Spectrum Deal of the Day

By Brad

Courtesy of Jeff Baumgartner of Light Reading:

Dish Network Corp. has agreed to pay US$700 million to Cablevision Systems Corp. and its AMC Networks unit to settle a legal spat over the defunct Voom HD service, but there’s a big wireless broadband angle in there, too. About $80 million of that money will go toward Dish’s purchase of Cablevision’s 500MHz of Multichannel Video and Data Distribution (MVDDS) licenses covering 150 million people in 45 metro U.S. areas, including New York, Los Angeles, Chicago, San Francisco and Philadelphia.

Acquisitions

By Brad

At the Washington Post, Hayley Tsukayama reports that Sprint, which is currently in the process of being purchased by the Japanese wireless company Softbank, is looking to make an acquisition of its own:

Sprint is moving to buy an addition stake in Clearwire, giving it control of the broadband firm.

Sprint already owns 48 percent of Clearwire — a partnership that has allowed Sprint to build out the 4G network it needs to compete with AT&T and Verizon.

If the deal goes through, Sprint’s spectrum holdings would increase dramatically. Yet another example of secondary market transactions being one of the fastest ways to get spectrum to market.

FCC Approves Action on WCS

By Brad

Today, the FCC approved a proposal put forward by AT&T and satellite radio provider Sirius XM aimed at freeing up spectrum from the “WCS band” for mobile broadband. Over at the AT&T Public Policy Blog, Vice President of Federal Regulatory Joan Marsh writes about what that will mean for the company’s customers:

We expect to commence deployment of LTE infrastructure in the band in as early as three years, allowing us to enhance our wireless broadband services. Our customers will also win, as additional spectrum capacity becomes available to support surging mobile Internet usage.

Chalk this one up to the government and private sector working together to benefit consumers.

Three Words: Faithful, Fair, Simple

By Jamal Simmons

In a speech at CTIA’s MobileCon on Wednesday, FCC Commissioner Ajit Pai talked spectrum – specifically, what has worked (and not worked) in the government’s efforts to free up more airwaves for wireless use.

As many would expect from this Republican member of the Commission, Pai embraces the power of the free market when it comes to providers being able to meet consumer demand for more airwaves. He points out:

Historically, the FCC used comparative hearings — better known as “beauty contests” — or even lotteries to assign licenses. In other words, the agency either had to choose political favorites or leave it to chance — a lose-lose proposition.

The big change, Pai noted, came in 1993, when Congress — and President Clinton — authorized the auction process for spectrum. Calling this move a “win-win,” Pai said:

Not only do [auctions] allocate spectrum more efficiently, but they also have raised over $50 billion for the federal government.

For further proof, Pai focused on two previous auctions — one in 2006, the other 2008 — that together provided 142 MHz of spectrum for mobile broadband. And that boost in airwaves, Pai went on to say, has greatly benefited the U.S. as a whole:

How important have these auctions been? They are the main reason why the United States today leads the world in 4G deployment. Verizon Wireless is using the C-Block spectrum it obtained in [2008’s] Auction 73 to roll out 4G LTE service nationwide. AT&T provides 4G services over B-Block spectrum from Auction 73 as well as spectrum from [2006’s] Auction 2006. MetroPCS uses spectrum from Auction 66 to provide 4G LTE service. So does Leap Wireless. And soon, so will T-Mobile.

That’s obviously a lot of wireless expansion — not to mention a healthy boost to competition — from just two auctions, but as Pai himself noted there’s still much work to be done, especially when it comes to closing America’s digital divide. Wired broadband can only reach so many people before it becomes economically unfeasible. That means, if the U.S. is going to achieve the ambitious goal of bringing broadband to every corner of our nation, mobile broadband is the way to go.

According to Pai, the key to making it all happen is for the Commission to stay on the schedule it has already laid out for spectrum auctions. But he added:

I think three principles should [also] guide our work as we set up these auctions. Specifically, we must remain faithful to the legislation. We must be fair to all stakeholders. And we must keep our rules as simple as possible.

That’s exactly right, and I hope Pai and the Commission are able to take lessons from past successes to shape the role that the government should play going forward. Making the goals of the National Broadband Plan reality is simply too important — to the economic health of America, to the promise that everyone in our nation should have an opportunity to succeed — for us to fail. The future of broadband is up in the air, and it will take smart spectrum management and reallocation by the FCC to help tap mobile broadband’s full potential.

