Happy Monday to all. This morning I shared the following comments via a letter with the House Committee on Energy and Commerce. I thought I’d share them with you as well.
An updated Act should not only provide broadband access to providers with clear guidance as to the rules of the road, but it should ensure that the road is not littered with debris from a 20th century regulatory framework. Through legislation and rulemaking, Congress and the FCC have worked to increase the amount of spectrum available to commercial providers.
Now is the time for Congress to go another step further by ensuring that an update of the Act sends a clear message to the FCC to the take steps necessary for increasing the amount of commercially available spectrum to providers that are ready to put this finite and valuable resource to its best use.
Increasing the amount of spectrum available for commercial use should be viewed as an investment in the value the wireless industry brings to the American economy. According to CTIA-The Wireless Association, in terms of contribution to gross domestic product, the wireless industry is now larger than the publishing, agriculture, hotels and lodging, air transportation, motion picture and recording, and motor vehicle manufacturing industry segments and rivals the computer system design services as well as the oil and gas extraction industries.
Job seekers have benefited from the growth and size of the wireless industry. CTIA reports that the wireless industry gained 1.6 million new jobs between 2007 and 2011. Meanwhile the rest of the economy saw private sector jobs fall by 5.3 million during what was arguably the worst economic downturn since the 1930s.
And while prices for wireless services have fallen 93% between 2008 and 2013, the United States, contrary to critics right here at home, leads the rest of the world in mobile broadband speeds. Again, according to CTIA the average mobile broadband speed in the U.S. in 2012 was 2.6 Mbps, the fastest in the world, and double the speeds seen in Europe.
American enterprise is exceptional because of America’s exceptional emphasis on innovation. The wireless industry helps to set standards of innovative excellence. An example of this excellence is the wireless industry’s rollout of 4G Long Term Evolution (LTE) technology and the devices that use it. According to data from CTIA, the number of 4G LTE-connected devices was 33.1 million devices in 2012. That number represented a 273% increase in devices that year. By the end of 2013, that number increased to 62.5 million.
This small sample of industry data supports the argument that there is a thirst for services provided by wireless carriers; that consumers place a value on the services they receive from all carriers, whether they be large national carriers such as AT&T, Verizon, T-Mobile, or Sprint, or smaller carriers such as Boost Mobile, Virgin Mobile, or C-Beyond.
There is competition in the wireless eco-system, and consumer demand for innovative, flexible services, pricing, and data plans motivate a demand for spectrum that is just as value driven. Any mechanism for providing wireless carriers with access to additional spectrum must recognize the value the market delivers to consumers and the initiatives carriers take to bring value to the market.
One mechanism that will provide quality spectrum to wireless carriers is the pending incentive auction. While the FCC has certainly conducted spectrum auctions before, it has never done one like this complex, two-sided auction. During the first part, or the reverse auction, television broadcasters will give up their licenses if they are confident that they’ll be adequately compensated for doing so. Then during the forward auction, wireless carriers will bid on the spectrum. Part of the proceeds from the revenue of the forward auction will compensate the broadcasters; hence their interest in a bidding process that maximizes revenue. However, carriers like T-Mobile and Sprint and their advocates have been advocating for restrictions on the amount of spectrum that AT&T and Verizon may bid on. What would be the consequences of implementing a policy that restricts AT&T and Verizon’s participation in the auction?
One consequence would be less revenue, which translates into less money to compensate the broadcasters, less money for deficit reduction, and potentially not enough funding a long-awaited national broadband first responder network. How big would the risk of leaving dollars on the table be? If we use past auctions as examples, leaving AT&T and Verizon out would have resulted in revenues being 45% lower in the 700 MHz auction and 16% lower in the AWS-1 auction.
Another consequence would be less spectrum available for commercial use. Data referenced above points to the value of the wireless industry to the economy and to consumers. Consumer demand for spectrum is rising and will continue to do so as mobile plays a bigger role in the education, healthcare, and energy sectors, not to mention our day-to-day personal and professional lives. The industry needs more spectrum to serve its customers as their needs increase.
Also, another mechanism that could provide quality spectrum to wireless carriers is a federal incentive auction as proposed in HR 3674, the Federal Spectrum Incentive Act. The bill would create a spectrum fund, and proceeds from the fund could be used to offset sequester cuts, among other uses. The bill has been with the House Sub-Committee on Intelligence, Emerging Threats, and Capabilities for three months, and it’s time to move it forward.
I believe the broadcast television incentive auction and the federal agency incentive auction as defined in HR 3674 are great opportunities to create pathways for wireless carriers to get access to spectrum.
I encourage you to let Congress know that broadband deployment in the mobile world will mean greater access to spectrum by all carriers. Consumers shouldn’t be penalized by the implementation of spectrum caps simply because they chose service with a larger wireless carrier.