Early Activation of Extra Licensed C-band Spectrum Will Enhance 5G Services and Competition

On August 14, Verizon announced that it has gained access to all of the C-band spectrum that it acquired through the FCC's spectrum license auction in March 2021. And today, August 16, it is reported that AT&T has doubled its available licensed C-band spectrum for 5G deployment. Apparently, the C-band spectrum for both providers was cleared ahead of schedule. Consumers will benefit from the network coverage and performance improvements enabled by the activation of valuable C-band (3.7 GHz) spectrum. And this development should enhance the overall competitiveness of the wireless market.

In an October 2022 blog post, I noted findings by OpenSignal that activation of C-band spectrum was leading to improved speeds for Verizon's and AT&T's respective 5G network services. And now with additional C-band spectrum available for use, Verizon and AT&T will significantly boost the speeds and capacity of their 5G service offerings. According to a Verizon press release:

Verizon won C-Band licenses for between 140-200 MHz in all available markets, and began deploying 60 MHz in the first 46 areas in 2022. As the additional spectrum has been cleared by satellite companies outside of the first 46 areas, Verizon has been able to deploy 5G Ultra Wideband using a portion of its licensed bandwidth in many more markets coast to coast. Now, with final clearance from the satellite incumbents, Verizon will be able to use the entirety of its licensed C-band spectrum, an average of 161 MHz coast to coast with some markets accessing a full 200 MHz. Verizon has been deploying equipment that is capable of the full 200MHz of bandwidth, so with a mere software update, customers will start to see the effects of this dramatic increase in bandwidth in the immediate next few days and weeks.

And as observed a news article in FierceWireless, AT&T combines C-band spectrum with 3.45 GHz spectrum nationwide, and its 5G mid-band network now covers over 175 million people, and its nationwide 5G network, including low-band spectrum, covers approximately 290 million people. 

Verizon's press release states its 5G services currently are available to over 222 million people in 359 markets. It also is reported in FierceWireless that Verizon will be operating its 5G network using C-band spectrum at full power in the vicinity of airports. Free State Foundation President Randolph May and I wrote about the FAA's questionable late-in-the-game attempt to halt full use of licensed C-band spectrum by Verizon and AT&T in a November 2021 Perspectives from FSF Scholars, "The FAA Should Stop Interfering With 5G in the C-Band." The FCC has "unified jurisdiction and regulatory power" over commercial spectrum, not the FAA. And that midnight hour dispute regarding C-band spectrum near airports almost certainly would have been avoided had the FAA been more engaged earlier in the Commission's C-band proceeding, when it had ample opportunity to do so. Interagency disputes over spectrum have been too numerous in recent years, and the effect of those disputes is detrimental to the full use of valuable spectrum and timely deployment of next-generation wireless services. As President May and I also wrote a February 2022 Perspectives from FSF Scholars, "Congress Should Require Better Agency Coordination of Spectrum Policy."

Successful Interagency Spectrum Coordination Requires Discipline from the Top

On July 11, the Federalist Society hosted a webinar titled "Federal Spectrum Coordination: Pitfalls and Progress." The panel was moderated by attorney Scott Delacourt and the ITIF's Joe Kane, and featured two former NTIA Administrators as panelists: John Kneuer and David Redl. The panelists, drawing on their wealth of experience, discussed spectrum policy and interagency coordination on spectrum allocations. During the webinar, the panelists discussed the history of the NTIA and its Administrator position, processes overseen by the NTIA for coordinating among executive branch agencies for federal use of spectrum, interagency conflicts, as well as the issue of process reforms for improving interagency coordination among executive agencies and the FCC. The webinar is full of insights and worth a listen in full. But near the end, Mr. Redl made an excellent point about the necessity of the White House demanding discipline across the executive branch which is essential for ensuring that the interagency process is followed.

Also, as noted in an August 3, 2022 blog post, nearly a year ago the NTIA and the FCC signed a Memorandum of Understanding (MOU) on spectrum coordination. Now Congress needs to pass the Spectrum Reauthorization Act of 2023 – H.R. 3565, so that there will be more spectrum available for the agencies to coordinate and reallocation for commercial use. 

Reps. Doyle and Latta Lay Out Plan to Reform Spectrum Management

Earlier today, on its "Congress Blog," The Hill published an op-ed penned jointly by Representatives Michael F. Doyle (D – PA) and Robert E. Latta (R – OH). Determined to avoid a repeat of the recent kerfuffle between the FCC and the FAA over 5G mobile operations in the C-Band, the two lawmakers set forth a four-element plan to overhaul interagency spectrum coordination processes.

As you undoubtedly recall, earlier this year the launch by Verizon and AT&T of 5G using C-Band spectrum licenses for which they contributed billions to the U.S. Treasury was impacted when, at the eleventh-hour, the FAA raised aviation-related concerns.

This occurred even though, prior to auctioning that spectrum, the FCC undertook a lengthy, deliberate, and engineering-informed process that considered, and addressed, potential interference.

Over the last few years, other disagreements regarding FCC efforts to repurpose high-value, underutilized spectrum similarly have played out in unprecedentedly high-profile fashion. They include the L-Band (vis-à-vis the Department of Defense), the 5.9 GHz band (the Department of Transportation), and the 24 GHz band (NASA and NOAA).