Unleashing Mobile Capabilities and the Infrastructure That Supports It

By Bruce Mehlman

Everyone likes the beach, but unless you live right on it, you have to get there somehow, and that generally means driving—using the essential infrastructure that America built over decades to connect our country. Likewise, we all like and often need to use our smartphones to access information, social media, and other types of applications—but this, too, relies on an infrastructure that is often invisible but no less important. Without it, wireless technology would simply not work.The wireless infrastructure association—PCIA—gathered in Orlando earlier this week. Their meeting offered a good opportunity to take a hard look at the industry’s infrastructure, the businesses supporting it, where it is going, and what we need to do to ensure that wireless technology continues to improve and become more reliable.

We have become used to having all that wireless devices can offer in the palm of our hand. But just as most Americans don’t think about the structural integrity of the bridges and highways we travel, many don’t think about the infrastructure necessary to support mobile broadband and the wireless devices it enables. As Jonathan Adelstein, the newly named President and CEO of PCIA, notes, “once you are used to broadband, there is no going back.” But even as we expect better service, faster delivery, and continuing innovation, the underlying infrastructure that makes wireless work has to be expanded and upgraded to support our needs.

Demand for wireless data—voice, video, games, apps, etc.—is growing exponentially. Data traffic grew by 300 percent last year and is expected to rise 16-fold in the next four years, driven by the rapid adoption of smartphones and tablets. That high demand can be met only by a modern wireless network that can handle ever higher levels of data traffic and provide the reliable service that consumers demand. The increasing demand for wireless technology creates capacity constraints on the wireless networks. And that’s an issue for everyone. As FCC Chairman Julius Genachowski noted at the conference, wireless dead zones are both quality of life and public safety issues. It’s critically important to address this problem now.

Not only do we need to make more spectrum available for wireless innovators and providers, but we need to continue encouraging broadband providers to upgrade and deploy additional physical infrastructure to support wireless.  Wireless infrastructure includes towers and new technologies such as small “femtocells” and distributed antenna networks that make more efficient use of the spectrum we already have. As was discussed in Orlando, spectrum auctions are also an important way to get spectrum into the hands of users quickly.

The wireless industry is currently upgrading to a technology called “4G LTE,” or fourth-generation. For mobile users, these networks also have the potential to expand mobile phone capability, offering faster connections, new mobile services and applications, and improved coverage.

These improvements, however, can only occur if networks are built, maintained and upgraded. Today the wireless industry is an investment juggernaut, deploying an estimated $27 billion in capital improvements in only the last year.  That investment sustains hundreds of thousands of jobs nationwide. It means jobs for those who deploy and upgrade these new systems and who are hired to build network infrastructure across the country. It also means jobs for network operators and those who sell smartphones and associated technology. The tasks involved in these jobs include everything from digging foundations and building the towers to designing the fiber network that will sustain the wireless needs of the future. This “job count” does not include the many ancillary jobs that wireless indirectly supports.

Fortunately, building high-speed networks is a top priority for both the private and public sector. If we do not repurpose additional spectrum or if we fail to build towers and other infrastructure investment will suffer, and the wireless ecosystem will be affected – including the quality of your wireless experience. Thus, policymakers should encourage investment and provide a regulatory environment that favors the digital revolution.

As I recently said in a statement that you can check out here, solving the wireless spectrum crunch is the great infrastructure challenge of our day. Investment in technology and the infrastructure that supports it can lead not only to jobs and to economic development across the nation but can also provide unforeseen technology and services that benefit consumers.

From the FCC to the NAB

By Brad

At the National Journal, Juliana Gruenwald reports a former FCC bigwig has a new gig:

Just months after leaving the Federal Communications Commission, Rick Kaplan has been hired by the National Association of Broadcasters.

Kaplan will be joining NAB as its executive vice president for strategic planning, a new post that will be charged with overseeing spectrum and innovation policies. He held several posts since joining the FCC in 2009 but most recently served as chief of the Wireless Telecommunications Bureau.

Exploring a Higher Bid

By Brad

Yesterday, T-Mobile and MetroPCS announced their intention to merge into one company. Today, Aaron Kirchfeld and Scott Moritz of Bloomberg report, fellow carrier Sprint is prepping a counter-offer for MetroPCS:

Sprint is crunching the numbers and holding talks with its advisers to weigh the feasibility of a higher offer, said the people, who asked not to be identified because the talks are private. The Overland Park, Kansas-based company began re- evaluating a MetroPCS offer a few weeks ago, before the T-Mobile deal was made public, and could decide as early as next week whether to pursue an offer, two of the people said.

