Wireless Executives at CTIA Frustrated, But Still Hopeful Incentive Auction Will Be a Success

"There are a hundred issues in this proceeding, and the vast majority of them are probably pretty easy to solve,” said CTIA Vice President Jot Carpenter in an interview. “Then you get to the last half dozen or 10 where it’s more complicated and you've got to rise up to the commission level and there’s where they get sorted out.” There has been a significant amount of discussion between NAB and the major carriers, he said: “I think all of that augurs for closing out a lot of these issues, trying to find consensus where we can find it."

Carpenter conceded that the public notice raised industry blood pressure over the auction. For example, he said, the notice asked once again about use of time division duplex in the 600 MHz spectrum. “I'm not sure why they felt compelled to ask about it again,” he said. “People have put hundreds of pages of comments in on those issues. They can put another several hundred pages in, but it probably won’t look a lot different than the first set.” On the new alternative band plan, “I don’t know anybody outside the commission who likes it,” Carpenter said. “I don’t see it as something that’s necessarily going to move the ball closer to completion of the proceeding."

"I was always pessimistic,” said a wireless industry lawyer of the auction. “For me a better way to say it is ‘are you feeling any more comfortable,’ and the answer is ‘no.’ The keys are certainty and simplicity. Certainty and simplicity are going to raise the most dollars.”

"It’s obviously a hard task,” T-Mobile Senior Vice President Tom Sugrue said of the auction during a Wednesday panel. “Everyone acknowledges that. Our goal is to get our band plan, which would produce 70 MHz of cleared spectrum above Channel 37. … We think that’s a good number. It’s good to have more, but 70 MHz is workable. Others have endorsed plans that are more like 50 MHz is the max you can get. To us, that’s undesirable.” T-Mobile is “optimistic” the auction will produce 82 MHz of spectrum “in the vast majority of markets,” which translates to 70 MHz of spectrum for wireless broadband, he said: “That produces” a “nice two 35 MHz paired blocks of contiguous spectrum.” There has been a lot of discussion between the major national carriers and broadcasters, said Sugrue. “We are working with them.”

"Hopefully, there’s not a rising level of anxiety,” said David Goldman, aide to Commissioner Jessica Rosenworcel. “To the extent that there is, I think that’s our job at the FCC to deal with that and not let that happen.” Keeping the auction as simple as possible will help, Goldman said. “You make this as simple as you can for all of the different stakeholders, and we should be welcoming participants. That’s on us to try to make sure that there’s not a rising level.”

Goldman said Rosenworcel is urging a series of public meetings on auction rules (CD May 23 p1). “The idea is to not just help facilitate these conversations, but do it out in the open,” he said. “The commission has a role as convener. We can have the public actually involved in some of these conversations."

Commissioner Ajit Pai made it clear he was “frustrated” by the public notice (PN), and the notice “struck a bad note,” said Matthew Berry, his chief of staff. “On the other hand, I do think it’s important to note that the commission has new leadership now and there’s an opportunity to begin again,” he said. “We're hopeful, not discouraged, because we're hopeful that with new leadership will come greater collaboration on the eighth floor."

"If we can start taking issues off the table and concentrate on the harder issues, getting those taken care of, I think that by far is the best way to go,” Berry said. “Not to sound like a broken record, but what was so disheartening about the PN is it seemed like some of the easier [issues] we were not going to take off of the table and we were making them harder than they have to be.”

"We posted a blog with Verizon and NAB on this, and I think we made it very clear that we were frustrated with the PN on Friday because we do want to see progress being made and these are complex issues and we felt that we were delivering progress,” said AT&T Vice President Joan Marsh. “Not that we object to putting PNs out, because we need to explore a lot of questions, we just didn’t explore this PN at this time on the band plan when consensus was developing.” Discussions will continue, Marsh said: “We're at the table. We're ready to continue the conversation and work hard to make this work. … Our engineers will continue to work hard. We will continue to collaborate with the industry to find consensus on any issue that we can find consensus on."

