Political junkies may be fixated on the Republican primary calendar, but most Americans, including President Obama, the basketball fan-in-chief, turned their attention to the annual round of March Madness that is the NCAA men’s basketball championship tournament. The only thing tougher for fans than having made it through security at the game attended by the President and British Prime Minister David Cameron may have been finding enough bandwidth to send friends that camera phone picture of the championship-winning shot in New Orleans.
Anyone who has ever been to a large sporting event or concert knows how hard it is to use the mobile devices that we all love so much to access the Internet, make calls or send messages. The crush of so many people trying to do similar things at the same time can make for frustratingly slow speeds as the nearby bandwidth is exhausted.
Over the past few weeks, millions of people also checked scores, updated their brackets and watched games through the March Madness On Demand viewing platform using wireless devices. Last Thursday, Turner Sports announced that NCAA.com and March Madness Live averaged 1.1 million daily unique visitors and averaged 473,000 daily uniques on mobile.
The more we come to rely on smart phones, tablets and other wireless devices, the more our day-to-day mobile experiences will feel like those frustratingly slow connection attempts at large events if federal policymakers don’t rapidly increase the amount of spectrum available for wireless communications. The most practical and common-sense way to do this would be to allow companies to agree on deals that will enable the most efficient use of this limited resource and hold incentive spectrum auctions that are open to all qualified bidders.
To meet this looming spectrum shortage, Congress, the Federal Communications Commission and other Federal policymakers must develop a more imaginative approach when addressing telecommunications issues. The last time the federal government overhauled telecommunications rules was in 1996, and the bill Congress passed and President Clinton signed only mentioned the Internet once. In those days cable news channels such as MSNBC and Fox News were new innovations. Palm Pilots that docked onto a computer to send and download email were the smartest handhelds commercially available and checking email involved waiting for the cacophonous sound of static to give way to a steady tone and the welcoming voice AOL employed to tell users “you’ve got mail.”
In the last 15 years, the wireless industry has grown in unimaginable ways. Television content, software applications, music and movies have migrated to the Internet and consumers regularly access that content using mobile devices. The wireless industry has become a beacon for our struggling economy. It is driving investment, fueling innovation, powering job creation and economic growth. The industry is also the cornerstone of tomorrow, critical to our country’s ability to maintain our leadership position in the world economy. The wireless industry is working, for the economy and for consumers – and it’s in wireless users’ interest that it stays that way.
Spectrum is to the wireless industry what oil is to transportation. We don’t have to drill for it, but we do have to conserve it and allocate it to its highest needs. Ensuring more spectrum is available for all players is critical to keeping wireless broadband affordable, innovative and working for consumers. Smartly tackling the spectrum crisis and ensuring continued investment will benefit Americans across the nation.
Public leaders in the 1990s couldn’t imagine what was on the horizon, and the choices consumers have today make that period seem as quaint as the days of bunny-eared television and rotary phones. As today’s policy makers make decisions that will greatly impact the future of this dynamic industry, that recent history is cause for humility. Laws put in place today to regulate the wireless industry may be outdated tomorrow, because technology is constantly evolving. Today’s rules should encourage innovation and competition while remaining flexible enough to allow for unforeseen market needs.
Nobody knew that Kentucky would claim this year’s championship trophy, and nobody can predict who the winners will be in the next generation of telecommunications and technology competition. A corporate giant today could be an almost forgotten name tomorrow in this era where products we can’t live without rapidly find their way to the dustbin of desk drawers, the graveyards of unneeded gadgets. Like the NCAA, the FCC should set the rules, let those who qualify into the arena and stand back while the players play. If the next few years are anything like the last 15, the action will be fantastic.
Speaking of spectrum and mobile broadband, Senator Mark Warner has a good piece for Wired on why the airwaves matter more than ever:
We all know the United States, the birthplace of the internet, is falling behind the rest of the developed world in terms of broadband speeds and access. The Obama Administration and the Federal Communications Commission have been pushing for more commercial access to spectrum, yet it is increasingly clear that we do not have a long-term plan to manage this limited resource.
Earlier this year, the internet exploded with consumer concerns about proposed legislation intended to curb online piracy. Without a real spectrum plan, we risk reaching a tipping point where the same forces that spontaneously ignited during the PIPA/SOPA debate are stifled — along with our nation’s economic ability to further innovate and grow.
Despite having its plans scuttled by the FCC, the LightSquared saga continues. As The Hill‘s Brendan Sasso reports:
The Federal Communications Commission (FCC) has provided thousands of internal documents to House Republicans who are investigating LightSquared.
The records given to the House Energy and Commerce Committee are related to the FCC’s review of the wireless start-up. Republicans have questioned whether the company received special treatment from the Obama administration.
