McDowell, Levin Say Its Time to Take Another Look at Spectrum Parts of National Broadband Plan

In a key chapter, the NBP recommended that 300 MHz of spectrum be made available for wireless broadband over the next five years and 500 MHz total over 10. Of that amount, 120 MHz was to come from an auction of broadcast TV spectrum, optimistically projected to take place 2012-2013. Another 90 MHz would come from the mobile satellite spectrum band. The plan also emphasized the importance of clearing federal government spectrum for commercial use.

The incentive auction now appears likely to reap only 60-80 MHz, with a big chunk of the 120 MHz lost in part because of language protecting TV station signals along the Canadian and Mexican borders. The future of the MSS band is in question, with LightSquared running into massive resistance from GPS interests in trying to bring just 10 MHz of MSS spectrum online for broadband. Government agency resistance has raised big questions about how much spectrum, including the 1755-1780 MHz band, will be converted to use for broadband.

"Facts change,” Levin said. “We have to be honest and say that an incentive auction is not going to get back as much spectrum as we thought it was going to get back. We're not going to free up as much MSS spectrum as we thought . … We're not going to get back government spectrum that we were hoping we would get back. But there are other paths we discussed-such as spectrum sharing -- that now look more promising for addressing the spectrum concerns."

A reassessment of the spectrum provisions makes sense, Levin said. “I think that would be a great idea,” he said. “I think it’s great [the FCC is] doing something on receiver standards, that’s one I wish we had focused on. I think long term that’s the kind of thing that there has to be greater clarity about.”

McDowell called for “mid-course correction” of the spectrum recommendations. “The goal of bringing 500 MHz of usable spectrum to market within what is now eight years will need to be adjusted downward, unless the executive branch is able to surrender more of its spectrum than it looks like it’s willing to today,” he said.

McDowell said many parts of the plan remain a work in progress, but the plan has been a partial success story. Commissioners were not asked to approve the NBP per se two years ago, but only to endorse a “mission statement” on the plan, a four-page summary. “If you look numerically at the volume of initiatives the broadband plan recommended the FCC undertake, the number is relatively small,” McDowell said. “However, if you look at the two main pillars, incentive auctions and reforming universal service to support broadband, the FCC has done a lot."

"There’s an awful lot to be proud of,” Levin said. “There’s a serious message to governments about the importance of actually sitting down and thinking about a five to 10 year perspective instead of the 24-hour perspective of the news cycle.” The plan laid out the basic principles adopted by the FCC last year in its Universal Service Fund reform order, Levin said. “There’s a big problem with spectrum that people didn’t see when we were starting that they now see,” he said. “We came up with an answer, not a complete answer, but a way of addressing some of the problem through the incentive auction.” Also, many of the staff that put the plan together have remained active either in other parts of the government or the private sector, advancing recommendations contained in the plan, he said.

Levin said the incentive auction should prove helpful in freeing up spectrum in the major cities that have the biggest needs, which he characterizes as “the NFL cities” plus Los Angeles. “There’s never been a market test of how many broadcasters are needed in a community,” he said. “What we have had is an FCC guess, which was done decades prior to the time of cable, prior to the time of over the top video. The FCC just said, ‘Hey, we think in Los Angeles you need … 32 [stations] depending on how you think about Los Angeles, and New York needs 25, depending on how you think about New York.’ You have a number of stations that are not that viable and we suspect will be willing to entertain selling the spectrum if they get a good enough price for it.” The market should “determine the ultimate allocation,” he said.

Analysts and other observers said Friday it’s becoming clear that the government will fall short of meeting the lofty spectrum targets in the NBP.

