What if you held an auction, but there was nothing to sell? Luckily, back in 1994 when I was a Commissioner of the Federal Communications Commission (FCC), the FCC had inventory to hold the first spectrum auctions for Personal Communications Services. We had a fascinating time setting the auction rules, followed by establishing individual service rules for the many innovative communications and video services, such as the FastTrak, and direct broadcast satellite (DirecTV and Dish).
Fast forward to 2013, a time when we see an explosion of growth in the usage of mobile devices for voice and Internet data communications — and the resulting congestion in the airwaves devoted to wireless communications. Most of us have experienced trying to send a text or photo from your smartphone at a well-attended sporting or entertainment event, and not having it go through. With the current wireless Internet usage straining the current allocation of spectrum for wireless services, it is important that we make more efficient use of the public airwaves. (The FCC defines spectrum as the invisible infrastructure used by wireless devices, like smart phones and tables, to provide communications services. One of the goals of the digital television transition completed on June 12, 2009, was to free up spectrum by moving television broadcasters into a more compact area of spectrum.) The digital TV transition took decades, however, and time is of the essence for the current spectrum issue.
In 2012, Congress passed the Spectrum Act which authorized the Federal Communications Commission (FCC) to conduct spectrum incentive auctions, with the first auction to be of broadcast television spectrum. Here’s a summary of the process. The FCC decided it will conduct a two-stage auction, a reverse auction and a forward auction.
In the first reverse auction, the FCC will hold an incentive auction that will give broadcasters the ability to voluntarily sell their licenses to the highest bidder, in exchange for a portion of the proceeds from the second forward action. The target was to have 120 megahertz (MHz) of spectrum per market to auction. The second forward auction is where the potential users of the repurposed spectrum (probably mobile broadband providers) bid for new flexible–use licenses on the airwaves these broadcasters vacated. This additional spectrum will help improve the speed, capacity, flexibility and ubiquity of mobile broadband services such as 4G LTE and Wi-Fi networks to improve performance of devices like smart phones and tables that rely on mobile networks.
Then the FCC will engage in “repacking” which means it will re-assign channels to the remaining broadcast TV stations that remain on the air, to clear contiguous blocks of spectrum suitable for flexible use. The broadcasters will be reimbursed for relocation costs.
This FCC grand plan all hinged on whether existing broadcasters could be lured into voluntarily giving up their existing airwaves so there was something to auction off. And these broadcasters need to be in large metro areas where the congestion is the worst,, not just suburban or rural areas.
The good news is that this week, a coalition of TV stations stepped forth to say yes, they are willing to sell their spectrum and share the profits in the FCC’s incentive auction plan. The coalition is called the Expanding Opportunities for Broadcasters Coalition and is led by Preston Padden, a retired senior executive of the Walt Disney Company and Fox. The Coalition claimed it has 39 TV stations in many of the country’s largest metropolitan areas, including eight of the 10 largest TV markets. This development is important, because the most valuable and necessary inventory needs to be in the biggest markets where wireless demand is highest. The Coalition made it clear however that the FCC should avoid putting a value on TV station frequencies based on the financial health of the broadcasting station, but should properly be the value of the spectrum being offered (presumably for uses like mobile broadband).
In a related development, a letter was filed with the FCC on January 24th from AT&T, Verizon Wireless, Intel, T-Mobile, Qualcomm and the National Association of Broadcasters (NAB) setting forth some core band plan principles they have agreed on that they urge the FCC adopt. (The NAB is representing the broadcasters who are not selling their spectrum.) After the incentive auctions are held, the FCC plans to reorganize the broadcast/broadband spectrum band to reclaim broadcast spectrum for wireless. It is very encouraging to see the broadcasters actively working with the wireless industry and others on some core principles for the band plan. They deserve accolades for this spirit of cooperation on this important national issue.
Because California is the home of many Internet-based companies and many cutting edge App Economy players, and is a large and lucrative market for the mobile broadband providers, this federal incentive auction is an issue worth watching. All players should be urged to actively participate and cooperate. The FCC should be encouraged to move as swiftly as possible, while hearing all parties fairly. It is my experience that it is all too easy to delay an FCC proceeding. Here, delay does not serve the American people, who above all, love their mobile devices.