Light Reading

Open Spectrum Auctions Open Door to Growth

Rick Boucher
8/16/2013
100%
0%

Imagine someone handing you, and only you, the winning Powerball numbers before the jackpot sequence was ever revealed. Sounds great if you're the person holding the ticket, but not exactly fair to everyone else.

The Federal Communications Commission (FCC) could hand its equivalent of a winning Powerball ticket to select communications companies in the upcoming spectrum auctions. As the FCC creates rules for the incentive auctions, it has the ability to stack the odds, restricting participation in the auctions by some mobile providers and essentially picking winners and losers among our nation's carriers.

Today, the wireless industry's future is in the hands of policy makers. The federal government expects to hold spectrum auctions in 2014 in which air frequencies currently used by broadcast television stations, but well suited for mobile broadband, will be put up for sale. Much is at stake in the way that the auction is structured and in its ultimate success.

Beyond the urgent need to supply carriers with the spectrum sufficient to serve consumer demand, the auction is expected to produce revenues for other key national priorities:

  • Up to $7 billion from the auction proceeds will be set aside for the creation of a national broadband network for local police, fire, and emergency services. "First Net," as it is known, will create a fully interoperable broadband service connecting local first-responders nationwide.
  • Broadcasters must be paid from the auction revenues as an incentive for their donation of spectrum to the auction.
  • Broadcasters that choose not to donate spectrum but to continue over-the-air broadcasting may be required to relocate to another channel so that a continuous band of spectrum attractive to commercial bidders can be created for the auction. Broadcasters who are part of this "repacking" have been promised reimbursement of their relocation costs from the auction proceeds.
  • And federal policy makers are expecting that after the foregoing needs have been met, there will be ample auction proceeds available for budget deficit reduction.

In order to meet these multiple needs simultaneously, it's essential that the auction be open to all financially qualified bidders. Some have suggested that the largest mobile carriers be restricted in their ability to participate fully in the auction in order to favor smaller carriers. Limiting the ability of the largest carriers to purchase the spectrum their customers are demanding will mean fewer services for consumers and lower auction proceeds, rendering very difficult the challenge of meeting all of the competing and urgent demands for the auction revenues.

Moreover, it is not at all clear that spectrum acquisition restrictions on the largest carriers would actually promote competition.

For example, FCC data shows that the third-largest carrier, Sprint Corp. (NYSE: S) (including Clearwire), controls over one third of the mobile wireless spectrum held by US carriers -- far more than any other provider.

The fourth-largest carrier, T-Mobile US Inc. , recently acquired Metro PCS with its significant spectrum holdings, and the merged company can now rely for spectrum acquisition financing on the deep pockets of Deutsche Telekom AG (NYSE: DT), which has controlling ownership of T-Mobile.

Neither of these two providers requires special treatment in the auction. They either have sufficient spectrum or the resources to acquire it without tampering with the auction rules.

These realities were recognized by Congress when it passed the 2012 legislation authorizing the incentive auction of broadcaster-held spectrum to the mobile carriers. In the authorizing statute the FCC is prohibited from excluding from the auction financially qualified bidders. That provision underscores Congressional intent that the auctions be open to all and argues strongly for a process that enables every carrier to bid for spectrum sufficient to meet its needs in every market that it serves.

Creating rules for the incentive auction is now in the hands of the FCC and will provide an early test of the leadership of the agency's new chairman. The wireless industry is one of America's economic bright spots, highly successful and highly competitive, with 80 percent of Americans having a choice of five or more wireless carriers.

The FCC should choose to sustain the industry's success by creating a level playing field fair to all as the incentive auction is launched. The ambitious goals of the incentive auction can only be achieved if all qualified bidders are welcomed into the process.

Let's allow carriers to acquire the spectrum they need to meet consumer demand. Competition in a truly open auction should determine the winners and losers, not the FCC.

Disclaimer: Boucher advises AT&T in his role as head of the Government Strategies Practice at Sidley Austin. AT&T is also a leading funder of the Internet Innovation Alliance.

— Rick Boucher, Honorary Chairman, Internet Innovation Alliance

(2)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
acohn
50%
50%
acohn,
User Rank: Light Sabre
8/16/2013 | 7:02:32 PM
Re: Spectrum debate
The author had AT&T as a Top-10 campaign contributor the last several election cycles where he was elected.  Enough said.
SarahReedy
50%
50%
SarahReedy,
User Rank: Blogger
8/16/2013 | 4:08:21 PM
Spectrum debate
Thank you for the post, Rick. It's certainly a poignant topic right now. AT&T and T-Mobile are fighting it out this week. Sounds like you are on AT&T's side that T-Mobile's sliding spectrum screen would be unfair? It does seem unfair to let the big two dominate the auction, however, Sprint and T-Mobile aren't so small anymore. What do you see as the biggest problems with a proposal like T-Mobile's that caps the amount of spectrum any single carrier can get, but only after the auction hits its revenue target?
More Blogs from Column
Dan Pitt of the Open Networking Foundation (ONF) lays down a challenge to OpenFlow's naysayers.
Telecom carriers need to build, buy or partner for many of the technology enhancements they put into the networks or customer solutions each year.
The future of communications depends on technology licensing, according to Ericsson's Monica Magnusson.
Reflecting on the pivotal role this technology played in the history of computing on its 10th birthday.
This is what industry leadership looks like.
From The Founder
Against the odds, Huawei is growing its telecoms networking equipment business in the US -- that should be ringing some alarm bells for domestic vendors.
Flash Poll
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
Between the CEOs
CEO Chat With Jeff Miller, ActiveVideo

