Outlook Called Favorable for Auction of Broadcast Spectrum

"Now is the time,” said Cramton, a University of Maryland economics professor. “We have to move now. It really is important. … FCC, let’s get on it and start moving.” Carriers like T-Mobile and Sprint Nextel need spectrum below 1 GHz to compete effectively with AT&T and Verizon Wireless, he said. In general, spectrum is more valuable for wireless broadband than for broadcast TV, Cramton said. “I haven’t seen an over-the-air broadcast TV program for 25 years,” he said. “I haven’t used mobile broadband for [all of] five seconds.”

Broadcasters should have a choice whether to sell their spectrum, Cramton said. “They can say no … but what they can’t do is say is, ‘I am channel 45, and, by God, I'm broadcasting on channel 45 come hell or high water,'” he said. “We can move them to channel 23 and pay for their move. What that does is free up the contiguous spectrum that LTE just loves."

Cramton said he supports a proposal by Evan Kwerel, a long-time FCC auction expert, for a two-step auction. First, using a reverse auction, the commission would try to get broadcasters to turn over their spectrum by asking them to indicate through sealed bids how much money they want for all or part of their spectrum, Cramton said. Carriers would then bid for contiguous blocks of spectrum in a more conventional auction, the proceeds being split between participating broadcasters and the U.S. Treasury.

Jane Mago, NAB general counsel, said broadcasters are looking at new ways to use their spectrum and they should be part of the mobile future. “I will take issue with your comment that broadcasting value is on the decline,” she said in response to Cramton. “I think it’s very much on the incline.”

Mago noted that after the massive earthquake Friday in Japan many residents seem to be getting information from mobile DTV service. “That’s one of the things broadcasters want to be able to use the spectrum for” in the U.S., she said. “That and greater innovation.” Broadcasters don’t oppose a voluntary auction “per se,” if it doesn’t hurt the public’s ability to rely on broadcast TV or mean that broadcasters can’t spin out new services, Mago said. After all, 42 million people in the U.S., including many older ones, tune in to broadcast TV, she said. “We can’t simply look away from all of that."

Repacking has to be part of any incentive auction, agreed Tom Sugrue, senior vice president at T-Mobile. Broadcast and wireless licensing have traditionally been “radically different,” he said. “You can’t just say, ‘Broadcaster A will sell and that will solve the problem,'” Sugrue said. “You've got to massage it a little bit."

Sugrue said the FCC should let the market decide. “I'm willing to bet in a properly designed auction system there'll be some sellers and some buyers,” he said. “Maybe a lot, maybe a modest amount.” Spectrum below 1 GHz would be particularly valuable to his company, which doesn’t have any licenses in that range, Sugrue said. Sprint, MetroPCS, Leap and others also likely would pursue spectrum below 1 GHz, he said. “If we could get 120 [MHz], or even something less in the 700, 600 [MHz] area, I can assure you [there will be] significant interest and we'd put it to good use,” he said.

Spectrum for mobile use “is scarce and getting scarcer,” said Intel’s Peter Pitsch. “The data tsunami is going to be huge.”

Cramton said agreement was nearly reached on a broadcast spectrum auction 10 years ago. “The problem we had was that it was very difficult to organize the broadcasters,” he said. “What made it especially difficult -- which is the key to the incentive auction -- is a holdout problem. Basically, everybody wants to be the last one to say, ‘I will give up my spectrum.'”