Agenda Items for the Next FCC Chairman

By Jamal Simmons

It’s official: current Federal Communications Commission (FCC) Chairman Julius Genachowski will be handing over the gavel on May 17th. While Commissioner Mignon Clyburn will lead the agency until Obama nominee Tom Wheeler gets confirmed and sworn in, it’s worth taking a look at the top two pressing issues Wheeler will face once he takes the helm of the Commission.

Agenda Item: IP Transition

The trend is undeniable. Americans are leaving their traditional phone service, dropping their standard connection in favor of wireless and IP-based phone connections. You’re probably one of them. If you have your home phone service bundled with cable, you might not even realize you no longer rely on the plain old telephone service (POTS) network.

With scores of people changing the way they communicate (some estimates peg the number at 500,000 people each month), network providers want to gradually sunset their old networks so they can concentrate billions in investment dollars to new, Internet-based services. In other words, they want to put their money where consumers want to go … and are going.

This transition to all-IP (Internet Protocol) networks won’t be as easy as flipping a switch. Ensuring everyone still has a reliable connection, especially seniors and those living in rural areas, is critical. That’s why AT&T submitted a proposal to the FCC for “beta trials” in select markets to identify potential pitfalls, an idea FCC Commission Ajit Pai strongly endorsed in a speech sponsored by the Hudson Institute back in March. As Pai said in his speech:

Right now, the most critical choice we face is whether to move forward with an All-IP Pilot Program. This program would allow forward-looking companies to choose a discrete set of wire centers where they could turn off their old TDM electronics and migrate consumers to an all-IP platform. Now, you may have noticed that when it comes to the IP transition, everyone has a prediction about what will or will not happen if carriers are allowed to provide services exclusively through an all-IP platform. But as we found out during yesterday’s “snowstorm”—what we Kansans call “weather”—predictions are no substitute for hard facts. Albert Einstein had it right: A “pretty experiment is in itself often more valuable than twenty formulae extracted from our minds.”

Fortunately, we don’t need to rely on formulae any longer. The FCC has sought and received comments on a proposal to create an All-IP Pilot Program. I’ve reviewed the record carefully. And having done so, I am proposing today that the FCC move forward with this program.

Going forward with beta trials is just part of the greater IP transition discussion Wheeler will no doubt be having as head of the FCC. Also on the burner will be regulations — specifically, what will be the regulatory framework in an all-IP world? The 1996 Telecommunications Act is by all accounts painfully outdated. Modernizing rules to keep pace with today’s technology in ways that encourage continued investment in network infrastructure and protect consumers will be critical for the IP transition to succeed. And Wheeler, from the driver’s seat of the FCC, will need to lead the discussion.

Agenda Item: Spectrum

Outgoing Chairman Julius Genachowski deserves a ton of credit for recognizing the coming “spectrum crunch” (as he’s coined it), but the FCC’s proposed solution to the problem — incentive spectrum auctions — is barely past the 50-yard line. The auctions are still being shaped, the details still being argued over. Some are pushing for limited involvement in the auctions by certain wireless providers. Others question whether enough broadcasters will participate to make a difference.

Meanwhile, thousands of Americans are adopting mobile broadband every day. They are firing up smartphones and tablets for the first time and pushing data into the ether. And all that data is joining the bits and bytes being pushed out from tens of millions of other people who are already relying on a wireless connection to the Internet for their daily activities.

To keep up with this flood of data traveling on their networks, wireless providers have been trying to make deals for spectrum left and right. But it’s still not enough, which means a lot will be riding on the FCC’s spectrum auctions. Will Wheeler and the other Commissioners successfully put together proceedings that are open to all qualified bidders? Auctions that maximize much-needed revenue for the Federal government? As my colleague Rick Boucher succinctly put it:

Only through truly competitive, open spectrum auctions will America’s wireless industry continue to thrive. After all, the best way to ensure competition is to encourage everyone to compete.

