The Federal Communications Commission has begun the long process of reclaiming broadcast TV spectrum for wireless use.
The five commissioners unanimously approved a proposal intended to free up spectrum now held by broadcasters and auction it to wireless broadband providers. (See the FCC press release embedded at the end of this article.) CNET followed the hearing via the FCC's public webcast.
The complicated process, which is the first of its kind, will have three components.
First there is the reverse auction, in which TV broadcasters will voluntarily sell their spectrum back to the government. Then there's a "repacking" or re-allocation of remaining television spectrum designed to free up large enough blocks for use by wireless operators. Finally, the plan calls for a forward auction in which the wireless broadband providers would bid on available bandwidth.
The commission intends to have this all wrapped up by 2014. That ambitious goal will require that a forward auction in which bidders won't know in advance which specific frequencies or geographic locations they will be bidding on.
The two Republican commissioners expressed concern over how much unlicensed spectrum was being set aside. And they also worried whether the auction proceeds would cover the cost of the process while also satisfying a congressional directive to use the money to pay for a new public safety wireless broadband network.
Commissioner Ajit Pai was particularly concerned about the cost of the auction. Specifically, he wanted to know if the FCC had considered what would happen if the $1.75 billion set aside to compensate broadcasters for repacking the spectrum did not cover all those expenses.
Democratic Commissioner Jessica Rosenworcel called for fairness in the auction process. She explained that not only should broadcasters who do not wish to give up spectrum be treated fairly, but she asked broadcasters evaluating the option of selling spectrum to make a "fair assessment" of the opportunities for selling the spectrum.
FCC Chairman Julius Genachowski called the proposal the world's first incentive spectrum auction. And he acknowledged that when it was first proposed by the committee that put together the National Broadband Plan in 2009 that no one thought it could work. But now the idea has become law, he believes it offers broadcasters and wireless broadband providers a great opportunity.
Verizon Wireless, the nation's largest wireless carrier, applauded the FCC's action.
"Consumer demand for advanced wireless services is growing rapidly, and more spectrum must be made available for mobile services in order to meet consumers' needs," Tom Tauke, Verizon's executive vice president for public affairs said in a statement (not available on the Web). "Today's action by Chairman Genachowski and the Commission is an important step toward achieving a successful incentive auction."
But some in the industry wonder how the FCC can pull off this daunting task. Earlier in the week, Steve Berry -- head of the Competitive Carrier Association, which represents the non-Verizon, non-AT&T carriers -- said he doubted the FCC could meet its 2014 target date.
"If they hold both the reverse auction and the forward auction at the same time, I'm just not sure how it can be done," he said. "I'm not sure who will be able to bid on spectrum without knowing how much they will get and whether or not the spectrum is contiguous."
The FCC's proposal is not the final word on the auction. And the agency has asked industry to comment on the proposal and offer suggestions. Commissioner Mignon Clyburn said she was happy to see the proposal included questions pertaining to interoperability. In her prepared remarks, she discussed how interoperability issues in the lower 700MHz block of spectrum is "impeding competitive options for consumers." And she called on the FCC to examine whether the agency should mandate interoperability as a requirement in the rules for the incentive auctions.
The agency also opened another rule making process to examine the FCC's current spectrum screen. The agency has used this loose screen when evaluating mergers and spectrum transactions to determine of a single carrier has too much wireless spectrum. The evaluation is done on a case-by-case basis. And the proposal voted on and approved by the FCC will look at whether the rules need to be more firm.
Both Republican commissioners McDowell and Pai expressed concern that a strict spectrum cap could harm growth in the wireless market. Still, Commissioner Pai said the current way that the FCC evaluates spectrum holdings is flawed and there is too much uncertainty in the market. But he, along with Commissioner McDowell, cautioned against enacting strict measures that would keep some players from participating in the incentive auctions.
"I am skeptical of any steps that would depress participation in the auction, such as tightening the spectrum screen, adopting a hard cap on spectrum holdings, or imposing requirements that would enable the Commission to second-guess how wireless operators run their networks and thus reduce the value of spectrum," Pai said.
The next step in the process is that both of these items will be opened to the public for comment. And at the end of the comment period, the FCC will evaluate the information and draft a formal proposal that will be voted on by the commission.
Here's the FCC's press release: