Consider this scenario: Say that in 1927, the feds turned over wide swaths of public land to mining companies, which made many millions harvesting that resource. But that mother lode has dried up lately, and the miners have moved on to new frontiers. The land is sitting fallow. Meanwhile, a new industry -- say, grain farming -- needs that acreage and could put it to productive use. So what do the mining companies do? Refuse to return the land unless they're paid handsomely. And instead of playing hardball with the former miners, the government agency in charge sits on its hands for years as consumers pay ever-higher prices for bread, cereal, pasta, and other food staples.
Swap in "spectrum" for "land," "broadcasters" for "miners," and "mobile telecom carriers" for "farmers" and you have a (dramatically simplified) analogy for what's going on in Washington.
The Telecommunications Industry Association, which represents the communications industry, recently expressed polite concern about the FCC's announcement that the earliest possible date for the voluntary "incentive" auction of 600-MHz spectrum is early 2016. Why the delay? The FCC has a lot on its plate, not least the Net neutrality political hot potato. But we also have broadcasters fighting, in court, to extract millions of dollars to return what is an underused public asset that they never paid a dime for. The National Association of Broadcasters filed a suit in August clearly meant to disrupt the auction process.
[Personal freedom trumps network protection: FCC-Marriott WiFi Blocking Fine Opens Pandora's Box.]
Some background: The incentive auctions cover the 600-MHz band, which is now licensed to television broadcasters for the over-the-air transmissions -- you know, to TVs with rabbit ears -- used by a tiny percentage of households. The auction process itself is incredibly convoluted, involving rulemaking that started in 2012. In a nutshell, the FCC proposes a reverse auction to see what spectrum broadcasters are willing to part with, and for what price. It will then package and sell that spectrum to mobile carriers and use the revenue to pay broadcasters -- all for a public resource that they were given and are dramatically underutilizing. Here's an in-depth historical and legal analysis.
Meanwhile, back in the real world, practical LTE downlink rates are around 14 Mbps -- and that's for all the users in a sector. Consider that a high-definition video stream from the NFL Network consumes about 350 MB per hour, according to Verizon's data calculator. We did the math: That's 78 times the bandwidth of a standard text or voice call. Tablets consume even more data than smartphones, and growth of the Internet of Things will depend on the availability of far more broadband wireless capacity.
IT and telecom organizations should be paying attention. Make no mistake: A spectrum crunch is coming. Allegations of bandwidth throttling, er, network optimization notwithstanding, the only effective tool Verizon, AT&T, and other mobile carriers have to control customer demand is price. Releasing the 600-MHz band is critical to boosting supply and thus keeping mobile broadband costs in check.
"600-MHz spectrum represents a public resource with huge economic and societal value," says Peter Rysavy, president of Rysavy Research and an expert on wireless technologies. "The FCC is exerting heroic efforts in its incentive auctions to realize the potential of the spectrum while balancing the needs of all parties involved. Broadcasters should accept the innate responsibility that comes with licenses that the public has generously bestowed on them and participate in the auctions in a good-faith manner."
However, Rysavy says political reality makes it unlikely there will be any forceful taking of spectrum. He's right. Congress can't even agree to pass a budget or confirm a new surgeon general. So operators are jury-rigging workarounds, including WiFi offload (e.g., Comcast turning subscribers' home routers into public access points), and some have resorted to throttling bandwidth -- for which, somewhat ironically, the feds recently sued AT&T. New mobile broadband technologies, including next-generation LTE Advanced, will help. And the US government is itself sitting on underutilized spectrum, so its hands aren't entirely clean.
Some argue that taking spectrum by eminent domain would set a troubling precedent. What's next? The Internet backbone? Cable? Fiber? This is a flawed analogy. First, we can always lay more fiber. Second, the owners of that capacity paid to build it. Spectrum is a finite resource that the broadcasters didn't pay for, nor do they "own" it. And third, "eminent domain" refers to the process of taking someone's rightful property for the greater public good. Spectrum is not the broadcasters' property.
Look, I can't blame broadcasters for trying to extract every dime and concession. After all, they face a very uncertain future. But at the very least, the FCC should ensure all future spectrum allocations come with a return requirement that triggers when usage falls below some set percentage for a given period.
But first, let's get the auction on the front burner. There is no replacement for more spectrum. It's time to remind the FCC, directly and via our elected representatives, that it answers to citizens and taxpayers, not to broadcasters.
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