On Friday, September 28, 2012, the FCC officially announced its long talked about “incentive auction process,” which will reclaim airwaves (AKA spectrum) now owned by TV broadcasters and auction them off for use in wireless broadband networks. This concept was first introduced in the National Broadband Plan over two years ago, but no specific plan had been announced till yesterday. TV broadcasters that want to keep their spectrum would be forced to relocate frequencies to different parts of the TV band, in a procedure called “repacking.” Broadcasters would get some undisclosed portion of the spectrum sales from the Incentive Auctions.
The FCC said in a statement:
“Spectrum is our nation’s ‘invisible infrastructure,’ supporting mobile devices like smartphones and tablets that require much more spectrum than traditional cell phones to support the rapidly growing demands of consumers, businesses and entrepreneurs who increasingly rely on mobile Internet to communicate and innovate. For instance, today’s smartphones use 35 times more spectrum than traditional cell phones, and tablets use 121 times as much spectrum. This consumer demand puts a tremendous strain on the nation’s invisible infrastructure in ways that require innovative new approaches to spectrum policy in order to spur continued economic growth, and help maintain America’s global leadership in mobile.”
“As mobile device adoption continues to grow around the world, this incentive auction will be a model for many countries facing similar spectrum challenges. These auctions are a market-based tool to repurpose broadcast television spectrum for mobile broadband by offering unique financial opportunities to broadcasters, including a portion of the auction proceeds for participants. The Commission expects a healthy and vibrant broadcasting industry to thrive after the auction, with expanded business opportunities for multi-platform growth in a more robust mobile ecosystem.”
Also see: http://www.fcc.gov/incentiveauctions
The commission estimates that mobile broadband traffic will increase more than thirty-fold by 2015. Without additional spectrum, FCC officials say that “consumers will face more dropped calls, connection delays and slower downloads of data.”
Authors Note: Not all wireless network observers believe that more spectrum is needed. At the Telecom Council’s TC3 Summit, Shared Spectrum Co. CEO Tom Stroup said that based on measurements his company has performed in major markets around the country, there is no spectrum shortage (in direct conflict with AT&T’s CEO Randall Stephenson who says AT&T needs a whole lot more spectrum to cope with exponential growth in mobile data traffic). Instead, Mr. Stroup maintains that most allocated spectrum is not used. He said that <20% of available and allocated spectrum is not in use at any one given time.
One wonders if spectrum-use sensing and sharing (AKA cognitive radio), rather than a reallocation of the airwaves (from broadcasters to wireless broadband operators), would be sufficient to alleviate the so called spectrum shortage crisis.
Next week, the commission will issue proposed rules for the incentive auctions. After that, the FCC will seek public comments over the coming months. The auctions are not expected until 2014, but commission officials and Congress have estimated that the process could generate $15 billion in proceeds. About $7 billion of that would be set aside to build a nationwide emergency communications network for public safety officials, a yet-unfulfilled recommendation of the 9/11 Commission. Some of the proceeds (TBD) would go to broadcasters that vacated airwaves for the incentive auction.
“In this flat, competitive world, capital and talent can flow anywhere,” Julius Genachowski, the FCC chairman, said before the vote. “We’re in a global bandwidth race. It’s similar to the space race in that success will unleash waves of innovation that will go a long way toward determining who leads our global economy in the 21st century.”
Critics question whether the government should be paying broadcasters for spectrum they originally received for free. Consumer groups and smaller carriers worry that the auction will tighten AT&T and Verizon’s stranglehold over the U.S. wireless market by transferring more of the nation’s valuable airwaves into their hands. That’s exactly what happened at the FCC’s 700MHz auction over 4 1/2 years ago. Here’s what we wrote after that much publicized event:
Separately, the FCC commissioners voted unanimously (5 to 0) to begin a review of its mobile spectrum ownership policies, specifically whether it should revise its limits on how much spectrum any one wireless telecommunications company can own in a geographic area.
The FCC now limits wireless operators to holding no more than one-third of an area’s available airwaves.
Big wireless telcos (AT&T and VZW) have said those rules, put in place more than a decade ago, should be changed to allow them larger spectrum holdings. Smaller wireless operators want the FCC to keep limits on spectrum ownership, while also changing its counting method to give greater weight to the most attractive spectrum bands (like 700MHz), over which signals travel further and pass more easily through buildings, trees and other structures.
The new spectrum ownership rules will explore the FCC’s spectrum-screen, which it uses when reviewing spectrum transactions. If a wireless carrier acquires too much spectrum and violates the screen, the deal is more closely scrutinized.
“There is no question that it is time for the Commission to update its policies on measuring how spectrum aggregation impacts competition in the wireless industry,” said Commissioner Mignon Clyburn in casting her vote.
The FCC is seeking comment–the notice includes no tentative conclusions–on the following:
- “Continuing the current approach to evaluating mobile spectrum holdings in the context of transactions and auctions-a case-by-case analysis, or moving to a different approach such as bright-line limits;
- “Including additional spectrum bands in evaluating spectrum holdings;
- “Updating the Commission’s geographic market analysis, including to consider the impacts of mobile spectrum holdings at the national as well as local levels;
- “Whether the Commission should make distinctions among bands in assessing spectrum holdings; and
- “Updating the Commission’s attribution rules.”
To read more see: