Auctions

I’ve been asked to talk about where we are with spectrum policy in the United States, and what lies ahead. Federal Communications Commission. Chairman Pai has two overarching goals at the top of the Commission’s wireless agenda. First, we want to unleash spectrum to meet growing consumer demand and enable new waves of wireless innovations that will grow our economy and improve the standard of living for the American people. The second key goal of our wireless agenda is harnessing the power of spectrum to help bridge the digital divide.

One foundational principle is flexible use for wireless spectrum. Instead of mandating that a particular spectrum band be used with a specific type of wireless technology, the government should leave that choice to the private sector, which has a much better sense of consumer demand. The Commission has a role to play in crafting light-touch regulatory frameworks, with clear and technology-neutral rules. Basically, we want to put spectrum into the marketplace and then let the market and innovators go to work. Flexible use for spectrum is a proven practice. For decades, it has enabled wireless networks in the U.S. to evolve with technology and to do so much more quickly than if operators had to obtain government sign-off each step of the way. Another principle is our commitment to continue to identify possibilities to put airwaves to more efficient use. Chairman Pai believes we need an all-of-the-above approach to this spectrum endeavor, looking at low-, mid-, and high-band spectrum.

Next generation systems will capitalize on both new and existing licensed and unlicensed networks, utilizing low-, mid- and high-band spectrum, including millimeter wave frequencies. Today, I will discuss how the Commission plans to make these raw materials available.

As the Chairman of the Federal Communications Commission, I have a special interest in the progress that was made in communications and technology policy during the Reagan Administration. It was an executive order signed by President Reagan that first made the Pentagon’s Global Positioning (GPS) system available for civilian use. FCC Chairmen who served during the Reagan Administration were incredible leaders and visionaries. Mark Fowler and Dennis Patrick each did a fantastic job leading the agency. They moved aggressively to eliminate unnecessary rules and implement President Reagan’s deregulatory philosophy. They set a high bar for those who came after them—and I strive for that bar every day.

The Reagan FCC eliminated the so-called Fairness Doctrine. This misnamed government dictate suppressed the discussion of controversial issues on our nation’s airwaves and was an affront to the First Amendment. The Reagan FCC also built the political foundation for auctioning licenses to spectrum—a free-market innovation blasted back then and widely accepted today. The Reagan FCC introduced “price cap” regulation, reducing government’s role in micromanaging profits and increasing consumer welfare. And the Reagan FCC set the stage for much of the innovation that we see today. In 1985, for example, it had the foresight to set aside what were generally thought to be “junk” airwaves for anybody to use—what we call “unlicensed” spectrum. And entrepreneurs put it to work. Thanks to the FCC’s vision, we now use unlicensed services every day, every time we access Wi-Fi or use Bluetooth or check a baby monitor. Consider this 1985 quote from Mark Fowler, President Reagan’s first FCC Chairman—a quote that applies today: “We want to eliminate, as much as we can, government regulation of the telecommunications marketplace so as to permit present players to provide new and innovative services to consumers and likewise permit new players to come in and compete.” That’s basically our approach today.

Global Harmonization & US Leadership in Wireless Technologies. While some in this country may eschew global harmonization, and I understand that our market position means we have the option of going it alone or in coordination with a handful of other countries, offering commercial services on the same frequencies around the world has many benefits for US consumers and providers. On the consumer side, there is the ability to use your devices and have the same wireless experience at home and abroad. At the same time, the economies of scale created by marketing products internationally enables research, development, and manufacturing costs to be widely dispersed, promoting investment and innovation while reducing the cost of devices and services for Americans.

Executives from the National Association of Broadcasters met with Federal Communications Commission staffers to ask it to make as much of the $1.75 billion post-incentive auction repack funding available to broadcasters as quickly as possible. The FCC will soon start authorizing payments for the expenses broadcasters have been submitting.

