Congress declares another spectrum auction, but is anybody selling?

satellite dishes airwaves shutterstockIn a rare fit of bipartisanship, the U.S. Congress has passed a deal that would extend payroll tax breaks and unemployment insurance to millions of Americans. From the technology standpoint, the news isn’t the extension of government benefits or the fact two gridlocked parties managed to get something done: It’s how the legislation would pay for those benefits. The U.S. government plans to auction off some wireless spectrum currently held by television broadcasters to the wireless industry, for a payday worth an estimated $25 billion. The deal promises to help alleviate the spectrum crunch experienced by mobile operators — meaning, beneficiaries of the auction would be able to offer more mobile broadband to more people. Along the way, the legislation also carves off the so-called “D block” of 700MHz spectrum exclusively for use by police, fire, medical, and emergency responders.

Sounds great, right? As Americans fervently embrace mobile technology, the capability to offer more mobile broadband to consumers and businesses will help America stay competitive in the global marketplace. It could even help bring mobile broadband to areas historically under-served by existing broadband technologies. And, as many politicians will happily point out, all these things are potential job creators — particularly important going into a national election when an estimated 13 million Americans can’t find work.

However, this whole idea hinges on the idea that television broadcasters will surrender their current spectrum holdings — at the lowest possible price — so the government can resell and re-allocate it. Why on earth would they do that?

What’s up for grabs?

The basic idea behind the spectrum auction is to reallocate selected spectrum licenses currently held by television broadcasters to mobile operators. The frequency licenses in question range from 572MHz to 698MHz, just below the 700MHz band vacated by broadcast television in the switch to digital TV a few years ago. Although mobile broadband technologies can theoretically be deployed on a vast number of frequencies, the laws of physics and the way the United States has managed spectrum for the last century all play important roles. Many of the frequency bands originally set aside for television broadcasters have a desirable trait: They do a good job penetrating buildings and other structures, meaning many television users would not need outside antennas to pull in their local stations. (Still, “rabbit ears” became a cultural icon — and, yes, we realize this is meaningless to generations raised on antenna-free cable television.) The same idea applies to mobile technology: Putting mobile broadband services in those spectrum areas means the services will work better indoors and in dense urban areas.

stacked TVs with static shutterstockThe spectrum blocks eligible for auction are currently occupied by 20 UHF channels (numbers 31 to 51). In some cases, local television broadcasters who hold licenses to those channels in particular markets are doing nothing with the spectrum: It’s just dead air. However, the National Association of Broadcasters estimated last year that some 672 stations operate in that spectrum band. That’s well over a third of all the full-power TV stations operating in the country.

The new legislation authorizes the FCC to hold so-called “incentive auctions,” which would enable television broadcasters who voluntarily give up their existing spectrum licenses to participate in the proceeds from the auction of that license. The FCC can also designate narrow frequency bands on either side of allocated spectrum blocks for unlicensed used. These so called “white space” bands can potentially enable a number of useful technologies, including long-range Wi-Fi-like services (they wouldn’t be as fast as short-range Wi-Fi, but could be a tremendous boon in rural areas). Mobile operators could also use white space bands to temporarily ease congestion in urban areas.

If the spectrum auction freed up the maximum amount of spectrum around the country, the frequency landscape would leave enough space for 29 channels of digital television, eliminate UHF channels 31 to 51, and enable mobile and cellular operators to operate in an additional 120MHz of spectrum.

If all goes as planned, the auctions won’t take place for at least another year or two, leaving plenty of time for industry players and regulators to get their ducks in a row.

cell phone tower mobile carriers shutterstockWhat mobile operators think

Mobile operators have widely praised the deal, saying it will help eliminate “spectrum crunch” for deploying mobile broadband services. That not only creates jobs for people the mobile operators employ to build out services, but also enables existing businesses to pursue new opportunities enabled by mobile broadband. Most mobile operators wish the legislation had gone further in allowing the FCC to repurpose broadcast spectrum for mobile use. By some estimates, the wireless industry will be pushing 16 times more data by the middle of 2016 than it was at the middle of last year, and that means mobile operators need all the spectrum they can get just to try to keep up.

The largest mobile operators — namely AT&T and Verizon — are particularly pleased that the legislation specifically bars the FCC from excluding carriers from bidding on spectrum for competitive reasons, although the FCC will be able to set limits on how much spectrum a single company can hold in a particular market. In general terms, this means the spectrum auctions are likely to favor deep-pocketed providers like Verizon and AT&T, which will largely be able to outbid competitors in key markets. However, ownership rules may present an opportunity for struggling T-Mobile, which currently has no clear path to LTE. Sprint may want to make a major play as well, particularly since its partnership with LightSquared to roll out LTE services appears to be in serious jeopardy.

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