FCC’s 600 MHz Band Plan Notice Asks Questions the Agency Needs Answered, Milkman Says

"Nobody has ever conducted an incentive auction before, and we're trying to improve our chances of success by reducing risk wherever we can,” Milkman said at a spectrum conference sponsored by the Georgetown Center for Business and Public Policy. “One risk we see is that although we hope to be able to clear a significant amount of spectrum in the vast majority of geographic markets, we anticipate that there may be some geographic markets where we can’t clear as much spectrum."

The notice followed the commission’s workshop on the band plan (CD May 6 p1), Milkman noted. “Following the workshop, we recognized a need to develop the record further on an issue that received little attention in the comments to date and that is the possibility of market variation,” she said. “The commission identified this issue in the notice, but not fully addressed by most of the commenters’ proposed band plans. At the request of its technical staff, the bureau therefore released a public notice seeking to focus stakeholders on the issue of market variation. We are trying to reduce the risk of not achieving the goals laid out by the commission and we believe this input is critical in our effort to craft a successful incentive auction."

Milkman said the FCC is also focusing on dynamic spectrum sharing, especially in the context of the 3.5 GHz band. (See related report in this issue.) “The bureau is committed to helping identify exclusive use spectrum wherever we can,” she said. “But there are additional opportunities to bring spectrum to market through new approaches. Database-enabled spectrum sharing is one of those cutting edge techniques, and we are laying the groundwork now for spectrum policy for years to come. The 3.5 GHz rulemaking tees up a number of important issues, including how to distribute rights among possible users while protecting incumbents, how to assign those rights and how to coordinate use among different rights holders. The notice also seeks comment on a framework that enables dynamic sharing. It’s complicated, and it requires fresh thinking and innovative policy approaches. But it has the potential to open a great deal of spectrum for shared use."

Milkman said the incentive auction “clearly … can’t close” unless the proceeds are high enough to pay off the broadcasters who turn in their licenses. “There’s also the $1.75 billion for relocation of incumbents, … there’s FirstNet and then there’s deficit reduction,” she said. “We're definitely focused on all of those."

The FCC isn’t trying to maximize the amount of spectrum available everywhere in the U.S., Milkman said. “If we're in a rural area where there are very few broadcasters and we don’t even need any to turn [licenses] in to get a ton of wireless spectrum” the FCC won’t be looking for broadcasters to sell their spectrum, she said. “We're planning to try to have a consistent amount nationwide so that the major urban areas have the same amount of spectrum.” The FCC might decide in border areas where it has to worry about Canadian TV allotments that it will be able to sell less spectrum for broadband, she said. “In order to make sure that the auction can close, there may be a limit to the amount of money that we can pay those stations and we might decide that in those markets we're better off having less wireless spectrum,” she said. “Then we would have some market variation.”

Milkman said there has been almost no consensus on whether the FCC should limit the amount of spectrum below 1 GHz that any carrier can own in a given market. “At this point we are really still thinking about all of the options,” she said.

Blair Levin, manager of the FCC’s National Broadband Plan, spoke about the importance of super fast broadband networks in his comments at the symposium. “Unlike in wireless, where we don’t know the endpoint but can envision incremental wireless generations, we know what the end state, or [next generation] wireline network will be,” he said. “It is a fiber-based conduit with upgrades made possible not by new conduit but by electronics at the edge of the network and advances in software. Such networks provide a step function increase. They are future-proof. Their design results in similar economics for a broad range of speeds; the incremental cost for a bit is nil."

High-speed broadband network’s like the Google Fiber network in Kansas City are raising the bar, Levin said. “I just used it for the first time in Kansas City and it reminded me of the first time I drove a new, really good car,” he said. “Yes, it did not avoid traffic jams and I honored, at great pain, the speed limit, but everything I did in the car felt better and more responsive than the used, old car that I was used to. Using a gig network made me understand what the great computer scientist Alan Kay meant when he said, as to network speeds, the slowest speed we will tolerate is the fastest speed we have experienced."

To call the U.S. wireless market “extremely competitive I think is an understatement,” said Jennifer Fritzsche, managing director of Wells Fargo Securities, who also spoke at the conference. Prepaid wireless is particularly competitive, postpaid less so, she said. “What you are seeing is the view among a lot of the Wall Street people that there is this kind of duopoly with AT&T and Verizon and a distant, distant measure between number two and number three and number four.”