Spectrum has been a major topic of conversation in tech policy circles lately, with carriers claiming they need (a lot) more spectrum to handle the data consumed by smartphones, tablets, and whatever new gadgets might emerge in the coming years.
But who should get the available spectrum and how do you dole it out? Should bigger carriers like AT&T and Verizon be limited in the amount of spectrum they can buy so that the smaller carriers have a shot or should the market make the rules?
Just today, Verizon announced plans to sell off coveted spectrum in the 700-MHz band - but only if the FCC approves its pending $3.6 billion deal to purchase other spectrum from the nation's cable companies.
For those who might not nab a piece of Verizon spectrum, Congress recently granted the FCC authority to auction off spectrum currently held by TV broadcasters to wireless carriers. Another option is the 95 MHz of "prime" spectrum in the 1755-1850 MHz band that the Commerce Department just identified. The agency, however, thinks it should be shared among interested parties.
Someone who has a bit of experience in this arena is former Virginia congressman Rick Boucher, who now serves as honorary chairman of the Internet Innovation Alliance (IIA).
PCMag sat down with Congressman Boucher recently to talk about how to solve the spectrum crunch, and concerns he has about FCC authority - particularly that the agency might arbitrarily alter its "spectrum screen" - an inventory of spectrum used to review license holdings, among other things - to suit its needs.
Rick Boucher: Congress made a very wise decision when [said] that the FCC may not bar from bidding in the auctions the larger carriers simply based on their size or position in the market. The FCC should not pick winners and losers. The FCC should give the opportunity for all carriers to bid for the spectrum that they need – both to satisfy existing demand and also to plan for the future anticipated growth of their customer base and the use of their networks.
There is a concern now that the FCC might change between now and the time of the incentive auction, the spectrum screens that the FCC has historically used that prevent undue concentration of spectrum in the hands of certain holders. And if they change the spectrum screens between now and the time of the auctions, so as to disqualify the larger carriers, they will have achieved through the back door what Congress has told them they cannot achieve through the front door – a direct bar on these larger carriers.
And we think that it would not be appropriate for the FCC to change its spectrum screens for that purpose. If they apply their existing screens and the result is, on a market-by-market basis, you see that carriers are holding too much spectrum or would if they succeeded in the auction, then fine, that would be the classic test and no one would object to it. The problem is, prospectively changing those screens between now and the auction, as a way to disqualify these carriers, we think that would be wrong.
PCMag: What is the process for changing the spectrum screen?
Boucher: They can pretty much [just] do it. It's an administrative process. We're counseling that that not be done because it would disregard congressional intent and it picks winners and losers, which can ultimately damage the ability of the carriers to meet the demands of their customers.
PCMag: Is a change definitely in the works?
Boucher: No, but there's a concern that they are thinking about doing it. To some extent, these things are speculative, but because it is an administrative proceeding that they can accomplish pretty quickly on their own, one might not have noticed that it's actually happening until it happens.
PCMag: Do you understand the concern that larger carriers might snap up the "good" spectrum, so to speak?
Boucher: I don't think major companies do that. The largest spectrum holder is Sprint, when you consider its holdings and the holding of Clearwire, which it's the majority stockholder of. I don't think Sprint has hoarded Sprint inappropriately. Verizon and AT&T are next in terms of their spectrum holdings, but companies are not buying spectrum they don't need.
To answer your question even further, one provision that I think does make sense is some kind of anti-spectrum hoarding provision that says if you don't use your spectrum within a reasonable amount of time once you've acquired it, then it would be re-purposed for auction or for other use. But that would have to be drafted very carefully because of the tremendous increase in data traffic that's expected over the next 3-5 years. You've have to be able to inventory enough spectrum to meet that need when it arises.
PCMag: Overall, do you think auctions are the best way to allocate spectrum?
Boucher: Yes I do, because it puts spectrum in the hands of the parties who need it most. The market is the best determiner of that and the way the market votes is dollars. And companies are not going to buy spectrum they don't need.
PCMag: Is the agreement reached in Congress the best route?
Boucher: I think it's a big step in that direction, as long as the FCC does not adjust the spectrum screens between now and the time of the auction in order to disqualify those very bidders.
PCMag: Is the public-private sharing option proposed by the Commerce Department feasible?
Boucher: I think that it will be as technology to enable spectrum sharing gets better. We have some early examples of spectrum sharing; one that comes to mind is white spaces, where you have sensing technologies that determines whether a particular spectrum is in use or broadcasting. And where it's not in use for broadcasting, that spectrum can then be used as a white space for data transmission.
PCMag: What are your thoughts on Verizon's efforts to purchase spectrum from the cable companies?
Boucher: I would apply the same logic to that and that is, do they need the spectrum? And in the end, if they're voting with their dollars and they do, then in my opinion, they ought to be able to acquire it. There may be other considerations about this and I'm not well enough versed in that subject matter to comment in detail, but it is an example of another large carrier demonstrating that it needs spectrum to accommodate its customers' demands and Verizon ought to be able to acquire that spectrum.
The smaller carriers would, frankly, like nothing better than to have government say that the larger carriers cannot compete for new spectrum and then leave it among the smaller carriers to bid among themselves. But the government would make less revenue in the auctions, and I'm not sure that when you have the FCC putting bidders that would otherwise be qualified on the sideline, that you get the best spectrum allocation. I think the best spectrum allocation comes when you have everybody free to bid. Let them bid in accordance with their needs, and then have a rule in place that says, if you don't use the spectrum you've acquired within a reasonable period of time, that it would be re-allocated. That would allow the companies to buy the spectrum for what they need today based on these very large projections for mobile data 3-5 years down the line. To me, that's the right way to handle it.
For more from Chloe, follow her on Twitter @ChloeAlbanesius.