These are the two most critical issues Wheeler will face once he’s in charge of the FCC (and underlying both of those issues is the most important part of his job — increasing access for all Americans to participate in the technological revolution we are experiencing. High-speed access to the Internet only increases in importance as job searches, entrepreneurial opportunities, education and health care are all enhanced by being online). While some have criticized his selection given his past life running both the NCTA and the CTIA, such experience offers encouragement that he has the ability to successfully get the job done. As President Obama remarked during the announcement of his selection:

”If anybody is wondering about Tom’s qualifications… [He] is the only member of both the cable television and the wireless industry hall of fame.”

Here’s hoping Wheeler will one day be inducted into the FCC hall of fame as well.

Quick Talk With Genachowski

By Brad

Speaking of the FCC, John Eggerton of Broadcasting & Cable has a short interview with outgoing Chairman Julius Genachowski. Here’s a taste, regarding the Commission’s upcoming spectrum auctions:

You mentioned incentive auctions. You are leaving with the incentive auctions still at the beginning of the process. What shape is it in?

In 2009, when I rang the alarm bell on a spectrum crunch, people said there was no spectrum crunch. In early 2010, when we introduced the incentive auction idea, people said that would never happen. The goals that I set out were to get the country focused on spectrum crunch, get the legislation passed and move forward on other steps to free up licensed and unlicensed spectrum. Things have moved much faster than anyone would have thought, and much more has gotten done than anyone would have predicted. Having said that, there are challenges ahead and they will be with us for a very long time. That is why one of the things I focused on was strengthening the agency so that it could continue to do the work of the American people for a very long time.

The full interview is worth checking out.

Swanson on Spectrum

By Brad

At his blog Maximum Entropy, Bret Swanson (who is one of our Broadband Ambassadors) writes about a recent op-ed from FCC Chairman Julius Genachowski in the Wall Street Journal:

Chairman Genachowski is right to herald the incentive auctions that could unleash hundreds of megahertz of un- and under-used spectrum from the old TV broadcasters. Yet wrangling over the rules of the auctions could stretch on, delaying the the process. Worse, the rules themselves could restrict who can bid on or buy new spectrum, effectively allowing the FCC to favor certain firms, technologies, or friends at the expense of the best spectrum allocation. We’ve seen before that centrally planned spectrum allocations don’t work. The fact that the FCC is contemplating such an approach is worrisome. It runs counter to the policies that led to today’s mobile success.

Swanson’s full post is worth checking out, as is a recent post from our own Bruce Mehlman on Genachowski’s spectrum vision..

Genachowski on Spectrum Auctions

By Bruce Mehlman

In today’s Wall Street Journal, FCC Chairman Julius Genachowski goes over the many steps the Commission is taking to free up more spectrum from wireless use. Calling broadband the “engine for economic growth,” he starts out his op-ed by backing up that statement:

To sustain long-term economic health, America needs growth engines, areas of the economy that hold real promise of major expansion. Few sectors have more job-creating innovation potential than broadband, particularly mobile broadband.

Genachowski then highlights how the U.S. now leads the world in 4G LTE deployment (along with the fact that private investment in mobile infrastructure is “more than 50% higher than in Europe”), but warns that in order to keep both deployment and investment happening, more airwaves are critical. As he writes:

Spectrum is finite, and the demand for airwaves being created by data-hungry, Internet-connected devices is on pace to exceed supply. How significant is the spike in demand? Today’s smartphones generate 50 times more mobile traffic than a traditional cellphone. For tablets, it’s 120 times more traffic. As a result, American wireless networks are running at the highest utilization rate of any in the world.

One solution to this problem, Genachowski tells readers of the Journal, is the Commission’s upcoming spectrum incentive auctions, which have the potential to both free up airwaves and deliver much needed revenue to the Federal Government. That’s potentially a win-win, as they say. But as our own Rick Boucher wrote this past February, the key to making the FCC’s initiative successful for consumers and the economy is ensuring spectrum auctions are open to all bidders. Boucher:

History has shown that when the FCC has tried to pick winners and losers in the wireless market, American consumers have lost. Past attempts by the Commission to favor certain bidders and/or impose rigid regulations on auction winners have drastically diminished auction proceeds, left major blocks of spectrum unused, and led to what FCC Chairman Julius Genachowski himself has labeled “America’s looming spectrum crisis.”

