Major players on the broadcast and wireless side of the spectrum allocation aisle frame the issue as costs or benefits to industry and not in terms representing the crisis as a threat to the innovation economy at large. Congress has recently addressed the issue, passing spectrum legislation that authorizes the FCC to conduct a two-part auction process, including “reverse” and “forward” auctions. The reverse auction will allow broadcasters to offer bids on how much they would be willing to take to exit the market, thus freeing up more spectrum to prospective buyers. The forward auction will give wireless operators an opportunity to place bids on spectrum made available from the reverse auctions.
If Broadcasters Gave Back Everything, It Still Wouldn’t Be Enough
At MMTC’s Broadband and Social Justice Summit earlier this year, CTIA Vice President of Regulatory Affairs Chris Guttman described spectrum reallocation efforts and the goals of the National Broadband Plan in bottom-line terms, saying that it was only a matter of “taking [spectrum] from places where it is possibly underutilized and moving it to another use where it will be utilized.”
On the other hand, Chris Ornelas, COO and strategy officer of the National Association of Broadcasters, stated, “Even if broadcasters gave back everything they have, it still wouldn’t be enough.… We still need more and there needs to be more input and other technological solutions explored.”
Before Congress passed the legislation giving the FCC auction authority, broadcasters consistently expressed their apprehension about being forced to exit the market. Broadcast audiences are not on the decline, they said, and any attempt to create that impression is false. James Winston, NABOB’s executive director, suggested that minority owners of broadcast channels were being targeted to give up their channels because minority owners are perceived to be more expendable in the industry than larger station owners. According to Winston, spectrum incentive auctions will have to steer clear of forcing “the few minority broadcasters there are into selling out to make more spectrum available.”
On the other side, the forward auctions side, minority ability to win spectrum may also be in jeopardy.
Minority Interests On The Buyer Side Of Incentive Auctions
MMTC continued the discussion on the looming spectrum crunch in its March Policy Summit on spectrum. S. Jenell Trigg, chair of Lerman Senter’s Intellectual Property and New Technology Practice Group, expressed concerns that minority and SDB interests were not being addressed as important decisions about forward auctions are being made. She reminded the panel of the success of the designated entities model and the tax certificate program, which allowed smaller players to compete against much larger, deep-pocketed carriers the last several times spectrum was up for bid.
Small and medium sized business interests and the interests of minority buyers and sellers of spectrum are easily lost in the larger discussion on the implications for consumers when we hit the spectrum wall.
Exploring Alternative Ways To Gain Spectrum Efficiencies
The public discussion since MMTC’s policy events has quickly turned to the question of alternatives outside of the FCC process. Ornelas was correct in his assessment that the nation’s needs exceed the likely outputs of the incentive auctions. The NTIA’s review released last week focuses appropriately on spectrum sharing between federal agencies and commercial users as an alternative to gaining greater spectrum efficiency.
The NTIA identified 95 MHz of spectrum currently in federal hands, which, combined with their earlier recommendation to reallocate 115 MHz of spectrum, increases federal agencies’ contribution to about 40 percent of the president’s goal for 500 Mhz over the next decade.
Industry experts have offered powerful ideas on how the joint efforts of the wireline and wireless sectors might lead to technologically innovative solutions. Walter McCormick of US Telecom explained at the BBSJ Summit that future growth of the wireless market depends on wireline, and fiber deployment will make it possible for continued wireless expansion. “We really need to think differently about how to alleviate the spectrum issue,” he said.
Can We Adjust Quickly Enough?
In a statement released alongside its report, the NTIA stated, “Spectrum sharing will be a vital component to satisfying the growing demand for spectrum, and federal and non-federal users will need to adopt innovative spectrum-sharing techniques to accommodate this demand.” In light of the NTIA’s report, which highlights spectrum-sharing opportunities, it would appear that although alternative approaches are gaining more attention, we continue on our path toward a spectrum wall.
While the primary aim of the government spectrum reallocation process is ensuring that every American is connected, the reality is that the most aggressive remedies are just out of reach.
Innovative spectrum-sharing techniques are being developed with the aim of accommodating enormous national demand, though we should expect that prices will rise for consumers and wireless firms will cap consumer data usage. Jonathan Spalter, chairman of Mobile Future and a speaker at MMTC’s spectrum summit, described the 2014 spectrum wall as “more than slower speeds and higher prices, but slower job creation, sluggish innovation and [an] impeded position of the U.S. globally.” He added that it could also mean “a widening of the digital divide, [a] deepening of the divide between the wireless haves and wireless have-nots. It is communities of color that will suffer the most and suffer first.”
The challenges we will face in the future are clear, as well as the reality of our current mobile communications ecosystem (from dropped cell phone calls to slow mobile Internet speeds.) FCC Chairman Julius Genachowski warned at CES 2012 that “the explosion in innovation in mobile computing […] could come to a crashing halt if the government can’t provide more bandwidth to mobile broadband carriers and their customers.” The chairman should be lauded for recognizing the scope of the problem, although the FCC has started late on finding a cure and we may have run out of time.
Blair Levin, who headed up the FCC’s National Broadband Plan, frequently poses the following question to MMTC event attendees: “How do we adjust to the coming changes?” While we ponder this question, it may be worthwhile to also ask ourselves what might happen to our innovation economy if we can’t adapt.