In "Aviation conflict highlights the need for spectrum management reform," Representative Doyle, Chairman of the House Energy and Commerce Committee's Subcommittee on Communications and Technology, and Representative Latta, its Ranking Member, expressed their well-founded concern that "declining faith in how these decisions are made is beginning to show signs of jeopardizing the consumer and economic benefits we've enjoyed for generations."

In response, the two laid out four principles that will guide their bipartisan efforts to "pursu[e] public oversight and restor[e] trust in the spectrum management process."

Those principles are as follows:

1. Reassert that it is NTIA that has the responsibility "to balance the needs and concerns of federal spectrum users, and to communicate those interests to its governmental counterparts and the public."
2. Promote "clear rules and expectations for federal and other spectrum users."
3. Ensure "that the government process for managing these critical spectrum resources [relies] on science and engineering …, not the institutional interests of a single federal agency."
4. Prioritize "the finality of [spectrum management] decisions."

Randolph J. May, the Free State Foundation's President, and Seth L. Cooper, its Director of Policy Studies and a Senior Fellow, made a number of similar points in "Congress Should Require Better Agency Coordination on Spectrum Policy," a February 15, 2022, Perspectives from FSF Scholars.

Specifically, Mr. May and Mr. Cooper (1) urged NTIA and the FCC to update their spectrum coordination Memorandum of Understanding to "expressly acknowledge NTIA's role in representing all executive branch agencies," (2) argued that "Congress should pass legislation to improve coordination among federal agencies," (3) noted with concern how the status quo "risks causing unnecessary delay and regulatory uncertainty," and (4) concluded that an improved process "could provide greater assurance to the public."

Flight-Sharing is the Latest Market on the Wrong End of Government Regulation

Flight-sharing is one of the latest services to emerge within the new “sharing economy.” Flytenow, a flight-sharing company, connects passengers with pilots who have empty seats on private flights for a fraction of the flights’ costs. Like Airbnb and Uber, which connect travelers with shelters and passengers with drivers, respectively, Flytenow can provide valuable services at the touch of a smartphone.

Sharing services, like these, provide additional consumer choice by disrupting traditional business models, and the emergence and popularity of such services has signaled to entrepreneurs that additional innovations are in demand. The new sharing economy services lead to increases in productivity for the overall economy and cost savings for consumers. For example, according to an Airbnb report on its impact in NYC, the company’s low prices have led to guests staying longer than they would have in a hotel. The average NYC Airbnb guest stays 6.4 nights, while the average NYC hotel guest stays 3.9 nights. These longer stays within the five boroughs have led to an additional $632 million in economic activity in one year in NYC alone.

Airbnb and Uber have come under regulatory scrutiny from many state and local governments (see here). Now, Flytenow is currently being regulated at the Federal level. According the Wall Street Journal, Flytenow is challenging the Federal Aviation Administration (FAA) in Federal court over the agency’s effective ban on its flight-sharing services.

Flytenow argues that it is not breaking any Federal laws or regulations because the FAA has always allowed private pilots to advertise flights and attract passengers as a means to cut down on expenses. But instead of using bulletin boards or newspapers, which apparently was legal in the past, users of Flytenow are advertising through the Internet. The FAA says that flight-sharing companies, such as Flytenow and Airpoolers, are subject to the regulatory standards that apply to commercial flights.

But Flytenow specifically sets forth the FAA regulation on its website: “Federal Aviation Administration regulations prohibit a pilot from accepting compensation from passengers. We help you split the costs, but you are not allowed to compensate the pilot further than that.” Flytenow argues that this cost-splitting operation makes flight-sharing services completely legal under Federal law.

It is understandable for regulators and government agencies to be cautious with regard to emerging technologies in order to protect consumers from certain identifiable risks.  But preemptive regulations often end up harming consumers by eliminating valuable services. As discussed in a Perspectives from FSF Scholars entitled “The Sharing Economy: A Positive Shared Vision for the Future:”

If purveyors of sharing applications engage in harmful, unhealthy, or unsafe activities, competition is probably the most important regulatory mechanism to address any real problems. In competitive markets, poor consumer satisfaction generally means that a company will lose market share, or even fall out of the market. If a company is not operating safely or if it is putting its users in unhealthy conditions, a competitive market allows for unsatisfied consumers to choose alternatives.

It should not be unreasonable to think that flight-sharing services could operate in a similar manner to ride-sharing and shelter-sharing services. Hosts, drivers, and pilots should be able to price their services based on supply and demand. In the “The Sharing Economy: A Positive Shared Vision for the Future,” Free State Foundation President Randolph May and I suggested the following:

If the laws or regulations applicable to the existing incumbent businesses no longer make sense today, they should be changed. It always harms consumers when public policymakers attempt to “level the playing field” by subjecting entities to regulatory restrictions that are not needed. The proper way to respond to “level the playing field” claims is to remove unnecessary regulations wherever they apply, not to expand them to new entities.

It is important for regulators to consider the costs and benefits of sharing services before restricting or outright prohibiting them. Preemptive regulations often lead to less consumer welfare than light-touch regulatory regimes that promote market-driven solutions that satisfy consumer demand while still providing redress for identifiable consumer hams.