The simple truth is America’s wireless industry continues to be fiercely competitive… Allowing the FCC to impose conditions on spectrum auctions will not make the industry more competitive. And the spectrum critically needed by all providers to keep up with increasing demand will not be put to its full use, leading to spectrum shortages, reduced investment and innovation, and higher prices for consumers.

Only through truly competitive, open spectrum auctions will America’s wireless industry continue to thrive. After all, the best way to ensure competition is to encourage everyone to compete.

Genachowski and the entire FCC deserve praise for their tireless work to keep this critically important issue on the front burner. But given mobile broadband’s benefits — not just to consumers and the economy, but to communities, education, and the health care industry — ensuring spectrum incentive auctions are open to all those willing to make the substantial private investment to keep rapid deployment going should be at the top of the list. As Genachowski himself wrote in his op-ed:

Private-sector innovation in mobile broadband has been extraordinary. But maintaining the creative momentum in wireless networks, devices and apps will need an equally innovative wireless policy, or jobs and growth will be left on the table.

Rosenworcel on Auctions

By Brad

Speaking of incentive auctions, yesterday FCC Commission Jessica Rosenworcel spoke at a conference and laid out her vision for how the auctions should proceed. The National Journal‘s Juliana Gruenwald once again reports:

Rosenworcel, a Democrat who joined the five-member commission in May, outlined the proposal during a conference that examined spectrum policy over the next decade. She noted that meeting the nation’s spectrum needs will require a variety of approaches, including effective implementation of the incentive auction process by the FCC, technological solutions, and spectrum sharing.

She also echoed calls for federal agencies to give up more of their spectrum to commercial wireless providers. Noting that government agencies are understandably reluctant to surrender a network or communications system once it’s in place, she suggested giving agencies an incentive by offering them a share of the proceeds from the auction of the federal spectrum.

Banding Together for Auctions

By Brad

The National Journal‘s Juliana Gruenwald reports that with the FCC’s incentive auctions gearing up, a group of broadcasters has banded together to work with the Commission:

The Expanding Opportunities for Broadcasters Coalition will press to obtain the best conditions for broadcasters as the FCC implements legislation passed in February that authorizes the use of incentive auctions to free up TV stations’ spectrum for use by wireless broadband providers.

According to John Eggerton of Broadcasting & Cable, the FCC’s chief is down with the idea:

FCC chairman Julius Genachowski Tuesday gave an “open, transparent and data-driven” shout-out to the new Expanding Opportunities for Broadcasters Coalition, which is being organized by former broadcast exec and one time Association for Independent Television Stations president Preston Padden.

“Incentive auctions will offer significant opportunities for broadcasters—both those that will take advantage of a once in a lifetime financial opportunity, and those that will choose to continue to be a part of a healthy and diverse broadcast marketplace,” said the chairman in response to the creation of the coalition. “I welcome the participation of the new Expanding Opportunities for Broadcasters Coalition in our rulemaking process as the Commission engages all stakeholders in a manner that is open, transparent and data-driven.”

Auctions Are Plan A

By Brad

Over at The Hill, Jennifer Martinez reports that when it comes freeing up more spectrum for wireless use, at least one FCC Commissioner says the FCC is all in on voluntary spectrum auctions:

Mignon Clyburn, a Democratic commissioner at the Federal Communications Commission (FCC), expressed confidence in the agency’s ability to execute its ambitious plan to off auction television stations’ airwave licenses to cellular service providers during a C-SPAN interview.

“We have no plan B, there’s a plan A. We’re doing all that we can to make sure that there are market synergies, that there are market forces, that there are market opportunities that both the buyers and sellers can take advantage of,” Clyburn said during a taping of C-SPAN’s “The Communicators” program that will air Saturday.

Three Words: Faithful, Fair, Simple

By Jamal Simmons

In a speech at CTIA’s MobileCon on Wednesday, FCC Commissioner Ajit Pai talked spectrum – specifically, what has worked (and not worked) in the government’s efforts to free up more airwaves for wireless use.

