House Panel to Debate Spectrum Aggregation, Unlicensed Use Proposals

The FCC should develop rules that “promote competition and broad carrier competition, Subcommittee Ranking Member Anna Eshoo, D-Calif., says in prepared remarks. “Second, the FCC should structure a band plan that ensures a nationwide block of spectrum under 1 gigahertz dedicated for unlicensed innovation,” she is set to say. “Following on the successes of Wi-Fi, Bluetooth and RFID, the upcoming incentive auction can provide a unique opportunity to fuel a new generation of unlicensed technologies, supporting rural broadband, connected hospitals, smart grid networking and so much more.”

Other Democrats on the panel will likely discuss the FCC’s work to expand unlicensed broadband operations and adopt an auction cap for some carriers, according to a minority memo that circulated before the hearing. “Recognizing the role unlicensed spectrum plays in driving innovation and economic growth, the [Spectrum] Act paves the way for the creation of a nationwide band of spectrum for unlicensed operations,” the memo notes. “The Act also clarifies that Congress intended for the FCC to continue to promote competition through its spectrum policies,” it said. A Republican memo said several questions remain about how the commission will implement the spectrum auction rules including: how will the commission determine the value of the spectrum in the reverse auction, what steps is the FCC taking to coordinate spectrum at U.S. borders, and how will the commission maximize spectrum utility and auction proceeds, among other questions.

AT&T’s witness will urge “unfettered participation” in the auction by all qualified bidders in order to maximize auction revenue, according to the advance testimony of Marsh. Limiting AT&T and Verizon’s ability to participate in the auction is “unnecessary,” “unwanted” and will “drive down the price paid by others, thereby reducing auction revenues,” her testimony says. Marsh will also cite a letter sent last week by eight House Democrats that asked acting FCC Chairwoman Mignon Clyburn not to adopt spectrum auction rules that exclude certain carriers from bidding in the forward auction (CD July 17 p14). “We hope the commission will adopt transparent and simple rules to encourage participation by the broadest possible group of broadcasters and wireless providers,” said the signers, led by Rep. John Dingell, D-Mich. Marsh will also urge the commission to permit unlicensed services in “appropriate portions of the 600 MHz band, but only if prospective providers of such services can demonstrate that their operations will not cause harmful interference to licensed commercial wireless services. It would make no sense to build a technically strong band plan, only to undermine it by permitting unlicensed uses that introduce new interference challenges,” she will say.

T-Mobile’s witness will tell lawmakers that without spectrum aggregation limits, AT&T and Verizon could squeeze out competitors, reduce consumer choice and thwart innovation in the wireless marketplace, according to Ham’s prepared testimony. Ham, the former chief of the FCC’s spectrum auctions program, will outline three objectives for the FCC’s auction rules: encourage widespread broadcaster participation, adopt a band plan that maximizes paired spectrum, and adopt “reasonable limits on spectrum aggregation to ensure the two dominant carriers do not foreclose other carriers.” Ham is to reference the Justice Department’s April FCC filing that said auction rules should guarantee that smaller carriers, especially those that need lower frequency spectrum, are able to expand their spectrum portfolios (CD April 15 p7). “Without a clear spectrum aggregation limit, smaller bidders may simply assume that defeat is inevitable and may not participate, which could reduce bidding and thus auction revenues,” her testimony will say.

Padden will tell lawmakers that the debate over carrier caps is useless if the commission fails to elicit sufficient participation from broadcasters, according to his prepared remarks. “The incentive auction will not succeed, and the policy goals underlying the Middle Class Tax Relief and Job Creation Act … will not be fulfilled, unless a sufficient number of TV spectrum sellers voluntarily walk through the front door of this auction,” he will say. “Simply put, the FCC should offer the same high initial prices to all stations in the same market and rely on the statutorily prescribed auction to discipline final prices.”

NAB’s Kaplan will urge lawmakers to maximize auction revenue, compensate broadcasters who are forced to relocate from their spectrum, and avoid interference issues in the 600 MHz band plan. The FCC can maximize auction revenue by focusing exclusively on paired spectrum, ensuring a “measured” repacking plan and coordinating spectrum frequencies with Canada and Mexico before the auction, Kaplan will say. Kaplan, a former FCC Wireless Bureau chief, will also urge the commission to ensure that television stations that are forced to relocate as a result of the auction are “made whole.” Furthermore, the FCC should decide which stations are “protected in repacking and to what extent,” Kaplan will say. He will also urge lawmakers to have “an open and frank discussion about the engineering implications of our band plan choices -- including the challenge of employing market variability -- and tackle head-on the difficulties presented,” according to his prepared testimony.

Feld will urge lawmakers to give the FCC time to develop “a proper record” and avoid “constantly hectoring” commission staffers about the auction. The auction will be a failure if policymakers “rush heedlessly forward out of impatience to hold an auction, however ill-designed,” said Feld’s prepared testimony. Feld is set to rail against those who seek to force “false choices between licensed and unlicensed spectrum, or between enhancing competition and paying for FirstNet. To the contrary, efforts to follow what seems like the straightforward path to maximizing revenue by minimizing guard bands or refusing to adopt rational spectrum aggregation limits are likely to make this auction a failure rather than a success.” Instead, Feld will also advocate for the FCC to offer what he calls a “no piggies” rule that encourages smaller carriers to bid on spectrum by limiting larger carriers ability to participate in the auction.

Separately, representatives from some carrier, computer and telecom groups urged policymakers to set restrictions on AT&T and Verizon’s ability to bid on spectrum in the auction, according to a letter sent before the hearing. “Contestants will be hesitant to play a game they cannot win,” said the letter sent Friday to the chairmen and ranking members of the House Commerce Committee and its Communications Subcommittee. “Without some constraint on the ability of the two dominant carriers to acquire all of the high-quality spectrum available in the 600 MHz auction, smaller rivals and upstarts will be significantly disadvantaged from acquiring the spectrum resources in the auction they need to compete against those carriers. If defeat seems inevitable, smaller carriers will not incur the significant costs involved in planning for and participating in the 600 MHz auctions. And without competitive pressure from smaller bidders, the two dominant incumbents can acquire the auctioned spectrum at below-market rates, reducing auction revenues for the U.S. Treasury and further constraining competitive alternatives for wireless consumers,” it said. The letter was signed by T-Mobile’s Ham; Computer and Communications Industry Association Vice President-Government Relations Cathy Sloan; Competitive Carrier Association General Counsel Rebecca Thompson; Rural Telecommunications Group General Counsel Caressa Bennet; Dish Senior Vice President Jeffrey Blum; Sprint Vice President-Legal and Government Affairs Lawrence Krevor; C Spire Wireless Senior Vice President-Strategic Relations Eric Graham; Comptel Senior Vice President-Government Relations Alan Hill; National Telecommunications Cooperative Association Director-Legal and Industry Jill Canfield; and US Cellular Vice President-Federal Affairs and Public Policy Grant Spellmeyer.