Spectrum reform, public safety network move forward in Senate

Committee approves bill authorizing FCC to conduct voluntary incentive auctions aimed at heading off mobile broadband crisis. Bill would also resolve long-standing stalemate over a national public safety network.

Larry Downes
Larry Downes is an author and project director at the Georgetown Center for Business and Public Policy. His new book, with Paul Nunes, is “Big Bang Disruption: Strategy in the Age of Devastating Innovation.” Previous books include the best-selling “Unleashing the Killer App: Digital Strategies for Market Dominance.”
Larry Downes
7 min read

The Senate Commerce Committee voted Wednesday to approve legislation aimed at resolving long-standing issues for mobile broadband users, both public and private.

Co-sponsored by Committee Chairman Jay Rockefeller (D-W. Va.) and Ranking Member Kay Bailey Hutchison (R-Tx.), S. 911, the "Public Safety Spectrum and Wireless Innovation Act," had wide bipartisan support, passing the committee by a vote of 21-4. (A current version of the bill is not available online, pending several amendments approved during the markup.)

A key provision of the proposed law would authorize the Federal Communications Commission to hold "voluntary incentive auctions" both to resolve impending capacity problems for wireless network operators and to fund a long-stalled nationwide public safety network. These auctions, which the FCC believes will reduce the risk of mobile broadband spectrum "exhaustion", would allow over-the-air TV broadcasters to return some or all of their existing allocation of frequency for auctions conducted by the FCC.

Under the proposed legislation, the FCC would share auction proceeds with the participating licensees. The rest of the money would be used to fund development of the public safety network, with any excess used to reduce the federal deficit.

Urgent need for spectrum reform
The bill comes at a critical time in the growth of mobile broadband networks. Mobile Internet use has exploded in recent years, spurred by the release of the Apple iPhone in 2007 and a tidal wave of smart phones, tablets, and other new mobile devices inspired by the iPhone's success. In the first four years of iPhone availability, for example, AT&T saw mobile data volume increase a dizzying 8,000 percent (PDF).

FCC Chairman Julius Genachowski, along with leaders in the mobile industry, insists that today's networks cannot support that level of growth without additional spectrum.

Usable radio frequencies, of course, are limited. New technologies are being developed that would make more efficient use of what's available and expand the range of spectrum that can be used. But in the meantime, urgent calls for freeing up spectrum by private, public, and consumer groups are increasing in volume.

Indeed, the specter of spectrum exhaustion was a key motivator behind AT&T's pending merger with T-Mobile USA. The deal would allow AT&T to rebalance the combined spectrum holdings of the two companies to better support existing 3G users, as well as accelerating AT&T's deployment of a nationwide 4G LTE network. (Currently, only Verizon offers nationwide LTE service.)

Attacking long-term and short-term spectrum reform
While the merger will certainly help, the longer-term need for spectrum is crucial. According to the FCC's 2010 National Broadband Plan mobile users will need 300 MHz of additional spectrum in the next five years (PDF).

The Rockefeller-Hutchison plan would go far toward meeting that goal, and proposes several important measures to head off spectrum exhaustion.

First and foremost is authorization for the FCC to conduct so-called "voluntary incentive auctions," which are principally a way to reallocate underutilized spectrum from over-the-air broadcasters to mobile broadband users. (The FCC currently lacks the authority to conduct such auctions.)

The auctions are seen as an efficient way to repurpose existing spectrum to better uses. Following the transition to digital television in 2009, broadcasters gave up their analog frequencies (including the D-block as well as spectrum now being used for Verizon's 4G LTE network). But few over-the-air stations are making full use of the spectrum they received in exchange.

By most accounts, over-the-air viewing has declined dramatically in the last decade as more consumers rely on cable, satellite, and fiber-based options for television programming. According to a recent survey by the Consumer Electronics Association, only 8 percent of U.S. households now rely on over-the-air broadcast.

So if broadcasters agree to participate in the incentive auctions, considerable blocks of underutilized capacity may be freed up for more valuable uses, in particular mobile broadband.

While broadcasters would not be required to participate in the auctions, the FCC is given authority in the proposed legislation to reclaim licensed spectrum to provide more attractive contiguous blocks for bidders. In that case, the broadcaster must be given replacement spectrum. This may change the television channel number for the broadcaster, and some funding would be set aside to compensate any disruption.

The National Association of Broadcasters, which worries that "voluntary" auctions may somehow become "involuntary," was tepid in its response to Wednesday's vote.