8|28|15   |   19:05   |   (0) comments


Jeff Miller, President and CEO of ActiveVideo, talks to Light Reading founder and CEO Steve Saunders about the impact of virtualization on the TV and video distribution market.
LRTV Huawei Video Resource Center
Vodafone: Mobile Money Is About Customer Trust

8|27|15   |   06.36   |   (0) comments


Light Reading spoke with Vodafone's Ian Ravenscroft about the unique responsibilities and opportunities facing operators handling customers' financial transactions over the network.
Telecom Innovators Video Showcase
Palo Alto Networks on Expanding in the Carrier/Service Provider Market

8|26|15   |   07:54   |   (0) comments


Alfred Lee from Palo Alto Networks tells Steve Saunders about their new chassis-based system, the PA-7080, and how it can benefit service providers compared to legacy firewalls.
LRTV Custom TV
Global Services Forum Preview

8|25|15   |   02:36   |   (0) comments


Light Reading's CEO and Founder Steve Saunders talks about Huawei's upcoming Global Services Forum with the help of Heavy Reading's Patrick Donegan and Teresa Mastrangelo.
Telecom Innovators Video Showcase
Infoblox on DNS Threat Index

8|19|15   |   04:39   |   (0) comments


Dilip Pillaipakam from Infoblox talks to Steve Saunders about his company's core network services.
Between the CEOs
CEO Chat With Ihab Tarazi, Equinix

8|14|15   |   20:18   |   (1) comment


Equinix CTO Ihab Tarazi talks to Light Reading founder and CEO Steve Saunders about the dramatic changes in the data center, cloud and interconnect markets and discusses the impact of SDN and NFV in the coming years.
Telecom Innovators Video Showcase
The Netformx Ecosystem

8|14|15   |   09:39   |   (1) comment


Ittai Bareket, CEO of Netformx, talks with Steve Saunders about the Netformx Ecosystem, which employs cutting-edge prescriptive analytics to help solution providers maximize profits.
Telecom Innovators Video Showcase
Versa Networks on Leveraging VNFs

8|12|15   |   07:37   |   (0) comments


Kumar Mehta, founder and CEO of stealth mode startup Versa Networks, talks with Steve Saunders about how providers can best leverage virtualized network functions (VNFs).
LRTV Custom TV
Transforming the Network Through OPNFV

8|5|15   |   7:09   |   (0) comments


Sandra Rivera, VP Data Center Group; GM Network Platforms Group, Intel Corporation, on OPNFV Arno and how the industry is coming together to accelerate the deployment of NFV and transform the network.
LRTV Huawei Video Resource Center
Huawei ONS Product Demo

8|3|15   |   6:01   |   (0) comments


Huawei shows at Open Networking Summit 2015 in Santa Clara how its SDN and NFV solutions embrace openness.
LRTV Custom TV
End-User or Enterprise Benefits to the New IP

7|30|15   |   04:27   |   (1) comment


Andrew Coward discusses what the New IP means to end users or enterprise customers. He explains compelling reasons, including how every customer can get their own network, from the transformation to the New IP.
LRTV Custom TV
Network Visibility & the New IP

7|30|15   |   02:23   |   (0) comments


Mukund Srigopal provides an explanation of what network visibility is and how it is essential as service providers transition to the New IP. In addition, the importance of the network packet broker is discussed.
Upcoming Live Events
September 16-17, 2015, The Westin Galleria Dallas, Dallas, TX
September 16, 2015, The Westin Galleria Dallas, Dallas, TX
September 16, 2015, The Westin Galleria Dallas, Dallas, TX
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
October 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
November 5, 2015, Hilton Santa Clara, Santa Clara, CA
November 17, 2015, Santa Clara, California
December 1, 2015, The Westin Times Square, New York City
December 2, 2015, The Westin Times Square, New York City
All Upcoming Live Events
Infographics
Cisco's cloud and virtualization portfolio can increase business agility and innovation by building a more flexible network architecture.
Hot Topics
Verizon Hums a Driving Tune
Sarah Thomas, Editorial Operations Director, 8/26/2015
Gogo Approved to Speed Up In-Flight WiFi
Sarah Thomas, Editorial Operations Director, 8/24/2015
Could Market Volatility Hurt Tech IPOs?
Dan Jones, Mobile Editor, 8/24/2015
Sprint's Claure: '3 to 5 Years' to Turnaround
Dan Jones, Mobile Editor, 8/25/2015
Like Us on Facebook
Twitter Feed
September 22, 2015
Media Begins With “Me”
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Jeff Miller, President and CEO of ActiveVideo, talks to Light Reading founder and CEO Steve Saunders about the impact of virtualization on the TV and video distribution market.
Equinix CTO Ihab Tarazi talks to Light Reading founder and CEO Steve Saunders about data center, cloud and the impact of virtualization in the coming years.
Cats with Phones
Cats Are a Smartphone's Best Friend Click Here
Whoever said cats didn't live to please their humans?