Meanwhile, President Obama’s nominees for the FCC, Ajit Pai and Jessica Rosenworcel, continue to be blocked by the Senate. Whether the documents released to Congress will unblock their path to the Commission remains to be seen.
In a post for The Hill‘s Congress Blog, our Honorary Chairman Rick Boucher warns of the “legislative black hole” when it comes to mobile broadband legislation:
If we are going to keep the wireless industry growing and encourage the build-out of a more powerful Fourth Generation wireless infrastructure across America, spectrum auctions must be properly designed. Rigging the system so that key stakeholders are barred or discouraged from participating, or spectrum availability is selectively curtailed, could cost our country billions in much-needed revenue and deal a severe blow to innovation from one of our most vibrant industries. A recent study from Deloitte Consulting estimates that deploying 4G networks across America could create as many as 771,000 jobs. That’s a lot of jobs, but it can only happen if wireless providers have the spectrum they need to power the networks they build.
Today, the House of Representatives is voting on the “FCC Process Reform Act,” a bill put forward by Rep. Greg Walden [R-OR] aimed at bringing the Commission’s process up to speed with the pace of innovation. In anticipation of the vote, Rep. Walden took to the pages of Politico in order to express why reform is so urgently needed. As he writes:
[P]rocess at the FCC is broke and does need fixing. This is not the fault of any one administration or any one FCC chairman. Indeed, the current chairman, Julius Genachowski, has improved the commission’s process in a number of ways. But it has fallen into sloppy habits over the years, and more needs to be done.
Sometimes the FCC acts before thoroughly examining whether regulation is needed. It’s now time to stop putting the regulatory cart before the horse. That’s why this bill requires the FCC to survey the marketplace, identify a failure and conduct a cost-benefit analysis before imposing rules.
The commission now frequently proposes to regulate without publishing the specific wording of a tentative rule. So public input can’t be specific. The result is rules that could prove less well-vetted and more likely to have unintended consequences. My bill would require the FCC to publish the specific text.
Not even the House of Representatives operates that way.
There’s no denying the FCC plays a vital role in American government. But as with most government agencies, readiness to act is always an issue. As we all know, technology moves at breakneck speed. New innovations, new disruptions to business models, arrive each and every day. Smart reforms, like those presented by Rep. Walden, are a vital first step in helping the Commission remain effective.
From allocating new spectrum for mobile broadband, to examining proposed mergers between companies aimed at better serving consumers, the FCC has a lot on its plate. If the Commission has any hope of keeping up with the blistering pace of technology, reform is absolutely necessary.
Via Brendan Sasso of The Hill, the House Energy and Commerce Committee is set to tackle FCC reform in the coming weeks:
The legislation would require the FCC to identify a market failure, consumer harm or regulatory barrier before adopting new regulations. The agency would have to then demonstrate that the benefits of its proposed regulations outweigh their costs. The bills would codify the FCC’s informal “shot clock” for its reviews so parties could know when to expect decisions.
The bills would also restrict the types of conditions that the FCC could impose on corporate mergers, only allowing the agency to address specific harms related to the proposed deals. Some lawmakers criticized the FCC for requiring Comcast to make commitments, such as offering channels aimed at racial minorities, to receive approval for its purchase of NBC Universal last year.
Broadcasting & Cable’s John Eggerton reporting on a speech made by FCC Commissioner Robert McDowell yesterday at the Mobile World Congress event in Barcelona:
McDowell was not opposed to Congress limiting the FCC’s ability to condition the auction. He has long complained of the conditions on the FCC’s 2008 auction of the first tranche of broadcast spectrum reclaimed in the DTV transition. Those are widely believed to have discouraged bidders and reduced revenue from the auction.
“The lesson learned from that auction and others is that when governments attempt to conduct social and economic engineering by foisting unnecessarily complicated mandates on the use of spectrum, their efforts frequently backfire,” McDowell said. He said he thought the FCC could get it right this time.
Over at CNet, Larry Downes has a must-read article on America’s looming spectrum crisis and the challenges ahead:
Short- and medium-solutions to the spectrum crisis are possible, but won’t come easily. Avoiding disaster in the mobile ecosystem requires a combination of smart technology investments, innovative business practices, and policy reforms likely to offend vested interests.
Each is valuable on its own, but coordination will be crucial if we are to improve spectral efficiency enough to keep mobile users going while we wait for the incentive auctions to run their course.
Even if we get through the next few years, it’s clear that staving off future crises will require radical changes to spectrum management. The patchwork quilt woven by 85 years of quixotic and often political decision-making has left U.S. airwaves dangerously inflexible and unnecessarily fractured. The accelerating pace of technological innovation is on a collision course with command-and-control assignment of spectrum. Something has to give.