"The 500-MHz-of-spectrum target always sounded more like a wish than an analysis,” said Craig Moffett, analyst at Sanford Bernstein. “Now reality is setting in. Kudos to the NBP team for having bold aspirations, but it was a pipe dream to think we were going to scrounge up that amount of spectrum that quickly. There were and are simply too many oxen to be gored.” Spectrum scarcity “is simply accelerating the slide to duopoly in the United States,” Moffett said. “The spectrum shortfall comes at a time when everyone is trying to transition from 3G to 4G, and Verizon and AT&T are the only ones with the spectrum to do it. There’s a real risk that without more spectrum, the transition to 4G will be seen, in retrospect, as a Rubicon on the way to duopoly that the smaller players were never able to cross."

Levin’s comments are “spot on,” said Jeff Silva, analyst at Medley Global Advisors. “He essentially has given public voice and recognition to a realization about present-day limitations of NBP spectrum recommendations that many I suspect are coming to intuitively accept,” Silva said. “The notion that less spectrum will be freed up than originally anticipated is undoubtedly a hard pill to swallow for policymakers and industry stakeholders alike, but such acknowledgment is essential in accurately sizing up the wireless market and crafting policies going forward based on any reassessment. A failure to appreciate the realities of a limited spectrum supply in relation to growing demand could lead to policy distortions, market confusion and utter frustration across the board generally.”

"The commission gets good marks for trying,” said Andrew Schwartzman, senior vice president of the Media Access Project. “The resistance from incumbents, including the government incumbents, was predictable, but I don’t fault the FCC for setting ambitious goals. The commission created the impetus for the spectrum auctions; it was Congress that cut back. And it has tried to free up MSS spectrum.”

The “noble goal” of clearing 300 MHz of spectrum for exclusive use “was always a long shot because of the power of incumbent licensees and policies that work against new entrants such as LightSquared,” said Michael Calabrese of the New America Foundation. “A reconsideration of a more realistic path to 500 or more megahertz of capacity will need to put far more emphasis on opening large but underutilized federal government bands for shared access on a secondary and unlicensed basis.” Additional shared and small cell spectrum will help carriers offload data from congested networks, Calbrese said. “Although the plan’s goal of 500 MHz always anticipated a substantial amount of shared and unlicensed spectrum, that path has been put on hold but now needs to be moved front and center as the most promising source of bandwidth in the future."

Finding 500 MHz of spectrum for auction was never a realistic goal, said Public Knowledge Legal Director Harold Feld. “As PK argued since the first public notice on spectrum in the National Broadband Plan, relying purely, or even primarily, on clearing spectrum for auction could never meet demand,” he said. “Unfortunately, because spectrum auctions generate revenue for the federal government, and because they are most consistent with the existing carrier business models and technology, finding usable spectrum to clear and auction attracts the most attention and excitement as a policy solution. It’s the spectrum equivalent of ‘drill baby, drill.’ But just as we have hit ‘peak oil,’ we have also hit ‘peak spectrum.’ We can no longer rely on clearing spectrum for auction as the primary way to meet our wireless needs, and our national policy needs to reflect this reality."

"Hitting the 500 MHz target … is not a meaningful goal by itself,” said Free Press Policy Director Matt Wood. “Simply clearing and auctioning more spectrum, too often just to feed AT&T and Verizon’s duopoly ambitions, is not a long-term solution to growing wireless capacity needs or to the competition crunch we face today. We need effective competition policy that prevents one or two carriers from abusing their control over crucial inputs like spectrum, backhaul, and handsets. We need a market able to discipline carriers when they are slow to innovate or upgrade their networks. And we need more proceedings from this FCC that prioritize smart receivers, unlicensed use, and spectrum sharing technologies, not just short-term auction gains.”

Slow progress in bringing more spectrum online for broadband “has left competitive carriers with inadequate spectrum access options, impeded their ability to deploy 4G networks, and injected considerable uncertainty into their business plans,” said Steve Berry, president of the Rural Cellular Association. “Broadband plan aside, the FCC needs to act on issues like interoperability and 4G data roaming that bring spectrum relief and benefit consumers. The FCC needs to incent those carriers who have spectrum but are not utilizing it and make it available to operators looking to deploy services immediately."