In an April 13 public notice on the repack, the Incentive Auction Task Force said that after its review of initial cost estimates submitted by broadcasters, it would cap initial allocations at $1 billion, with $750 million held back. NAB says that there is no reason to withhold that much, and that a $175 million reserve should suffice. The broadcasters pointed to three things that have changed since that April public notice: 1) Vendors have expressed concern that stations' uncertainty about reimbursement has forced some of them to delay firm orders for needed equipment; 2) that the $1 billion cap dates from before the FCC had the full $1.75 billion available, and 3) that the FCC now knows that estimated costs are going to exceed, NAB says "greatly exceed," $1 billion.

[Commentary] For years politicians (both Republicans and Democrats), regulators, telecom providers, and just about anyone who uses a cellular phone or Wi-Fi have been saying that the US needs more radio spectrum for commercial two-way communications. Steps are being taken — for example, the Federal Communications Commission conducted an incentive auction to move radio spectrum from broadcasting to two-way communications. Another strategy would be to loosen regulatory controls on radio spectrum markets.

Current practice is a “rights to use” model. Since licensing is really about managing interference, licenses could deal with this directly with something like a “rights to interfere and rights to not be interfered with” approach. Company A’s license could read something like: “Don’t cause more than X interference in radio spectrum bands Y and Z without the agreement of Companies B and C.” So as long as A, B, and C are happy, the FCC would be happy, too.

[Mark Jamison is the director and Gunter Professor of the Public Utility Research Center at the University of Florida’s Warrington College of Business.]

What kind of spectrum is AT&T looking to as it plots it 5G strategies? “All of it,’’ according to Hank Hultquist, AT&T’s vice president of federal regulatory. And AT&T isn’t alone in taking a holistic view of the role spectrum will play as carriers roll out 5G services and technologies in the coming years.

Indeed, that was the overriding theme during a round table discussion Sept 13 at Mobile World Congress Americas focusing on airwaves and next-generation networks. 5G “is not a particular band; it’s more a weaving together,” said Julie Knapp, chief of the FCC’s Office of Engineering and Technology. Rather, it will see carriers use a wide variety of wavelengths as they build next-generation networks, using the most appropriate spectrum and antennas in specific areas based on multiple factors.

Federal Communications Commission officials conducted a webinar explaining how proposed Connect America Fund (CAF) II auction rules would work. The auction will award funding to help cover the cost of deploying broadband in unserved rural areas. It is expected to take place in 2018, officials said. The rules discussed were proposed in a public notice adopted in Aug. Interested parties have until September 17 to comment on the public notice, with reply comments due October 17.

The CAF II auction is a reverse auction, meaning that funding, in general, is designed to go to the service provider that offers to provide service at the lowest level of support (with some caveats). The maximum amount of support that any service provider will receive in the CAF II auction, also known as the “reserve price,” is the amount of support that was previously rejected by the incumbent price cap carrier. Collectively, the price cap carriers accepted the majority of funding offered, but up to nearly $2 billion (up to $200 million annually for 10 years) remains to be awarded for parts of 20 states. The FCC previously established weighting factors for the auction, designed to incentivize service providers to deliver higher-speed service with low latency.

The House Communications Subcommittee drilled into the Federal Communications Commission's post-incentive auction repack plan in a hearing that touched on everything from hurricanes and tornados to tall towers, timelines and even the Sinclair/Tribune merger, which actually drew a fair share of time and attention. Most of the ground covered was not new, but there were some key takeaways, which were that both keeping broadcasters on air and serving viewers and freeing up spectrum for deploying and advancing broadband service are important, that how much money and time that will take remain points of debate, and that Congress will likely have to step in, at least on the financial end. Some legislators emphasized the need to hold broadcasters harmless, while others countered that they should not be allowed to do any foot-dragging, noting that wireless carriers had bid $20 billion for the spectrum.

By most accounts, the U.S. broadcast incentive auction was a success. Does that mean it was perfect? No. This was a very complex undertaking. Were lessons learned? Absolutely, and I will discuss that a bit later. But all things considered, the mechanisms designed and put in place worked relatively well. Through the incentive auction, the U.S., on a completely voluntary basis, reallocated broadcast spectrum to mobile use, which will now be used by private commercial providers to offer 4G and 5G broadband networks. In fact, one U.S. winning bidder has already announced that it will initiate 5G in 600 MHz and has already turned on its first 600 MHz LTE system.