utilities will be cultivated in the US

Starting in 2H 2020, a few regional electric power companies in the United States began to deploy private LTE networks using the CBRS or 900MHz spectrum band.

The private LTE network offers a broader coverage and better reliability compared to legacy private networks. In addition to improving their communication infrastructure, many utility companies will leverage their LTE networks to adopt advanced IoT use cases to improve their operations. The most commonly cited advanced IoT applications in utilities are listed below:

• Smart grid monitoring
• Smart grid repair (automatic service restoration)
• Power distribution management
• Inspection drones
• Fire prevention (using high-definition or HD surveillance cameras)

3. Momentum is growing, but the adoption of advanced IoT use cases in utilities will take some time

With the realignment of the 900MHz spectrum, Anterix still must work with the incumbent users to clear the 900MHz before its new licensees can use the spectrum. Hence, Ameren or SDG&E is currently waiting to have access to the 900Mhz spectrum. Anterix plans to deliver its 900MHz spectrum to Ameren and SDG&E on June 2021 and sometime in 2022, respectively.

The CBRS and 900MHz spectrum licenses are long-term agreements (10 year and 30-year terms, respectively) with renewable options. Although many utility companies have already commenced testing many advanced IoT test cases, it will take several years until these new use cases are recognized as best practices and widely adopted across the industry.

Concluding remarks

The recent licensing announcements involving 900MHz and CBRS spectrums indicate that a growing number of utility companies in the United States are interested in leveraging these spectrums to deploy private LTE networks. Just as importantly, the agreements with Anterix and spectrum auctions indicate that utilities are willing to make significant investments to enable these deployments.

Considering the current level of interest, it is highly likely Anterix will continue to announce new spectrum licensing agreements with regional utility companies over the next several years. As the number of these private network deployments increase, Omdia expects it will spur the development of many advanced IoT use cases in the utility space.

Author

Christian Kim, Senior Analyst, IoT

askananalyst@omdia.com