As many would expect from this Republican member of the Commission, Pai embraces the power of the free market when it comes to providers being able to meet consumer demand for more airwaves. He points out:

Historically, the FCC used comparative hearings — better known as “beauty contests” — or even lotteries to assign licenses. In other words, the agency either had to choose political favorites or leave it to chance — a lose-lose proposition.

The big change, Pai noted, came in 1993, when Congress — and President Clinton — authorized the auction process for spectrum. Calling this move a “win-win,” Pai said:

Not only do [auctions] allocate spectrum more efficiently, but they also have raised over $50 billion for the federal government.

For further proof, Pai focused on two previous auctions — one in 2006, the other 2008 — that together provided 142 MHz of spectrum for mobile broadband. And that boost in airwaves, Pai went on to say, has greatly benefited the U.S. as a whole:

How important have these auctions been? They are the main reason why the United States today leads the world in 4G deployment. Verizon Wireless is using the C-Block spectrum it obtained in [2008’s] Auction 73 to roll out 4G LTE service nationwide. AT&T provides 4G services over B-Block spectrum from Auction 73 as well as spectrum from [2006’s] Auction 2006. MetroPCS uses spectrum from Auction 66 to provide 4G LTE service. So does Leap Wireless. And soon, so will T-Mobile.

That’s obviously a lot of wireless expansion — not to mention a healthy boost to competition — from just two auctions, but as Pai himself noted there’s still much work to be done, especially when it comes to closing America’s digital divide. Wired broadband can only reach so many people before it becomes economically unfeasible. That means, if the U.S. is going to achieve the ambitious goal of bringing broadband to every corner of our nation, mobile broadband is the way to go.

According to Pai, the key to making it all happen is for the Commission to stay on the schedule it has already laid out for spectrum auctions. But he added:

I think three principles should [also] guide our work as we set up these auctions. Specifically, we must remain faithful to the legislation. We must be fair to all stakeholders. And we must keep our rules as simple as possible.

That’s exactly right, and I hope Pai and the Commission are able to take lessons from past successes to shape the role that the government should play going forward. Making the goals of the National Broadband Plan reality is simply too important — to the economic health of America, to the promise that everyone in our nation should have an opportunity to succeed — for us to fail. The future of broadband is up in the air, and it will take smart spectrum management and reallocation by the FCC to help tap mobile broadband’s full potential.

An Update on the Auctions

By Brad

At Broadcasting & Cable, John Eggerton has an update on the FCC’s spectrum auction plans:

The FCC is going through “a whole bunch of edits and questions” from commissioners’ offices on the upcoming spectrum auction framework notice of proposed rulemaking, which is scheduled for a vote Friday, Sept. 28. Those questions include the wisdom of holding simultaneous auctions, as the FCC is proposing.

According to a source familiar with the edit chain, questions include whether the FCC is setting aside too much spectrum for unlicensed use, and whether it might make more sense to do the auctions sequentially.

Right now, the Commission is aiming to have auctions completed — and much-needed airwaves available for wireless use — by the end of 2014.

What Auctions Could Look Like

By Brad

According to John Eggerton of Broadcasting & Cable, the FCC has released a model of what a spectrum auction could look like to interested parties:

The model is described as essentially a “tab A in slot B” description of the process, from reverse auction clock countdowns, to running the winning bids through the FCC’s modeling for reconfiguring that spectrum, to the spectrum’s re-auction to wireless, soliciting questions all along the way.

The model talks about cross-border spectrum arrangements and says there will probably have to be different rules for stations along the shared border with Canada and Mexico, seeking comment on what those should be.

FCC at MMTC

By Brad

Broadcasting & Cable’s John Eggerton has a good wrap-up of yesterday’s appearance by FCC Commissioners at the MMTC conference in Washington, DC. One major topic was the upcoming spectrum auctions:

FCC Commissioner Rosenworcel said Wednesday that upcoming incentive auctions would be a “big and innovative” undertaking. She emphasized that the auctions were voluntary and that broadcasters should have a full and fair opportunity to remain in the business.