When T-Mobile Met Metro PCS

By Brad

Big news in the wireless world today as providers T-Mobile and MetroPCS have agreed to a merger. At The Hill, Brendan Sasso reports:

Deutsche Telekom, the parent company of T-Mobile, agreed to buy MetroPCS on Wednesday, a move that will solidify T-Mobile’s standing as a national competitor in the wireless marketplace.

MetroPCS shareholders will receive $1.5 billion in cash and 26 percent ownership of the combined company, which will keep the T-Mobile name.

Secondary market transactions like this one are the fastest way to get spectrum to market while the FCC focuses on incentive auctions, spectrum sharing and making progress toward reallocating government spectrum not being put to its highest and best use.

The proposed merger will need regulatory approval to go forward. The press release from T-Mobile and Metro PCS is after the jump.

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IIA Calls Freeing up Underperforming Spectrum the Great Infrastructure Challenge of Our Day

By IIA

Getting framework for spectrum incentive auctions right will unlock economic growth and hugely benefit consumers

September 28, 2012 – In response to the Federal Communications Commission (FCC) adopting a notice of proposed rulemaking (NPRM) on spectrum incentive auctions, Bruce Mehlman, co-chairman of the Internet Innovation Alliance (IIA), a broad-based coalition supporting broadband access and adoption for all Americans, released the following statement:

“This is a terrific start. With the right policy framework in place, this proceeding will meaningfully add to the spectrum available for commercial broadband applications, a true boon to our economy.

“Unlocking our underperforming spectrum is the great infrastructure challenge of our day. Those nations who succeed will give their innovators and entrepreneurs a tremendous leg-up on the global stage.  The new services and applications enabled by increasing bandwidth will benefit consumers tremendously.

“Yet no one can rest on their laurels. This is only a beginning. Demand for bandwidth and creation of content continue to exceed supply, and the Administration and Congress should redouble their efforts to make additional bands of spectrum available to broadband providers.”

Keeping America’s Lead in Mobile Broadband

By Brad

Deloitte has released a startling new report that exams how a lack of spectrum available for wireless use is threatening America’s lead in mobile broadband. Among the report’s findings:

• Policymakers need to address the potential spectrum deficit as well as new approaches to spectrum management.

• Investment in mobile broadband over the next four years could potentially increase the GDP by up to $151 billion and support over 700,000 jobs.

• Despite the private sector and the government working to address a spectrum shortage, demand for mobile broadband may “overwhelm the system,” especially as usage branches out from consumers to other sectors such as cars, traffic management, and health care.

Also in the report is what Deloitte calls the “Mobile Communications National Achievement Index,” which tracked wireless in 20 countries from 2004 to 2011. As Deloitte notes, for much of that span the U.S. enjoyed a comfortable lead over other countries when it came to wireless investment and usage. But in recent years, other countries have gained ground, which means if the U.S. is going to continue leading the world it will mean “maintaining a robust and adaptable wireless infrastructure capable of offering new services and meeting growing demand.

The full report, “Airwave overload?: Addressing spectrum strategy issues that jeopardize U.S mobile broadband leadership” is definitely worth digging in to. You can find it at Deloitte’s website in handy PDF form.

The National Grange on Telemedicine

By Brad

Over at their “View From the HIll” blog, rural organization the National Grange (which is one of our members) has a good post on mobile broadband, health care, and how more work needs to be done to bring the full power of telemedicine to rural areas:

The possibilities of mHealth are exciting, and the potential that this technology has to improve health and quality of life for rural Americans is vast. But as of now, we just don’t have the necessary ingredients to accomplish these goals. Access to high-speed wireless broadband is still not universal in this country, as rural Americans are well aware. Not only is our nation’s wireless network infrastructure lacking, but spectrum is in high demand.  In order to deliver reliable, fast wireless broadband service to people who need it, sufficient spectrum must be made available through any means necessary.

An Update on the Auctions

By Brad

At Broadcasting & Cable, John Eggerton has an update on the FCC’s spectrum auction plans:

The FCC is going through “a whole bunch of edits and questions” from commissioners’ offices on the upcoming spectrum auction framework notice of proposed rulemaking, which is scheduled for a vote Friday, Sept. 28. Those questions include the wisdom of holding simultaneous auctions, as the FCC is proposing.

According to a source familiar with the edit chain, questions include whether the FCC is setting aside too much spectrum for unlicensed use, and whether it might make more sense to do the auctions sequentially.

