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Pai statement on FCC procedures for H Block auction

Posted September 13th, 2013 in 4G, Broadband, Federal Communications Commission, interoperability, spectrum, spectrum auction and tagged , , by Alton Drew

The following was released today by Federal Communications Commission member Ajit Pai:

“This summer, I proposed that the H-block auction start on January 14, 2014, and I applaud Chairwoman Clyburn and the Wireless Telecommunications Bureau for today’s Public Notice announcing that the auction will commence on that date. Bringing this valuable 10 MHz of paired spectrum into the commercial marketplace as soon as possible will benefit Americans in two ways.

First, it will help deliver bandwidth-intensive mobile services and applications.

Second, the proceeds of the auction will provide much-needed revenue for the First Responder Network Authority to build out a nationwide, interoperable broadband public safety network. I look forward to working with my colleagues to ensure a successful auction four months hence.”

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Spectrum: Larry Downes describes the downside of changing a social goal

Last week Larry Downes posted an article on how the Federal Communications Commission seems to have lost its way on broadband policy. With a spectrum frontier that, according to Mr. Downes, is effectively closed, the FCC appears to have been thrown off course by short term goals preferred by smaller wireless carriers, notably Sprint and T-Mobile, a number of grassroots advocates, and the U.S. Department of Justice.

They have combined to craft and sell a narrative that more spectrum going to larger carriers, specifically AT&T and Verizon, is not good for competition and that future spectrum reverse auction rules should be written to steer spectrum toward smaller carriers in the name of, I don’t know, fairness or equity.

Somewhere lost in this pushing and shoving at the dinner table are two social policy goals. The first goal is making available to all Americans universal access to a nationwide communications network. The second goal is getting broadband access to all American households pursuant to the FCC’s March 2010 national broadband plan. In a free market where consumers are able to choose a provider for broadband services, the FCC is using its bottleneck status as gatekeeper to the airwaves to craft consumer choice according to its own image.

That image is a market where carriers serving 80% of current subscribers should be punished because they got a head start on broadband due to their very organic business model: they were incumbent local exchange carriers with a network in place and a large local phone customer base to sell to. The carriers would have to engage in time travel back to the 1970s in order to get on the same so called equal footing that the FCC would like to see now in the 21st century. That is not going to happen.

What should happen is that Sprint and T-Mobile put to use their current spectrum holdings and enter into strategic partnerships with handset and operating systems providers to sell innovative product and services. As Mr. Downes points out, Sprint, due in part to a merger with Clearwire and it being acquired by SoftBank, is America’s largest holder of spectrum. T-Mobile’s acquisition of MetroPCS garnered for itself additional spectrum.

Rather than indirectly hampering the quality of service AT&T and Verizon’s subscribers would incur because their respective carriers would be shut out of spectrum, Sprint and T-Mobile should give AT&T and Verizon subscribers a good old fashioned market based reason for switching to them versus lobbying for auction rules that violate the very premise of free markets and competition they allegedly believe in.

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Of course there is no competitive market for spectrum.

Posted June 6th, 2013 in FCC, Government Regulation, spectrum, spectrum auction and tagged , , , by Alton Drew

A column by The New York Times’ Eduardo Porter argues that the market for spectrum would be more competitive if the Federal Communications Commission would restrict AT&T and Verizon’s access to the upcoming incentive auction where the FCC hopes to reallocate television broadcast station spectrum for wireless carrier use. Mr. Porter’s column also cites an argument by Consumer Federation of America’s Mark Cooper asserting that keeping AT&T and Verizon out of the auction may even lead to higher revenues for the auction because smaller carriers would be encouraged to enter the auction and submit bids and the accompanying cash.

Sorry, but I just don’t buy that argument. The market for spectrum will always be a monopoly market. Why? Because there is only one supplier of access to spectrum and that supplier is the FCC. The FCC is a monopolist and as a monopolist it can set the price for spectrum way above the marginal cost for providing a license to those invisible waves rolling around the planet Earth. To raise more revenues from fewer participants, the bidders would have to increase the premiums on their offers or fewer bands of spectrum would have to be made available given the demand.

This is supposed to be an incentive auction for broadcasters, not a disincentive auction. If you want more broadcast stations to give up more of that beachfront property on that 300 Mhz to 3 Ghz coastline, broadcasters will want to know that you are serious about getting them the biggest bang for the buck and that’s only going to happen if they know that the big boys are playing, too.

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NAB wants to see MetroPCS, T-Mobile transaction go through

Last week the National Association of Broadcasters (NAB) filed a letter with the Federal Communications Commission urging the agency to bless the merger of MetroPCS and T-Mobile. NAB’s president and chief executive officer Gordon H. Smith made some strong free market arguments in support of NAB’s position. Mr. Smith said that the remarkable power of the free market was enabling wireless companies to address spectrum concerns.

Mr. Smith opined that, “[t]his merger is part of an essential transformation that the wireless industry has undergone over the past year alone. Wireless carriers have responded to the initially surprising surge in demand for data by restructuring to rationalize their considerable spectrum holdings.”

Mr. Smith goes on further to say that the merger will help wireless companies use spectrum more efficiently and that “the transaction will address major spectrum constraints facing both T-Mobile USA and MetroPCS by combining their highly complementary spectrum portfolios.”

If anything the merger speeds up the transfer of spectrum from one spectrum holder to the next. It is a lot faster than the voluntary auctions slated to start later this year that would send spectrum from television broadcasters to wireless communications providers. It would make sense that NAB is pulling for T-Mobile and MetroPCS to pass muster. It would probably put less pressure on its member stations to dip their toes into the auction soup.

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The Spectrum Cliff

Posted November 14th, 2012 in FCC, Government Regulation, spectrum and tagged , , , , by Alton Drew

Yesterday Federal Communications Commission member Jessica Rosenworcel delivered a speech on spectrum policy. Overall I was not impressed with the speech, but two things stood out.

First, Ms. Rosenworcel coined the term, “spectrum cliff”, in reference to the shortage of spectrum the nation is facing. It’s obvious what influenced the creation of that moniker.

Second, Ms. Rosenworcel recommended a way to incentivize federal agencies to give up the spectrum they are using: cut them in for a piece of the action by giving them a share of the proceeds. I admit this is outside the box thinking on the part Commissioner Rosenworcel and shows her appreciation for profit as a motivator.

The other cliff, the fiscal cliff, may be motivation enough for taking a cut of spectrum auction proceeds. If an agency is about to lose funds as a result of budget cuts, Ms. Rosenworcel’s proposal may alleviate some fiscal pain, at least in the very short run. I say short run because an agency would only have so much spectrum to give up if it wants to carry out its primary mission.