Wednesday, October 15, 2014

Don't Rain on the Spectrum Reallocation Parade

By Gregory J. Vogt

I have been encouraged by recent government actions that advance efforts to reallocate more spectrum for mobile broadband use. This forward progress is essential in order to get closer to achieving the Administration’s goal of allocating 500 MHz of new spectrum for such use. These efforts should be continued in order to meet wireless broadband demand and to maintain the currently robust competition for wireless broadband subscribers. But there are clouds on the horizon that threaten to rain on this spectrum reallocation parade.

The positive steps include the following.

First, Commissioner Rosenworcel should be praised for “thinking outside the box” and encouraging immediate exploration of additional spectrum at extremely high (above 60 to 90 GHz) and extremely low (e.g., 400 MHz) frequency bands. Concrete proposals in these areas have not yet materialized, but given the lengthy time to market of spectrum allocation decisions, which often take 10 years or more to complete, this forward-thinking momentum is welcome. She has also laudably encouraged recent discussions to make currently allocated spectrum more efficient, e.g. 50 to 100 times more efficient, an enticing visionary challenge.

Second, the FCC is moving forward expeditiously with the AWS-3 auction. The FCC recently announced that more than 80 bidders have filed their initial applications to participate in the auction. Progress also appears to have been made concerning the responsiveness of current government users to advance the speed of vacating their AWS-3 spectrum as well as to improve the efficiency of spectrum sharing. Although in general sharing spectrum with government users is not efficient, it is welcome news that affected agencies appear to be cooperating better than they have in the past.

Third, some in Congress have been focusing on the need for more wireless spectrum to be allocated both on a licensed and unlicensed basis. Legislation introduced by Senator Rubio, for instance, is a forward-looking attempt to reallocate spectrum for wireless use, which I detail here.

Fourth, Chairman Wheeler has announced that he will ask the Commission to consider at the October agenda meeting a Notice of Inquiry exploring how spectrum above 24 GHz can accommodate wireless service. This is another laudable example of forward-looking agency consideration of potential means to bring more spectrum to market.

Despite this good news, dark clouds are circling over the FCC’s incentive auction. Last summer, the FCC established significant elements of the ground rules for conducting an incentive auction, whereby over-the-air broadcasters voluntarily give up spectrum, in exchange for a portion of the price bid during the forward phase of the auction, ultimately reallocating the volunteered broadcast spectrum for mobile broadband use. The FCC adopted a number of rules that skewed the auction in favor of certain bidders. As I outlined here, these favored bidders are seeking yet more favorable treatment in petitions for reconsideration of the incentive auction rules adopted. Granting these petitions would further risk reducing the amount of spectrum volunteered and thus available for broadband use.

Those dark clouds became even more menacing when the National Association of Broadcasters filed an appeal of the incentive auction rules, seeking changes to the way TV channels could be re-packed among over-the-air broadcasters who choose not to participate in the auction. Although the court of appeals was set to entertain expedited briefing, another appeal has put a monkey-wrench in these plans, and serious delays could ensue. The repacking issue will not necessarily delay the auction, but the issue nonetheless poses a significant risk to the auction’s timing, and ultimately could impact the willingness of broadcasters to volunteer spectrum in the first place.

Fortunately, the agency, I think somewhat out of character, has been expediting a number of follow-on rulemakings to keep the incentive auction on schedule. It has clarified its repacking rules, begun addressing use of the guard band, and provided estimates and information to broadcasters as to what revenues they can expect to achieve in an auction. Although some are criticizing this valuation estimate effort, both as to its optimistic estimate of expected broadcaster participation and the spectrum’s anticipated value, the information provided does kick off a serious informational campaign to induce active consideration by broadcasters. The Commission should join in Chairman Wheeler’s apparent desire to keep the incentive auction on schedule.

Despite these positive events, more work must be done. Overall, the amount of spectrum identified to meet the Administration’s goal of 500 MHz is lagging. Recent reports, such as one from Recon Analytics and one from Deloitte, demonstrate that more spectrum is needed in the future.

I commend government for these recent steps to advance reallocation of spectrum for mobile broadband use. But the Commission can and should chase the dark clouds away from the incentive auction so that the interest of consumers can be served: more wireless broadband spectrum to meet consumers’ seemingly insatiable demand for mobile broadband.

Don’t let the rain fall on this reallocation parade.