Right now, the Commission is aiming to have auctions completed — and much-needed airwaves available for wireless use — by the end of 2014.

Needed: An Answer to Match Warnings on a Spectrum Shortage

By Jamal Simmons

FCC Chairman Julius Genachowski has done a remarkable job in sounding a very consistent and clear alarm that our national romance with wireless communication is headed for a meltdown unless we make a lot more spectrum available for mobile. His agency has estimated that that demand for wireless data could begin outrunning the spectrum available in just a couple more years. Responding to a handful of deniers, Genachowski recently told a Stanford University conference: “No one can factually dispute that we have a spectrum crunch.”

Further, consumer excitement over the iPhone 5 clearly signals that even more pressure on our spectrum supply lies ahead. Even before Apple unveiled the latest upgrade, forecasters were predicting that mobile data demand would climb an average of 74 percent a year through 2016.

But Genachowski’s foresight in identifying the challenge isn’t enough. We need a convincing solution — especially in the short term. We need to find spectrum anywhere we can and get it to wireless service providers as fast as humanly possible. There is no single solution, so we better try “all of the above.”

The challenge is daunting, the FCC’s National Broadband Plan, released in 2009, said commercial wireless service required an additional 500 MHz of spectrum over the next decade, but was only able to identify 200 MHz that might be available for allocation that didn’t belong to some government agency. It urged new government-run auctions, an approach strenuously embraced by Genachowski and authorized by Congress this year. But as observers have stated, the approved auction probably won’t provide more than 60 MHz —‚ barely a tenth of what we need. And, even that won’t happen fast. In the past, it’s been 5-10 years between identifying spectrum for auction and getting it into service. The FCC aims to do better this time, but we shouldn’t put all our eggs in that basket.

Spectrum sharing was also pushed hard in a recent PCAST report by academic experts. Since federal agencies, which hold the lion’s share of spectrum, are reluctant to give it up, the report suggested they share it with commercial providers. It’s an idea worth exploring. But it would take years to figure out the mechanics and if you’ve ever tried to convince your children to share their toys, you know it may be easier said than done. During a speech at Stanford, Genachowski described sharing as “an additive,” not an answer.

In the near term at least, let’s let “the market” work. When somebody in our economy needs a valuable resource to serve customers they are more than happy to buy it from somebody who already has it, but doesn’t need it. It’s fast, too, because regulators don’t have to find it, persuade somebody to give it up, or write rules for an auction.

It’s also a way for Chairman Genachowski to turn his concerns over a spectrum shortage into a viable strategy because his agency must review and approve such deals. The FCC just approved transfer of spectrum from cable companies to Verizon — though it took approximately eight months to do so. Faster action and a clear signal that the FCC is inclined to approve additional transfers would help create a spectrum road map — market transactions now, auctions up ahead, and sharing as an option to explore.

Falling Behind in Spectrum

By Brad

At the Daily Caller, Scott Cleland warns the U.S. is falling behind when it comes to allocating spectrum for wireless use:

[T]he federal government’s obsolete regulation-first-mindset has America falling quickly behind the world in auctioning government spectrum. The U.S. Government has an abundant supply of spectrum available to auction, if only they didn’t hoard, mismanage and waste it.

There is no way the Government can justify hoarding 85% of broadband-grade spectrum when the Government only uses 1% of the nation’s energy, 30% of the nation’s land, and 8% of the nation’s workforce, or when all government public safety personnel can get by with just 20 MHz — the equivalent of 1% of the government’s auction-able broadband spectrum hoard.

Cleland goes on to note that Germany, Spain, France, Italy, and Japan have each reformed their spectrum allocation.

The View From the Chairman

By Brad

FCC Chairman Julius Genachowki has penned an op-ed for the tech site TechCrunch in which he praises the current state of mobile broadband in America:

It wasn’t long ago that Asia and Europe were seen as ahead of the U.S. in broadband-powered innovation and infrastructure. Take mobile. As a 2008 Businessweek story said, America’s reputation for too long was as a “wireless backwater.” But thanks to America’s innovative technology and broadband companies, and to smart government policies, the story today is different. It’s one of comeback and leadership.

After trailing in key 3G metrics, we are now leading the world in deploying the next generation of wireless broadband networks – 4G LTE – at scale. We have 69% of the world’s LTE subscribers, making the United States the global test bed for LTE apps and services.

