Light Reading
Competition in a truly open auction should determine the winners and losers, not the FCC.

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
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
Operators can cut the cost and complexity of extending legacy services to all-IP environments.
Norway's Lyse Smart is showing how broadband-enabled applications can improve the lives of elderly people and provide a cost-effective alternative to traditional care home services.
If we can build complex systems from simple components with precise functionality, we can more easily change those systems as new technologies arise.
A list of 10 considerations for municipalities pondering building their own broadband networks.
Communications service providers need to become digital service providers, but what exactly does that entail?
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Custom TV
Using Service Quality to Drive WiFi Monetization

10|22|14   |   6:51   |   (0) comments


Live from the SCTE conference: Heavy Reading's Alan Breznick explores the forces shaping the WiFi opportunity in an interview with CableLabs' Justin Colwell and Amdocs' Ken Roulier.
LRTV Custom TV
Distributed Access Architectures – 2

10|21|14   |   8:51:00 AM   |   (0) comments


ARRIS CTO Network Solutions Tom Cloonan discusses why many if not most MSOs will continue with integrated CCAP, while addressing why some are also looking at two futuristic, distributed access architectures: Remote PHY and Remote CCAP.
LRTV Custom TV
Distributed Access Architectures – 1

10|21|14   |   9:01   |   (0) comments


SCTE Sr. Director of Engineering Dean Stoneback discusses the pros and cons of distributed access architecture (DAA) and its various forms, which range from basic Remote PHY to full CMTS functionality in the node.
LRTV Custom TV
The WiFi Road to Riches – 2

10|21|14   |   3:58   |   (0) comments


ARRIS Senior Solution Architect Eli Baruch talks about how MSOs can enable public and community WiFi through 1) outdoor access points, 2) businesses seeking to offer WiFi to customers, and 3) residential WiFi gateway extensions.
LRTV Custom TV
The WiFi Road to Riches – 1

10|21|14   |   10:15   |   (0) comments


SCTE Director of Advanced Technologies Steve Harris discusses WiFi deployments, drivers, challenges and advances, including 802.11ac, carrier-grade WiFi, community WiFi, Hotspot 2.0, Passpoint, WiFi-First and voice-over-WiFi.
LRTV Custom TV
Advantech Accelerates 100G Traffic Handling

10|17|14   |   7:56   |   (0) comments


Paul Stevens from Advantech explains why handling 100GbE needs a whole new platform design approach and how Advantech is addressing the needs of equipment providers and carriers to give them the flexibility and performance they will need for SDN and NFV deployment.
LRTV Huawei Video Resource Center
Holland's Imtech Traffic & Infra Discusses Huawei's ICT Solution and Services

10|16|14   |   4:49   |   (0) comments


Dimitry Theebe is from the business unit at Imtech Traffic & Infra which delivers communications solutions for transportations. His partnershp with Huawei began about a years ago. In this video, Theebe speaks more about this partnership and what he hopes to accomplish with Huawei.
LRTV Huawei Video Resource Center
Huawei's Comprehensive Storage Solutions Vital for SVR

10|16|14   |   6:16   |   (0) comments


SVR Information Technology provides cloud services for academic and special sectors. With Huawei's support, SVR and Yildiz Technical University has established Turkey's largest and most advanced High Performance Computing system. CSO Ismail Cem Aslan talks about what he hopes Huawei's OceanStor storage system will bring for him.
LRTV Huawei Video Resource Center
Mexico's Servitron's Impression of Huawei at CCW 2014

10|16|14   |   6:35   |   (0) comments


Servitron is a network operator in Mexico that has been in the trunking industry for the past 20 years. Its COO, Ing. Ragnar Trillo O., explains at Critical Communications World 2014 that his company has been interested in the long-term evolution of LTE technology and its adoption for TETRA.
LRTV Huawei Video Resource Center
Building a Better Dubai

10|16|14   |   2:06   |   (0) comments


Abdulla Ahmed Al Falasi is the director of commercial affairs, a telecommunications coordinator for the government of Dubai. Their areas of service span across multiple industries, including police, safety, shopping malls and more. In this video, Abdulla talks about his department's work with Huawei.
LRTV Huawei Video Resource Center
Huawei Lights Up Malaysia Partner Maju Nusa

10|16|14   |   1:59   |   (0) comments


Malaysia's Maju Nusa is an enterprise partner to Huawei in networking, route switches and telco equipment. At this year's Critical Communications World in Singapore, CTO Pushpender Singh talks about what Huawei's eLTE solutions mean to his company and for Malaysia.
LRTV Custom TV
Evolving From HFC to FTTH Networks

10|15|14   |   2:19   |   (0) comments


Cisco's Todd McCrum delves into the future of cable's HFC plant, examining how DOCSIS 3.1 and advanced video compression will extend its life and how the IP video transition will usher in GPON and EPON over FTTH.
Upcoming Live Events
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
February 10, 2015, Atlanta, GA
June 9-10, 2015, Chicago, IL
Infographics
WhoIsHostingThis.com presents six of the world's most extreme WiFi hotspots, enabling the most epic selfies you can imagine.
Hot Topics
Analysts Warn of Major NFV Gaps
Carol Wilson, Editor-at-large, 10/22/2014
Is Health the Killer App for the IoT?
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 10/22/2014
Drones Hover Over the IoT Sector
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 10/23/2014
Roku Raises $25M, But for What?
Mari Silbey, Independent Technology Editor, 10/23/2014
1959 Newsreel: Make Phone Calls – From Cars!
Mitch Wagner, West Coast Bureau Chief, Light Reading, 10/24/2014
Like Us on Facebook
Twitter Feed