As for other hot topics with the FCC, Eggerton reports:

Asked what issues were on the horizon for commission action, [Commissioner] Clyburn cited Universal Service Fund reform as something she was passionate about. Rosenworcel said the spectrum auctions were really important because they would grow the economy, particularly by spurring 4G mobile service growth. The agency should double down on those kinds of economy-growing efforts. She also put in a plug for getting to work on a first responder interoperable broadband network, which she promoted in her former job with the Senate Commerce Committee. She also said that broadband adoption and deployment are also double-down issues.

Before the FCC is Before the Senate

By Brad

The full FCC is set to appear before the Senate Commerce Committee today, Broadcasting & Cable’s John Eggerton has a preview of what newly appointed Commissioner Jessica Rosenworcel will say during the appearance:

According to a copy of those remarks, she will give a shout out to incentive auctions and the FCC’s history of delivering the goods—raising $50 billion for the treasury. She will also express confidecence that with the “right mix of engineering and economics,” the incentive auctions can follow in that tradition and, so long as the FCC follows the law, be “fair to all stakeholders.”

That law includes the requirement that broadcasters not be forced to participate.

The hearing begins at 2:30 pm EST, and will be streamed on CSPAN.

Boucher in Daily Tech

By Brad

At Daily Tech, Jason Mick talked with our own Honorary Chairman Rick Boucher on spectrum auctions and the potential for the FCC to exclude some bidder. As Mick writes:

[Boucher] praises Congress, saying that he thinks that they did a couple things right with the recent authorization. He states, “The FCC has been instructed by the Congress to develop a process for [carrying out] a spectrum auction…Congress correctly instructed the FCC not to disqualify from the incentive auction process any carriers based on their size or position in the mobile carrier market.”

But then the issue returns to the fear of potential discrimination via the spectrum screen—a provision design to protect against “inappropriate concentrations” of spectrum in the hands of a few holders in individual markets.  While that provision may be legal to enforce in some cases, he suggests, he argues that overall, “We have antitrust laws that are designed to prevent undue concentration.”

Check out the full back-and-forth at Daily Tech.

Swapping Spectrum

By Brad

Via CNet’s Roger Cheng, T-Mobile and Leap wireless have announced they are swapping some spectrum holdings in order to keep up with customer demand:

The deal is just the latest move by the wireless carriers to improve their various spectrum positions. By realigning their spectrum holdings, the carriers can build a network with better coverage, and potentially, better service. The transaction also signals the broader need for more spectrum in the wireless industry.

Since it takes years for wireless carriers to put newly attained spectrum to work — not to mention the fact that the FCC’s process for incentive auctions is only just now beginning — policy makers should let the market make moves like this one to help assuage the spectrum crunch.

Mobile Broadband’s Legislative Black Hole

By Brad

In a post for The Hill‘s Congress Blog, our Honorary Chairman Rick Boucher warns of the “legislative black hole” when it comes to mobile broadband legislation:

If we are going to keep the wireless industry growing and encourage the build-out of a more powerful Fourth Generation wireless infrastructure across America, spectrum auctions must be properly designed. Rigging the system so that key stakeholders are barred or discouraged from participating, or spectrum availability is selectively curtailed, could cost our country billions in much-needed revenue and deal a severe blow to innovation from one of our most vibrant industries. A recent study from Deloitte Consulting estimates that deploying 4G networks across America could create as many as 771,000 jobs. That’s a lot of jobs, but it can only happen if wireless providers have the spectrum they need to power the networks they build.

You can read Boucher’s full piece at The Hill.

Assembling a Spectrum Task Force

By Brad

Yesterday, the FCC announced the creation of a task force aimed at guiding upcoming spectrum auctions for wireless. As The Hill‘s Brendan Sasso reports:

In its first step toward implementing spectrum auctions authorized by Congress, the Federal Communications Commission (FCC) announced a task force on Wednesday to study the issue.

Ruth Milkman, a special counsel to the agency’s chairman, will head the task force on an interim basis.

From FCC Chairman Julius Genachowski’s statement on the task force (PDF):

“I’m confident our staff is up to the challenge. What we’ll see is an implementation process that will be inclusive and participatory; that will be guided by the economics and the engineering; and that will seek to maximize the opportunity to unleash investment and innovation, benefit consumers, drive economic growth, and enhance our global competitiveness. When the incentive auction of the TV bands is complete, we expect to have a healthy broadcast sector, and a strong, robust, competitive, and world leading mobile industry.

