Spectrum Reform/Wireless Broadband

Background: The current legal framework for spectrum management evolved in the early 20th Century as a compromise on the questions of who should determine the distribution of spectrum among competing interests and what standard should be used in deciding this question. These responsibilities are currently divided in the executive branch between the Commerce Department's National Telecommunications and Information Agency (NTIA) and the FCC, an independent agency answerable to Congress. The NTIA manages spectrum use by the government, and the FCC manages non-federal and commercial use. The standard for managing non-federal government spectrum is "the public interest," although this standard has led to much debate and interpretation over the years. Under this divided system, the FCC and NTIA must coordinate and cooperate in order to determine how to accommodate different entities competing for spectrum. The current spectrum management system has processes in place for allocating spectrum for new uses and users of wireless services, but these processes can be contentious and often result in protracted lobbying and lengthy negotiations among the FCC, NTIA, and interested parties.

Comparative Hearings and Lotteries
Prior to 1994, the FCC assigned spectrum mostly through comparative hearings in which licenses were assigned among competing applicants based on which one best served "the public interest"–although this standard was not clearly defined. Lotteries were adopted to allocate the first cellular telephone licenses. However, these lotteries often led to spectrum speculation and resale. The result of this process was extensive rule-making and dispute resolution, which still frequently resulted in inefficient outcomes.

Auctions
The FCC has been conducting competitive auctions for spectrum since 1994 rather than assigning licenses for the "best public use." In this, the FCC is not alone. Countries throughout the world are now using competitive auctions to assign spectrum. Generally perceived as a step in the right direction, the auction approach is a market-based method for assuring that useful frequencies are allotted to those that value them the most, and#150;at least as the FCC believes#150;will use the most effectively. Auctions also provide governments with additional revenue. Overall spectrum auction receipts are predicted to exceed $50 billion by 2015. However, these spectrum auctions have not been without their detractors. The auctions have not appreciably enhanced competition in the telecommunications arena and the process itself is often manipulated through collusion and coercion by large telecoms.

Current Status

Wireless Broadband 700 Mhz Auction Plans at the FCC
The 700 MHz auction is made possible by the transition from analog to digital broadcast television. Since digital over-the-air broadcasts use spectrum much more efficiently than do analog ones, the FCC can clear significant chunks of the airwaves. In all, the FCC will auction 60 of 108 MHz of spectrum set to be reclaimed between 698 and 806 MHz, or channels 52-69. Furthermore, this block of spectrum is highly sought after because of its superior propagation characteristics that would allow data to travel much farther and more reliably than either Wi-Fi or WiMax technology. It will also be the last portion of high-quality spectrum to be auctioned off in the foreseeable future.

Discussions regarding optimum auction parameters and "bandplans" have been voluminous and long running: The Commission recently received comments on its ninth inquiry into the matter. The Commission may divide a good portion of the spectrum into smaller geographic licenses to encourage new entrants while holding open the possibility of giving half to a trust for joint use by public safety and the private sector.

The joint-use approach is a new take on spectrum use. Rather than assuming that government or industry will use a given bit of the airwaves exclusively, the FCC in this case is evaluating proposals that would use "smart" transmission and reception devices, capable of "sharing." These devices would give communications of public safety officials priority over non-emergency users in the event of an emergency.

Other nations have reserved much less of their spectrum for the public sector, resulting in faster wireless connectivity at far lower prices. Indeed, although surveys vary, nearly all have placed the United States no better than 16th in the world in terms of broadband penetration. A new competitor or competitors, on the other hand, could set a speed floor and price ceiling for true broadband while spurring incumbents improve their offerings. An authentic intermodal competitor to broadband would be best of all.

White Spaces
For all the talk of how to reuse broadcast spectrum, there is still one more area left unexplored: the so-called white spaces between digital TV (DTV) frequencies that usually contain noise from the adjacent transmitting entities and were thus traditionally unusable.

Such interference is no problem for "smart" or "cognitive" radio equipment. Since such gear can sense and automatically adjust for interference, the space needed between established frequencies becomes much smaller and the usable spectrum equally larger. New entrants, licensed or not, can operate in these white spaces and provide more competition in the market for broadband services. The FCC will be testing a prototype device for Internet access via DTV white spaces provided to it by a coalition of tech firms: Microsoft, Google, Dell, Hewlett-Packard and Phillips. Unlicensed use of white spaces will spur significant innovation in end user devices. In the 110th Congress, Senators John Kerry (D-MA) and John Sununu (R-NH) introduced the Wireless Innovation Act, which would promote universal and affordable broadband access for all Americans by freeing up this unused spectrum. Companion legislation is pending in the House of Representatives.

CCIA's Position: CCIA believes the time has come for comprehensive spectrum policy reform that strives to maximize competition, innovation, and the productivity of the spectrum itself.

The auction process must be reformed to allow for competitive entrants and new technologies. Policies need to be enacted to minimize anticompetitive actions taken by larger, entrenched companies to unjustly foreclose competitive bidding. Also, significant amounts of high-quality, so called "beachfront," spectrum must be made available for wireless broadband providers to facilitate the creation of a "third pipe" for broadband access for American homes and small businesses. The spectrum available in the upcoming 700 MHz auction is perfect for this use because of its superior propagation characteristics, which allow it to carry signals over long distances and through barriers that would impede current wireless broadband technology. With America sinking to 16th in broadband penetration according to the ITU, the time for this reform has never been more pressing. End users need the competitive checks that more competition would impose on the marketplace for broadband access.

Although well-designed auctions are a useful way to allocate spectrum, CCIA believes that the rapid pace of technological innovation has created a new paradigm that necessitates new models of spectrum management and allocation. Significant amounts of spectrum should be made available for unlicensed use. This would spur innovation in the device markets by driving more capital towards these new technologies. Furthermore, new models of spectrum sharing need to be implemented, which would allow a primary license holder certain rights while still reaping benefits from the spectrum they are not using by opening it up for use by secondary licensees. For example, Google has proposed "dynamic spectrum management techniques" that would allow more innovative spectrum sharing techniques aimed at more efficiently using spectrum to facilitate wireless broadband.

Specifically, CCIA supports the FCC keeping the 700 MHz auction on track for this year, and the transition to digital TV, with consumer education programs, on track for 2009. The FCC should give serious consideration to proposals that reduce entry barriers in the wireless broadband market for potential 700 MHz bidders who are not already major incumbent licensees. CCIA also supports FCC approval of the use of DTV "white spaces" for a new broadband Internet access platform. Assuming the availability of equipment that passes interference testing at the FCC, this new application offers the possibility of first real broadband service for many rural households and businesses and a new broadband option for Americans in more heavily wired urban locations.

Currently, innovation in wireless technology has far outpaced the advancement of wireless policy. Policymakers must revise the current framework governing spectrum allocation and management in order to the pave the way for competition and innovation. Decisions made now will reverberate well into the future and could very well determine whether the U.S. regains its leadership in both the innovation and adoption of wireless technologies.