Communications Daily is a Warren News publication.
Net Neutrality Rules Not 'Dictatorial'

Wheeler Sees Incentive Auction Going On Next May, With Broadcasters Active

FCC Chairman Tom Wheeler expects the incentive auction to be well underway a year from now with active broadcaster participation, he said Wednesday. He also defended the net neutrality order as creating a flexible, not dictatorial, broadband Internet framework. The planned takeover of Suddenlink by a European company showed that the regulation wasn’t chilling investment in the U.S., he said in a Q&A session with Accenture Managing Director Shahid Ahmed at the management consulting firm’s Network Summit.

Sign up for a free preview to unlock the rest of this article

Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!

Wheeler noted the FCC was aiming to hold the world’s “first double-sided, triple-action” incentive auction with broadcasters bidding to sell their spectrum in the 600 MHz band, wireless carriers bidding to buy it, and the “inputs” changing as the auction unfolds. Despite the complexity and industry parties “jockeying for a fair advantage,” Wheeler said, “I’m quite confident a year from today we’ll be well into the incentive auction.”

Wheeler said he “absolutely” expected broadcaster participation in the auction. He said broadcaster interest was stoked by the success of the AWS-3 auction, which raised more than $40 billion, as well as by broadcasters' realization that they could share spectrum. He said two broadcasters could share one of their two 6 MHz channels, sell the other channel for a "nice" shareholder return, and keep the exact same business model. “I don’t think you need to have Accenture” to figure that out, he joked. Wheeler also expected “nontraditional” wireless players to participate, he said without elaborating.

Wheeler said U.S. leadership in 4G wireless was rooted in making spectrum available to industry, and he intended to follow the same formula for 5G. “We intend to be the world leaders in moving on 5G, starting with 600 MHz but not stopping there,” he said. “We have to have more spectrum.” He touted the FCC’s “radical” plan to share the 3.5 GHz band with the Department of Defense, where spectrum use would depend on market demand, and said the FCC was opening up about 100 MHz in the 5 GHz band for “really high-speed” use. He saw a “great future” for unlicensed/Wi-Fi innovation in all three bands, but declined to predict what applications would emerge there. “That’s not our job,” he said. “We want to make sure unlicensed spectrum is available, because I can guarantee we don’t know all the uses that will follow.”

Asked about the net neutrality order that reclassified broadband Internet access, Wheeler said the concept of leaving Internet access without regulatory oversight was “unthinkable.” He said he found it “interesting” that telco and cable groups had sought a court stay of Title II and the Internet conduct standard, but not of the four bright-line rules for broadband providers: the prohibitions on Internet blocking, throttling and paid prioritization, along with transparency duties (see 1505200003">1505200003). “That’s the only regulation per se that exists,” he said.

Going forward, Wheeler said the net neutrality framework and conduct rule would allow the FCC to be a “referee,” leaving it to industry players to do their thing within bounds. “Broadband providers by their actions can determine what the government does,” he said. “That’s a paradigm shift.” He acknowledged there would be disputes over particular actions and regulatory interpretations. “You get three lawyers, and you get four opinions on what the language says,” he said. “But we set up something that is flexible and responsive to what happens, not dictatorial.”

Wheeler noted the European-based company Altice was making a $9.1 billion investment to buy control of Suddenlink (see 1505200062">1505200062). “So much for the argument that the open Internet rules are chilling investment in America,” he quipped.

Wheeler said he was tired of seeing charts showing the U.S. behind countries such as Latvia in broadband rankings. “The U.S. is a little different than Latvia,” he said. He credited South Korea with doing a great job in building out broadband, “But the fact is Korean companies are coming over here and buying American company applications.”

Wheeler said there was a perception the telephony IP transition could be dealt with at one time: “It’s not a thing; it’s a process.” Its economics are shifting from “place-based” and “hardware-based” facilities to the “software-based” digital cloud, he said. “That’s why you want to make sure the open Internet rules aren’t fixated on what we know today because things are changing.” While the technology will change, Wheeler said the “network compact” between users and providers shouldn't, and he intends to uphold five principles: ensuring access, interconnection, public safety, consumer protection and national security.