The other major source of underutilized spectrum is the federal government itself, which holds vast swaths of frequency. The bill directs the Department of Commerce's National Telecommunications and Information Administration to identify government allocations of spectrum that can also be auctioned off by the FCC.

Seeding innovation and mandating spectrum inventory
Designing and conducting these auctions, however, will take time. Even if the bill is passed quickly, it could be two years or longer before the voluntary incentive auctions actually begin. Longer term, a more comprehensive reform of spectrum management is needed to head off future crises stimulated by future technological innovation.

To that end, the proposed legislation would also encourage more efficient uses of existing spectrum. For example, the bill directs government research agencies, including the National Science Foundation, to expand grants for basic research in "transformative telecommunications" technologies. Using proceeds from the voluntary incentive auctions, research would be funded for promising developments including dynamic spectrum sharing, interference mitigation, and nanoelectronics.

The bill also directs the FCC to produce a complete inventory of existing spectrum allocations within 180 days of the bill's enactment. Knowing who has what licenses today would seem an essential tool to help the FCC perform its principal duty of managing spectrum in the public interest. But the agency has balked at repeated requests from both Congress and the While House to complete this task.

Most recently, Chairman Genachowski reassured Senator Olympia Snowe (R-Me) that a "baseline" inventory was already completed. But he gave no indication of when, if ever, the agency planned to release a complete inventory.

Finally, the bill looks to secondary spectrum markets as a way of reducing reliance on slow-moving FCC auctions. Currently, spectrum licenses can be transferred with FCC approval, but the licenses often come with severe usage restrictions that limit the liquidity of secondary markets. The proposed legislation directs the FCC to consider revised rules that would allow spectrum transfers that support the best and highest use of this critical and limited commodity.

New public safety network corporation
The bill also proposes the most comprehensive solution yet for an interoperable nationwide public safety network. Under S. 911, a new nonprofit corporation, the Public Safety Broadband Corporation, would be created to develop the public safety network. The corporation's start-up funding of up to $12 billion would come from future auctions of existing private and government spectrum. The corporation itself would be given outright a key allocation of frequency, the so-called D-block of the 700MHz band.

The fate of such a network, a high priority for law enforcement agencies, has been up in the air for several years. Most recently, the FCC tried in 2008 to auction off the D-block, but failed to attract any bidders. The goal was to find a private network operator to license the D-block, build the public safety network, and recover its costs by leasing its use to law enforcement agencies across the U.S.

But the new plan, consistent with the preferences of President Obama, would give the spectrum outright to the newly created nonprofit. The corporation, a public-private partnership, would develop the network and operate it on behalf of public safety users.

Network build-out would be funded by proceeds from the voluntary incentive auctions. But once the network is built, the corporation is designed to be self-sustaining, based on ongoing charges to federal, state, and local law enforcement users.

An important provision of the bill would also allow the corporation to lease excess capacity to private entities for commercial wireless use. This could help offset operating costs as well as providing a safety valve for capacity-constrained private networks.

Rough road ahead for S. 911?
The bill now moves to the full Senate for consideration. There, the proposal may encounter more significant resistance from Republicans and some Democrats, as well as from the Republican-controlled House.

The most significant objection is likely to be the bill's approach to the public safety network. Some in Congress still prefer to auction the D-block to a private network operator. "There can be no reasonable assumption that a quasi-government entity could maintain quality communications," said Sen. Jim DeMint (R-S.C.), who was one of four Commerce Committee members to vote against the bill. "Look at Amtrak and the Post Office."

Setting up a new corporation and funding it with auction proceeds may be seen by some legislators as an unwanted expansion of the federal government. Indeed, Sen. DeMint dismissed the proposed legislation as "a spending bill."

With the 10-year anniversary of the September 11 terrorist attacks looming, however, the bill's supporters are sure to keep the pressure on their colleagues for a definitive resolution to the public safety network stalemate.

For now, mobile broadband users are caught in the crossfire. Without explicit authority from Congress, the FCC cannot begin preparations for voluntary incentive auctions. While fewer consumers make use of over-the-air broadcast networks and mobile broadband applications continue to explode, the mismatch of allocated spectrum can't be addressed. Mobile broadband innovation, meanwhile, continues to inspire new applications and new uses.

S. 911 moves us closer to avoiding a mobile broadband crisis. But there's still a long way to go.