Broadband Spectrum: Finding, Consolidating, Swapping, Selling
08.13.2012 by Andrew M. Seybold
Until the FCC and NTIA come together and decide what spectrum will be made available to fulfill the FCC’s promise of 500 MHz of additional broadband spectrum, it seems only logical that they would be in favor of deals that will put more spectrum into service as quickly as possible.
I guess I am confused about broadband wireless spectrum. In the FCC National Broadband Plan delivered to Congress in (2010), the FCC promised to “find” 500 MHz of additional broadband spectrum, 300 MHz within 5 years with an additional 200 MHz in the next 5 years. Subsequent to that report, the FCC Chairman has made broadband spectrum a priority over and over again and has stated on several occasions that we need more commercial broadband spectrum and that putting more of it into use by commercial operators would create jobs and help the economy. The FCC also published several papers demonstrating that the demand for wireless broadband services was fast outstripping the amount of capacity available, and other organizations, including CISCO, have published their own reports stating the same thing.
However, over the past couple of years, the FCC has stalled a number of spectrum swaps, consolidations, and sales. Am I the only one confused by the FCC’s statements versus actions? The FCC and the Department of Justice put a halt to the proposed merger of AT&T and T-Mobile, a move that would have given AT&T more spectrum for broadband and more towers on which to deploy it. The stated reason was that it would be bad for competition, reducing the number of “nationwide” operators from 4 to 3, and that somehow this would stifle competition and drive up consumer prices. Yet in many other countries there is a trend to shrink the number of commercial networks, and study after study has shown that pricing for voice and data services has come down year after year.
Next up is the still unresolved Verizon deal with a number of cable companies. In this deal, Verizon would purchase spectrum that is not being used and that the cable companies have no intention of building out, in exchange for a marketing agreement that would bring more competitors into the marketplace. As part of this deal, Verizon has also agreed to a spectrum swap with T-Mobile in the AWS-1 band that would make it more practical and efficient for both companies to offer fourth-generation broadband services. Dish network is waiting patiently for the FCC to act on its waiver request to use some satellite spectrum for a terrestrial 4G network that will not interfere with our GPS system as the LightSquared network would have.
While operators wait for more spectrum to be available at auction, including ASW-2 and ASW-3 bands and the incentive TV auctions, they are trying to find other ways to obtain more spectrum as quickly as possible. AT&T bought the Qualcomm 700-MHz spectrum and it took the FCC a long time to rule on that purchase. Now AT&T is in a deal with NextWave for additional spectrum and I have to wonder how long that will take. How can the FCC say one thing and consistently do something else?
Yes, the FCC and the NTIA seem to be working together to “find” additional spectrum, and they are certainly looking at other ways of making spectrum available including spectrum sharing (which I don’t think is a great idea at this point), cognitive and smart radio use, and more. But the fact remains that even if and when they “find” spectrum it will be years before it can be placed into commercial service. It has to be identified, existing users have to be moved somewhere else, it has to go to auction, and existing users have to be given enough time to move. Someone has to pay for the relocation, and once the spectrum is cleared, network construction can begin and devices can be designed to operate on the new spectrum. It is anyone’s guess how long this process will take, but at the very minimum it will be 3-5 years before any of the new spectrum is available for commercial use.
In the meantime, operators are trying to manage the increasing demand in a multitude of ways. The first was that all-you-can-eat data pricing became a thing of the past on most commercial networks. Operators are off-loading traffic to Wi-Fi access points and femtocells within homes and businesses, applying for permits to build more sites closer together (takes time and lots of money), and trying to make deals with other spectrum holders for spectrum that is not in service. It seems to me that the logic here is for the FCC to act quickly when idle spectrum is made available to someone who will put it into use and build out more broadband coverage. It seems to me that spectrum swaps to help provide more efficient use of the spectrum and spectrum purchasing and other ways to make more spectrum available should be welcomed by the FCC and encouraged, not sat on and debated ad nauseam.
Verizon is not my client, but I watch the ongoing battle for what seems to be a simple solution for both Verizon and the cable companies. Take the spectrum that the cable companies paid the federal government for that is NOT in use, sell it to Verizon for more than what the cable companies paid for it, and permit the cable companies to essentially act as Mobile Virtual Network Operators (MVNOs) on the Verizon network. When Sprint, T-Mobile, or one of the other network operators adds an MVNO it is simply announced, no FCC action required. It astonishes me that the Communications Workers of America (CWA), Sprint, and others are fighting this transaction as much as they are. I have read the arguments on both sides, since each week it seems, I receive emails from the CWA about its position on this, and frankly I don’t get it. Like the failed AT&T and T-Mobile Merger, the Verizon/cable company deal should be welcomed and quickly approved.
Cable operators have been interested in wireless since the 1996 PCS auctions when they teamed up with Sprint on the bid. Since then they have, on several occasions, worked with Sprint on joint ventures, all of which were announced with grand fanfare and none of which ever went anywhere. This time around they have spectrum to throw into the pot so they have something to barter with, thus the deal makes a lot of sense. The FCC took what seemed like forever to approve the AT&T purchase of the Qualcomm 700-MHz spectrum. If it had been approved on a timely basis it would already be in service and helping to add capacity to the AT&T broadband network.
Until the FCC and NTIA come together and decide what spectrum will be made available to fulfill the FCC’s promise of 500 MHz of additional broadband spectrum, it seems only logical that they would be in favor of deals that will put more spectrum into service as quickly as possible. Since the demand for wireless broadband is increasing more rapidly than the network operators’ ability to handle the demand, and since there are interim solutions out there involving unused spectrum, spectrum swapping, companies that want to buy spectrum, and companies that want to sell it, the FCC should be working toward a common goal—a goal the FCC continues to restate—of putting more wireless broadband spectrum into service as fast as possible.