Spectrum Bill Said to Provide Only Partial Fix for Industry’s Growing Needs
The spectrum provisions in the payroll tax extension will only get the Obama administration part of the way toward finding 500 MHz for wireless broadband. The legislation won’t free up nearly as much spectrum as expected, industry and government officials said. The FCC National Broadband Plan projected that voluntary incentive auctions of broadcast spectrum would yield 120 MHz for broadband. That figure appears now to be down to 60-80 MHz, with a big chunk of the 120 MHz lost in part because of language sought by the NAB protecting TV station signals along the Canadian and Mexican borders, industry and government officials said.
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Gone too from the legislation is language in the House spectrum bill that would have required reallocating the 1755-1780 MHz band for auction. The band has long been a key target of wireless carriers. The Department of Defense had asked that the band be taken out of the legislation on the grounds that too many unknowns remain, carrier officials said. Gone too is language advocating the reallocation of the 3550-3650 MHz band. Unlike the broadcast spectrum, the FCC did not need approval from Congress to reallocate these bands.
The legislation is “missing its centerpiece,” said Paul Gallant, analyst at Guggenheim Securities. “It appears the wireless industry was unsuccessful in persuading Congress to relocate federal agency users from the 1755-1780 MHz band. Carriers lobbied hard to pair that 25 MHz with the vacant 25 MHz at 2155-2180 MHz for a 50 MHz block of spectrum, which would have been the prime piece of non-broadcast spectrum to be auctioned. So creation of that 50 MHz block now appears off the table."
"The broadband plan called for 500 MHz, so let’s add up what we've got so far,” said a government official. “We don’t really know. We won’t know for years.” The “other unknown is what is the spectrum band going to look like,” said another government official. “Is a nationwide swatch achievable? It depends on what the broadcasters decide to do. … Everybody is familiar with the phrase don’t let the perfect get in the way of the good. It’s not clear how good this is."
The spectrum bill is less than meets the eye, said Information Technology Innovation Foundation Senior Fellow Richard Bennett. “The spectrum auction legislation fails to deliver an adequate amount of spectrum,” he said. “This is a the result of classic interest group politics: Defense is hanging on to spectrum they don’t need, TV is hanging on to spectrum they don’t deserve, and we still don’t have a rational concept for unlicensed. So instead of the 120 MHz that the incentive auction was supposed to deliver in the National Broadband Plan’s estimation, we'll be lucky to get 60 MHz when the auction concludes.” Bennett said there’s a lot of congratulations in Washington Friday “over the fine compromise that allowed incentive auctions to finally go forward,” but that’s only part of the story. “Half a loaf is certainly better than none,” he said. “But we can’t keep doing spectrum allocation this way. The set-asides for defense and broadcasting aren’t defensible and we need a more rational approach to providing the greatest good to the greatest number of spectrum users."
Public Knowledge Legal Director Harold Feld said the legislation must be counted as a big win for FCC Chairman Julius Genachowski. “I'm inclined to treat the 500 MHz goal as ‘aspirational’ rather than something that anyone really expected,” Feld said. Te 500 MHz was supposed to include shared and repurposed spectrum and bands already in the pipeline, he said. “It’s certainly true that we can’t predict how much spectrum will ever get to market,” Feld said. “But frankly, that was always a big question mark. Recall that the Senate version had a process that would have allowed the military to prevent transfer of the 1755-1780 band, and CBO was very skeptical in their score for S-911 that anyone could pry more spectrum away from DOD.”
As for the 3550-3650 MHz band, “no one really thought that was good for auctioning,” Feld said. “There is much more productive discussion going on about how to share this under rules similar to those being used for the 3650-3700 band. It has pretty much the same characteristics and exclusion zones."
Passage of the legislation was a positive development, said Free State Foundation President Randolph May. “It’s true that existing spectrum claimants, including the Defense Department, fought hard to hold on to their spectrum entitlements,” he said. “So what else is new? This is Washington, not Utopia. Nevertheless, the prospect of more spectrum becoming available for wireless is now much better with the bill adopted than without it, and the bill is better than it could have been if the FCC had been given leeway to exclude bidders.” The administration “certainly needs to keep the Defense Department’s feet to the fire regarding the 1755-1780 MHz band,” May said.
Jeff Silva, analyst at Medley Global Advisors, expects continued pressure to locate more government spectrum for broadband. “While spectrum provisions … may fall short of lofty policy goals envisioned by the Obama Administration, industry and other stakeholders, they nonetheless collectively represent a huge step forward in addressing commercial and public safety wireless needs going forward,” he wrote. “The legislative achievement, however imperfect, simply cannot be understated in light of the increasingly bitter partisan nature of politics that’s only exacerbated in a presidential-election year. … This is about more than just wireless. This is about the future of the Internet as traffic, innovation and investment steadily migrate to mobile platforms and therefore by extension about American competitiveness on the global stage."
"Nobody thought this was going to be easy, and it hasn’t been,” said Media Access Project Senior Vice President Andrew Schwartzman. “As it becomes clear that the 500 MHz goal may not be reached as soon as was hoped, it places renewed focus on using existing spectrum more efficiently."
Despite the broad incentive authority given to the FCC, it may not apply to mobile satellite services S-band spectrum, which Dish Network is seeking approval to use terrestrially. While the bill doesn’t specify the S-band, it does limit incentive auction authority to instances where “at least two competing licensees participate in the reverse auction.” An industry executive said that provision may exclude Dish, which is in the process of buying the two S-band licensees. Still, if the FCC were intent on auctioning some of that spectrum, the agency could probably structure its approval to make sure the legislation still applies to Dish, said a communications lawyer.
Dish said it was glad the legislation passed to give “the FCC the ability to address the nation’s spectrum crunch and promote competition.” Dish’s “pending applications and associated waiver requests, present the FCC with an immediate opportunity to advance one of its highest priorities -- providing new sources of broadband competition. With these approvals, DISH would immediately begin the design and construction planning for the nation’s first 100 percent LTE network, which would provide greater choice for wireless consumers.”