Getting it Right

By Brad

Broadcasting & Cable’s John Eggerton reporting on a speech made by FCC Commissioner Robert McDowell yesterday at the Mobile World Congress event in Barcelona:

McDowell was not opposed to Congress limiting the FCC’s ability to condition the auction. He has long complained of the conditions on the FCC’s 2008 auction of the first tranche of broadcast spectrum reclaimed in the DTV transition. Those are widely believed to have discouraged bidders and reduced revenue from the auction.
“The lesson learned from that auction and others is that when governments attempt to conduct social and economic engineering by foisting unnecessarily complicated mandates on the use of spectrum, their efforts frequently backfire,” McDowell said. He said he thought the FCC could get it right this time.

Boucher in Roll Call

By Brad

Calls for humbler government are as old as the republic. In this era of frenzied media coverage and hyperpartisan dialogue, few would apply the humble label to anything related to the federal government. It’s time for at least one agency to heed the call.

As it writes rules for the availability of additional spectrum through incentive auctions, the Federal Communications Commission should apply a light touch — a truly humble approach — to the wireless sector, which is a major contributor to our national economic recovery.

So begins an op-ed from our Honorary Chairman, former Congressman Rick Boucher, in today’s Roll Call. Check out the full op-ed on their site.

Bruce Mehlman on Open and Competitive Auctions

By Brad

Our Co-Chair Bruce Mehlman recently spoke with Web Pro News about the need for the FCC to conduct open and competitive spectrum auctions. Here’s video of the interview.

Spectrum: Keep Auctions Open and Competitive

By Rick Boucher

In a letter yesterday to 20 congressional leaders, a group of wireless providers led by Sprint and T-Mobile essentially called on Congress to grant the Federal Communications Commission (FCC) power to pick winners and losers in the wireless market. From the letter:

Congress’ challenge today is to authorize the FCC to conduct inventive auctions to bring additional spectrum to market while preserving the FCC’s ability to manage auction eligibility and structure to promote the benefits of vibrant wireless competition for consumers and the economy.

To this end, the letter argues the FCC should be able to take into account the amount of spectrum carriers have when it comes to crafting spectrum auction rules – in other words, not an open, competitive auction at all.

Given the unprecedented adoption of mobile broadband, the upcoming spectrum auctions are simply too important to limit the involvement of any bidder, be they large or small. The development of next-generation wireless services, and the ability of all carriers to obtain the necessary spectrum to improve service and keep up with customer demand, is critical not just for the health of the wireless industry, but for America’s economy.

While it’s not surprising that Sprint, T-Mobile, and other wireless providers would want to inhibit the nation’s two largest carriers from participating in full in spectrum auctions, doing so would severely limit the amount of revenue the government would receive in return for spectrum sold. Contrary to claims in the letter to Congress, the current House Bill (H.R. 3630) regarding spectrum auctions will ensure a level playing field continues to exist. It will also maximize auction proceeds, bringing American taxpayers the full benefit from the sale of one of our most vital public resources.

History has shown that when the FCC has tried to pick winners and losers in the wireless market, American consumers have lost. Past attempts by the Commission to favor certain bidders and/or impose rigid regulations on auction winners have drastically diminished auction proceeds, left major blocks of spectrum unused, and led to what FCC Chairman Julius Genachowski himself has labeled “America’s looming spectrum crisis.”

The simple truth is America’s wireless industry continues to be fiercely competitive (in fact, when it comes to spectrum holdings, letter signee Sprint is in arguably the best position due to its partnership with Clearwire). Allowing the FCC to impose conditions on spectrum auctions will not make the industry more competitive. And the spectrum critically needed by all providers to keep up with increasing demand will not be put to its full use, leading to spectrum shortages, reduced investment and innovation, and higher prices for consumers.

Only through truly competitive, open spectrum auctions will America’s wireless industry continue to thrive. After all, the best way to ensure competition is to encourage everyone to compete.