This Thursday, February 23, TechAmerica will be holding a Congressional Briefing on Spectrum Allocation and Rural Development at the U.S. Capitol Building in Washington, D.C. The participants are Jonathan Adelstein, Administrator of the USDA Rural Utilities Service; Dr. Anna-Maria Kovacs, Visiting Senior Policy Scholar for the Georgetown University Center of Business and Public Policy; Phillip Junker, Executive Director-Strategic Alliances for Verizon Wireless; and Pete Ihrig, Senior Vice President of CGI.
Anyone whose smart phone has dropped a call has seen evidence that wireless data use is surging in the US, so much that we are rapidly running out of spectrum, the bandwidth necessary to support our mobile needs.
The evidence is everywhere that America’s mobile economy desperately needs an influx of this valuable, limited resource. Start with the new Cisco report, which estimates North American mobile Internet traffic will increase from 119 terabytes/month in 2011 to 493 in 2013 and 1,964 in 2016 (see chart below).
Cisco is hardly alone in documenting our rapid mobile migration. Last July, a global analysis found that mobile networks in North America are filled to 80 percent capacity.
The same study found that nearly 40 percent of individual mobile base stations already face capacity issues. In laymen’s terms, that’s when your call fails or your smartphone’s Pandora stream suddenly stops because the cell tower’s radio transmitter can’t process all the data from nearby subscribers.
Against this flood of evidence about our swelling mobile data demands, spectrum auctions have been mired in legislative procedure. Thankfully, Congress recognized the urgency of the issue and included language in the payroll-tax extension bill that ensured critical spectrum auctions would be conducted in an open process by not allowing the Federal Communications Commission to exclude some wireless providers from participating — perhaps even those who would be willing to pay the most for spectrum.
Almost 20 years ago, the FCC set aside certain spectrum auctions for “designated entities” as part of its 1996 auctions. All other companies were barred.
The result: More than half of the 493 licenses from that auction were later returned to the government for non-payment.
Given that auction proceeds go to the U.S. Treasury (in other words, taxpayers), Congress has delivered a win for consumers. Not to mention economic growth, innovation, and broadband deployment. The legislation means a true level playing field — all auctions open to all qualified companies — and in the end, that’s the best course we can take to keep our wireless economy vibrant and growing.
Yesterday, it was announced Congress had reached an agreement to extend the payroll tax cut. Included was legislation on spectrum auctions. Our thoughts (and applause for Congress) about the spectrum legislation are here. Meanwhile, over at The Hill, Brendan Sasso reports on President Obama’s comments following the announcement:
“[The legislation] includes a critical element in the plan I outlined in the State of the Union to out-innovate the rest of the world by unleashing mobile broadband, investing in innovation, and building a nationwide public safety network,” Obama said. “It will mean a stronger economy and hundreds of thousands of new jobs.”
While today’s House Subcommittee on Communications and Technology hearing on the “The Budget and Spending of the Federal Communications Commission” examines the FCC’s programs and finances, it’s important to recognize that the Commission is basing its work on a shaky foundation.
In 1996 — the last time telecommunications laws were overhauled — Google didn’t exist, the Internet had 100,000 websites, and most people were still exhilarated by the buzz of a successful dial-up Internet connection. Wireless communications were limited to basic cell phones and Skypagers, and the newly released Palm Pilot PDA had to be docked onto a computer to download email.
Today, there are hundreds of millions of websites; television is available via the Internet; the Internet is available on cell phones; and phone calls are made using cable TV infrastructure. Telecommunications networks have converged beyond anyone’s imagination.
No one would use a 16 year-old laptop, cell phone or computer server. Yet the FCC operates with a 16 year-old operating system, an anachronistic governing statute that pre-dates Google and smart phones and undermines today’s innovation ecosystem. For the sake of tech and telecom sector growth and creativity, the IIA encourages policy makers to modernize the government for an Internet age and consider that less is often more when it comes to regulating a rapidly evolving industry.
The House and Senate appear to have reached a deal on extending the payroll tax cut, and as The Hill‘s Brendan Sasso reports, spectrum auctions are included:
The spectrum legislation would authorize the Federal Communications Commission (FCC) to auction airwaves that currently belong to television broadcasters, splitting some of the revenue with the stations that choose to participate.
The spectrum is potentially worth billions of dollars to wireless carriers, which are struggling to meet the growing data demands of smartphones and tablet computers.
There’s no word yet on specifics in the spectrum auction proposal.
Calls for humbler government are as old as the republic. In this era of frenzied media coverage and hyperpartisan dialogue, few would apply the humble label to anything related to the federal government. It’s time for at least one agency to heed the call.
As it writes rules for the availability of additional spectrum through incentive auctions, the Federal Communications Commission should apply a light touch — a truly humble approach — to the wireless sector, which is a major contributor to our national economic recovery.