The 600 MHz band plan always looked difficult, Marsh said. “There is significant and very notable consensus and an enormous amount of effort went into building that consensus,” she said. “I felt, and I think many of my colleagues felt, that we don’t need to argue about engineering. So we formed a collaboration. T-Mobile was involved, Verizon, we brought in equipment manufacturers to make sure we are getting their views, and we eventually talked to NAB too.”

Low-band spectrum has better propagation characteristics, but other spectrum also is important, Marsh said, noting AT&T just made a big investment in Wireless Communications Service spectrum in the 2.3 GHz band. “The fact of the matter is we are now in a data centric world, carriers are out there building incredibly dense networks and it does not matter if you're building it with high-band or low-band,” she said. “In fact, in a data centric world I would argue wider band spectrum [is] as important as where the spectrum falls on the screen.”

"There are a number of carriers around this country that are very focused on this auction because we think it’s the last chance that we have to get our hands on sub-1 GHz spectrum that will be vitally important to continue to maintain a competitive market place in the United States,” said Grant Spellmeyer, vice president at U.S. Cellular. Spellmeyer observed that no one had mentioned Tom Wheeler, nominee for chairman. “This is the biggest docket at the FCC, it’s probably the biggest docket that they'll do this decade,” he said. “I've never known a chair at the FCC who didn’t want to influence the most important docket pending before the commission.” The FCC will inevitably be in a “holding pattern” on some of the bigger auction issues until Wheeler is confirmed, Spellmeyer said.

Berry said the FCC should continue to do what it can with the nomination pending. “There’s no reason we can’t make progress on the band plan,” he said. “I do think some of the big issues will get delayed, but there are plenty of issues I think that we can deal with right now. I think it would be a shame to say we're going to wait six months."

"We remain optimistic that this thing can get done,” Spellmeyer told us. “Nobody took the air out of the balloon as a result of that PN. The bureau staff are dedicated, hard working, they were trying to respond to concerns that they heard of a technical nature out of that May 3rd [band plan] workshop. It’s going to mean more work for us in the next 30 days to file comments, but we'll move beyond that. I was going to predict 2015 before there’s an auction.”

Paula Boyd, Microsoft director-government and regulatory affairs, said the FCC needs to remember the growing importance of unlicensed spectrum as it devises auction rules. “The number of connected devices that are going to be out there in the upcoming years is only growing, it’s going to be billions,” Boyd said. “By 2016, IP traffic that will go over Wi-Fi networks is going to be to 45 percent of all traffic. Eighty percent of the traffic that moves from smartphones and tablets moves on Wi-Fi. Those numbers are only going to increase.”

Low-band spectrum is important for unlicensed, Boyd said. “The upper-band spectrum can get you a fair amount of … capacity,” she said. “What the lower-band spectrum gets you is range. When you think about applications that may warrant range, those applications will not happen in this country if there’s no lower-band spectrum."

Marsh said AT&T understands the importance of unlicensed spectrum. “I just don’t think 600 MHz is the place,” she said. “We've got too much going on here. We've got too much at stake. And we've got revenue targets that we have to make and interference challenges that we have to manage and it’s going to be very, very difficult to carve out a significant amount of spectrum in 600 MHz for unlicensed. … But 600 MHz is not going to change the world for unlicensed."

Another recurring topic of discussion during the Wednesday panel was a looming deadline for the Commerce Spectrum Management Advisory Committee (CSMAC) to wrap up key reports on spectrum sharing in the 1755-1850 MHz band, with an emphasis on the bottom 25 MHz, 1755-1780 MHz. Peter Tenhula, senior advisor to the NTIA, said CSMAC may have to schedule another meeting in July if a series of working group reports aren’t ready at a scheduled June 18 meeting. “We're working very hard,” he said. “I think we have fundamental agreements on where to go.” But CSMAC member Sugrue conceded: “We frankly haven’t made as much progress as we would like.”