Despite our leading the charge in mobile broadband, however, Genachowski warns there are speed bumps ahead. Among them is a shortage of spectrum:

[A] key challenge on the mobile side is the wireless spectrum crunch. U.S. mobile data traffic grew almost 300% last year, and driven by 4G LTE smartphones and tablets, traffic is projected to grow an additional 16-fold by 2016. With this exponential growth, demand for our wireless capacity is on pace to exceed supply. Congested wireless networks are slower wireless networks.

Genachowski’s full op-ed is worth checking out.

What Auctions Could Look Like

By Brad

According to John Eggerton of Broadcasting & Cable, the FCC has released a model of what a spectrum auction could look like to interested parties:

The model is described as essentially a “tab A in slot B” description of the process, from reverse auction clock countdowns, to running the winning bids through the FCC’s modeling for reconfiguring that spectrum, to the spectrum’s re-auction to wireless, soliciting questions all along the way.

The model talks about cross-border spectrum arrangements and says there will probably have to be different rules for stations along the shared border with Canada and Mexico, seeking comment on what those should be.

Meeting the Needs of American Businesses and Consumers

By Bruce Mehlman

The U.S. government is the single largest user of spectrum, and without its willingness to relinquish control over spectrum bands that are not being put to their highest and best use, our country will suffer from significant losses in economic gains and jobs.

Today the House Energy and Commerce Committee held the hearing “Creating Opportunities Through Improved Government Spectrum Efficiency.” Beyond the hearing’s focus on improving government spectrum efficiency, clearing spectrum for market use is the best strategy for creating new opportunities for entrepreneurship and innovation. Commercial spectrum users need certainty in order to invest and reliably serve their customers.

Innovation to improve the efficiency of the government’s use of spectrum and moving inefficient users off of spectrum bands, as pointed out by Representative Greg Walden, will mean that more American consumers can take advantage of mobile broadband to enhance their quality of life and more businesses can create new technologies that depend on next-generation wireless networks.

Keeping the App Market Booming

By Brad

At The Hill, Jennifer Martinez reports on a hearing today in the House focused on keeping the growing mobile app market booming:

At the Wednesday hearing, subcommittee chairwoman Rep. Mary Bono Mack (R-Calif.) noted that the booming mobile app marketplace has helped spur the launch of several new small businesses. She said that roughly one-third of apps are developed by entrepreneurs or businesses with fewer than five employees.

“Through American innovation and ingenuity, we’re rapidly becoming a world where there’s literally an app for everything,” she said.

During the hearing, industry reps highlighted some challenges the industry already faces. Among them: trouble finding employees due to a lack of a relatively small pool of trained workers, and an issue we’ve often talked about:

Another challenge facing app companies is the looming spectrum crunch and lack of broadband Internet in rural regions of the U.S., the industry representatives said. 

Ramsey argued that there needs to be right infrastructure in place to handle the rising population of mobile apps. That includes ensuring there is enough spectrum, or airwaves, for mobile apps to run on and reach consumers.

He called the spectrum crunch “a big issue.”

Urging Broad Participation

By Brad

Speaking of the FCC’s incentive auctions, John Eggerton of Broadcasting & Cable reports the Commission’s Chairman is already working hard to get as many players involved as possible:

FCC chairman Julius Genachowski Friday urged broad participation in the FCC’s upcoming spectrum incentive auctions, a draft framework for which he is circulating among the other commissioners for their input and vote Sept. 28, if not sooner.

“Even as the Commission draws on the expertise of the world’s leading economists, auction design experts, and engineers, our ability to maximize the opportunities of spectrum will depend on the active engagement of the public and all stakeholders,” he said in a statement Friday. “I urge broad participation by all.”

Genachowski’s full remarks are available at the FCC website (PDF).

The Long Process

By Brad

Last week, the FCC announced it was ready to kick off the spectrum incentive auction process. That’s the good news. The potential bad news — for wireless providers and consumers — comes courtesy of Cecilia Kang of the Washington Post:

The FCC kicked off its much-anticipated plans to auction broadcast television spectrum for mobile wireless networks. Here’s our story in Friday’s paper.

But it will be years before your iPhone or Galaxy feels the difference, analysts said. That’s because of the long regulatory process ahead at the FCC to get the auction up and running and then make those airwaves available to winners.

According to an analyst Kang quotes, if the FCC’s plan is approved by the end of September, auctions won’t take place until 2014. After that, it could take up until 2016 for spectrum to be put to use easing congestion on wireless networks.

Still, with new airwaves-hungry devices arriving each day — and more and more Americans embracing the power of mobile broadband — any movement to provide more spectrum is a step in the right direction.