In a letter yesterday to 20 congressional leaders, a group of wireless providers led by Sprint and T-Mobile essentially called on Congress to grant the Federal Communications Commission (FCC) power to pick winners and losers in the wireless market. From the letter:
Congress’ challenge today is to authorize the FCC to conduct inventive auctions to bring additional spectrum to market while preserving the FCC’s ability to manage auction eligibility and structure to promote the benefits of vibrant wireless competition for consumers and the economy.
To this end, the letter argues the FCC should be able to take into account the amount of spectrum carriers have when it comes to crafting spectrum auction rules – in other words, not an open, competitive auction at all.
Given the unprecedented adoption of mobile broadband, the upcoming spectrum auctions are simply too important to limit the involvement of any bidder, be they large or small. The development of next-generation wireless services, and the ability of all carriers to obtain the necessary spectrum to improve service and keep up with customer demand, is critical not just for the health of the wireless industry, but for America’s economy.
While it’s not surprising that Sprint, T-Mobile, and other wireless providers would want to inhibit the nation’s two largest carriers from participating in full in spectrum auctions, doing so would severely limit the amount of revenue the government would receive in return for spectrum sold. Contrary to claims in the letter to Congress, the current House Bill (H.R. 3630) regarding spectrum auctions will ensure a level playing field continues to exist. It will also maximize auction proceeds, bringing American taxpayers the full benefit from the sale of one of our most vital public resources.
History has shown that when the FCC has tried to pick winners and losers in the wireless market, American consumers have lost. Past attempts by the Commission to favor certain bidders and/or impose rigid regulations on auction winners have drastically diminished auction proceeds, left major blocks of spectrum unused, and led to what FCC Chairman Julius Genachowski himself has labeled “America’s looming spectrum crisis.”
The simple truth is America’s wireless industry continues to be fiercely competitive (in fact, when it comes to spectrum holdings, letter signee Sprint is in arguably the best position due to its partnership with Clearwire). Allowing the FCC to impose conditions on spectrum auctions will not make the industry more competitive. And the spectrum critically needed by all providers to keep up with increasing demand will not be put to its full use, leading to spectrum shortages, reduced investment and innovation, and higher prices for consumers.
Only through truly competitive, open spectrum auctions will America’s wireless industry continue to thrive. After all, the best way to ensure competition is to encourage everyone to compete.
At the Wall Street Journal, columnist L. Gordon Crovitz breaks down the current spectrum debate in Washington and calls on the FCC not to pick winners and losers:
A House bill would require the FCC to allow all telecommunications companies to participate in the auction, without regulators picking winners and losers before the bidding even begins. The worry is that the FCC is reverting to its old practice of handpicking preferred owners of broadband, a form of industrial policy that’s bad on principle, and would also reduce the fees going to the Treasury by limiting bidders.
The FCC is lobbying against this provision, even though an agency spokesperson assured me in a phone interview that “the FCC has no intention of keeping either AT&T or Verizon from participating in the auction.” That’s good, but the market-leading firms might still be forced to sell back some of their bandwidth to meet regulatory views about antitrust.
The FCC is trying to manage competition among telecommunications providers using 1970s-era antitrust theories. Almost every American can choose among four or five telecommunications providers, not just Verizon or AT&T.
You can read our own Bruce Mehlman’s take on the FCC and spectrum auctions here.
The Hill‘s Brendan Sasso reports that a proposed deal between Verizon and a group of cable companies has earned the attention of regulators:
Verizon agreed in December to buy wireless airwave licenses, or spectrum, from a group of cable companies, including Comcast and Time Warner. Under a separate deal announced simultaneously, Verizon and the cable companies agreed to cross-sell each other’s services.
Sen. Herb Kohl (D-Wis.), chairman of the Senate Judiciary subcommittee on Antitrust, Competition Policy and Consumer Rights, announced on Wednesday he plans to hold a hearing to examine how the deals will affect consumers.
The Justice Department has acknowledged it is conducting its own probe of the agreements, and the Federal Communications Commission (FCC) is gathering evidence to decide if it should block the transfer of the airwave licenses.
Via Gautham Nagesh of The Hill, Congressional efforts to reform the Federal Communications Commission have received support from a major trade group:
U.S. Telecom, which represents both large and small telecom providers, sent a letter to panel Chairman Fred Upton (R-Mich.) applauding the scheduled markup next Tuesday of two bills from Telecom subpanel Chairman Greg Walden (R-Ore.) that would reform the way the FCC does business.
“As Communications subcommittee Chairman Greg Walden has indicated, the bills being scheduled for markup Tuesday will ensure that best practices become a part of statute, that transparency will not depend upon who is serving as chairman, and that there will be consistency of application and predictability among administrations,” wrote U.S. Telecom President Walter McCormick Jr.
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