Refreshing Ideas for Spectrum Auctions | Commentary
The numbers never lie. In the fifth game of the NBA finals, starters for the Spurs poured in 107 points, Danny Green made six 3-pointers (beating the NBA finals record) and the team became the first to shoot 60 percent in a finals game in four years. By contrast, the Heat’s first string put up just 73 points, and its leading 3-point shooter made two fewer than Green.
Guess who won Game 5 in the series?
Let’s apply this same discipline to the mobile broadband space. Mobile data services are so popular that the wireless industry is growing at five times the rate of growth in the overall economy. About 1.3 million Android devices are activated every day — that’s four times as many new smartphones and tablets as there are babies born each day. (And that doesn’t even include iPhones and iPads.) Once a smartphone is activated, it’s checked on average 150 times per day — once every 6.5 minutes.
Guess who needs more spectrum?
Spectrum, the radio waves that make our wireless devices work, is in high demand. As a result, our nation is facing an impending spectrum crisis and has an urgent need for more spectrum to fuel our digital economy. Earlier this month, Arkansas Democratic Sen. Mark Pryor’s communications subcommittee convened its latest State of Wireless hearing and was presented with policy prescriptions varying greatly in approach.
The Department of Justice, for example, recently asked the Federal Communications Commission to tilt the field in upcoming spectrum auctions to tie larger competitors’ hands. As justification, the department warned of the possibility that larger companies might try to buy more spectrum than they need just to handicap rivals. But mindful of former FCC Chairman Julius Genachowski’s assessment that every provider faces a shortage, many are dubious about restricted bidding — especially as little evidence exists of so-called spectrum foreclosure in the U.S. market.
As Sen. John Thune, R-S.D., said during the Senate hearing, “Unfortunately some voices including the Department of Justice are calling for the Federal Communications Commission to micro-manage the allocation of spectrum among wireless carriers. The FCC should not be distracted by proposals that could lead to less spectrum being made available and less auction proceeds being realized.”
FCC Commissioner Jessica Rosenworcel, on the other hand, is one official advocating for a more comprehensive approach toward spectrum policy. “To successfully solve this puzzle, we must look at the whole picture. We must address these pieces together,” she said.
Rosenworcel urges an open process, including public hearings, to set rules for the incentive auction in which TV broadcasters who choose to participate will say how much spectrum they will give up and at what price, so the FCC can then resell that spectrum to wireless providers.
She also called for speed and a clearly stated timetable so that wireless service providers can plan their spectrum strategy, TV broadcasters can make final decisions about giving up some of their spectrum, and consumers can be confident that wireless services will be reliable.
“All good deliberations must come to an end,” she explained in calling for a traditional auction of 65 MHz of spectrum in the third quarter of 2014 and the larger incentive auction in the fourth quarter. To make that happen, she said a “bandplan” for assembling the auctioned spectrum must be in place by the third quarter of this year. She has proposed a new approach for spectrum now in the hands of federal government agencies, which control approximately 60 percent of the critical asset.
There’s wide agreement that much of the spectrum in the hands of government agencies must be made available for consumer wireless services — either through sharing or transfer. But federal agencies don’t like to give up assets, making reallocation hard. Rosenworcel suggests devising incentives to “reward authorities for efficient use of their spectrum so they see benefit in commercial reallocation and not just loss.”
Her open-minded approach is a refreshing contrast to others who may at times appear to tailor facts to fit a desired outcome. She suggests a path for reasoned analysis to prevail so that the FCC ultimately gives every service provider a fair opportunity to acquire the spectrum it needs to satisfy consumers and keep America the world leader in wireless.
Rick Boucher represented Virginia for 28 years in the House, co-founded the Congressional Internet Caucus and chaired the Energy Subcommittee on Communications, Technology and the Internet. He is honorary chairman of the Internet Innovation Alliance and head of the government strategies practice at Sidley Austin, which has mobile service providers as clients.