Updated on December 16th, 2011
The House recently approved spectrum legislation granting the FCC incentive auction authority. In his statement responding to the bill, Federal Communications Commission (FCC) Chairman Julius Genachowski recognized that the legislation would promote investment, innovation, job creation, and U.S. leadership in mobile broadband. He expressed concern, however, that the bill limits the FCC’s authority to allocate spectrum cleared by auction on an unlicensed basis and restrict auction eligibility.
Although I appreciate the FCC’s desire for unlimited authority, it isn’t surprising that the House has proposed to limit the scope of the FCC’s delegation over spectrum policies granting special market privileges to favored technologies, services, or industry groups. Rather than make things better, FCC attempts to fine tune the market through government privilege typically result in unintended consequences that make things worse. Read the rest of this entry »
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Updated on May 10th, 2011
Mahad: Okay, you go and create a distraction.
Mila: Then what?
Mahad: By then I should have the second half of the plan figured out.
Skyland (2005)
Two weeks ago NAB released a paper claiming there is no spectrum crisis (pdf here). Even though the paper lacks any relevant, quantifiable analysis, it somehow continues to get cited in articles and in Congress. Yesterday even an IEEE publication stooped to parroting NAB’s unsupported claims (see article here). According to the IEEE blog, the crux of NAB’s argument is the lack of a “spectrum inventory.” Waiting to make more spectrum available while conducting a lengthy “spectrum inventory” is a distraction, not a plan.
Broadcasters are keen to focus on the spectrum use of others to distract Congress from the broadcasters’ own Achilles heel: broadcasters use the largest amount of the most valuable spectrum to serve only about ten percent of the population. As I’ve blogged before, broadcasters primarily use their spectrum to take advantage of government subsidized must carry rights. Without must carry rights, most broadcasters would quickly be out of business and would no longer have any use for their spectrum at all. Using spectrum to access a government subsidy is hardly an efficient use of spectrum.
It’s not surprising that the broadcasters would rather have the government look at the spectrum use of others rather than the broadcasters’ own. The problem for NAB is that we already have more than enough information to know that the broadcast spectrum must be made available for mobile use if America is serious about satisfying consumer demand for mobile services. Here’s what we know already:
- The broadcast spectrum is the only large, contiguous block of spectrum in the prime frequencies for mobile use.
- Mobile use is exploding now and will exhaust currently available mobile spectrum.
- Broadcasters can be repacked at the expense of mobile providers without harm to the services broadcasters already offer (especially given that the vast majority of their profits are the result of must carry rights rather than spectrum use).
- The broadcasters’ current services are a paragon of inefficient spectrum use.
Given what we know already, we don’t need any additional information from a spectrum inventory to move forward on incentive auctions now. No matter how inefficient other spectrum users may be, we already know they don’t have a large, contiguous block of spectrum in prime mobile frequencies that can be made available quickly and at no cost to consumers. The broadcasters do. That’s why Congress should focus on incentive auction legislation now rather than NAB’s groundless distractions.
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Updated on April 26th, 2011
It’s ironic that the FCC is planning on giving the industry a failing grade again this year on broadband rollout (see Electronista article here). While the FCC points its finger at industry, the FCC has been busy adopting policies that discourage broadband deployment. Let’s take a look.
Net Neutrality: Last December, the FCC adopted net neutrality regulations (see order available here). These rules shift potential Internet revenue from service providers – the companies that actually deploy broadband infrastructure – to software companies and device manufacturers. The obvious result is to discourage investment in costly broadband infrastructure.
Incentive Auction Authority: Making more spectrum available through incentive auctions would promote significant broadband deployment. The FCC is now working toward this goal, but in 2010, the FCC made net neutrality its top priority rather than incentive auctions. Had the FCC focused on the need for more spectrum in 2010, the FCC might have obtained incentive auction authority already by striking a deal with Congressional Republicans opposed to net neutrality. Instead, the FCC is fighting with broadcasters over incentive auctions in 2011, with the election cycle looming ahead.
Universal Service: Universal service reform is one of the most important regulatory actions the FCC could take to promote broadband deployment. But, while the FCC was busy working on net neutrality regulations last year, universal service reform languished, and another opportunity to promote broadband deployment now was lost.
Roaming: The FCC found in 2007 (see order here), that mobile wireless roaming regulation discourages infrastructure-based broadband deployment if roaming is required in markets in which the requesting service provider holds spectrum licenses. In 2010, however, the FCC changed its mind (see order here), and in 2011 (see order here), it imposed new roaming requirements on broadband service providers. It’s difficult to see how allowing one provider to use another provider’s infrastructure rather than build its own network will promote more infrastructure deployment.
If broadband deployment is lagging, the FCC should point the finger at itself. The FCC needs to get back to the task of implementing policies that promote broadband deployment rather than imposing heavy handed regulation. For starters, the FCC can focus on making more spectrum available and reforming the Universal Service Fund. That would go a long way toward reversing the FCC’s troubling trend of discouraging broadband deployment.
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Updated on February 3rd, 2011
“Go on take the money and run.” Steve Miller Band.
The National Association of Broadcasters (“NAB”) last Friday sent to the Chairmen and ranking members of the Senate and House Commerce Committees a letter attacking Time Warner for warehousing spectrum in the AWS-1 band. The letter implies that, because Time Warner is warehousing spectrum, broadcasters shouldn’t be subject to an incentive auction. Those who live in glass houses (in this case its more like cellophane) shouldn’t throw stones: The broadcasters have been warehousing their spectrum since Congress passed “must carry” laws.
Without the implied government subsidy of must carry laws, broadcasters would have been out of business years ago and television spectrum would have already transitioned to more valuable uses. As a result of the success of cable television, it had become clear by 1992 that broadcasters lacked a viable business plan. Because fewer and fewer people were watching broadcast television over the air, broadcasters were having a more difficult time selling advertisements. To prop up the dying broadcast industry, Congress decided to force cable providers to carry broadcast channels on their cable systems. Forced cable carriage ensures that broadcasters reach enough “eyeballs” to satisfy advertisers, which is how broadcasters make money. Because only about 10% of the population actually watches television transmitted over-the-air, broadcasters couldn’t sell enough advertisements to survive without “must carry” subsidies – which means that broadcasters are now using their spectrum solely to reap the benefits of “must carry” laws rather than serve consumers.
In other words, an industry that uses spectrum so it can use cable networks – indeed, an industry that owes its continued existence to cable – is now lobbing stones at Time Warner for warehousing spectrum. That’s counterintuitive. Of course, broadcasters have been enjoying the use of free spectrum and “must carry” rights so long they’ve probably forgotten that their spectrum doesn’t serve an actual market. I bet they’d remember if Congress eliminated their “must carry” rights. There would then be no need for incentive auctions because there would be no broadcasters to “compensate,” and the billions that would otherwise be funneled to the broadcasters through such auctions could be used for a more worthy subsidy, like providing broadband to unserved areas.
NAB would better serve broadcasters by advising them to support incentive auctions. Starting a debate about the efficient use of spectrum can only spell trouble. Broadcasters use large swaths of extremely valuable spectrum to serve 10% of the population using decades-old technology (development of the ATSC standard began in 1987) and rely on government subsidies to survive. In contrast, wireless providers are spending billions upon billions to deploy the latest technologies to hundreds of millions of consumers who are clamoring for more and more bandwidth. Broadcasters should take the money and run.
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