It’s not as if there’s harmony in wireless carrier world regarding the structure of spectrum auctions, or even
who does what best, but they do share a common goal—securing more spectrum.
“If you want to maximize
auction revenues, you should sell one license. But I don’t think that’s what
you want to do,” said Tom Ford, chief economist with the Phoenix Center in
Washington. Ford was among the witnesses who testified Tuesday at a Senate
subcommittee hearing on the state of U.S. wireless communications.
Ford was the most pointed among witnesses, who represented wireless carriers
large and small, networks and consumers. He defended the position of larger
wireless carriers calling for an unfettered spectrum incentive auction.
Regulators and lawmakers are tossing around the idea of capping the
amount of spectrum one carrier can control so that Verizon and AT&T don’t
walk away with all the marbles at the next auction of TV frequencies,
tentatively planned for June of next year.
“If you take roaming, for example… we have to force larger carriers with
nationwide networks to allow smaller carriers to access their networks,” he
said. “To some extent, if we keep imposing these rules, we’re forcing these
things to fit” into a model that doesn’t reflect the market. “If you’re not big
enough to serve the market, should you be in the market?”
What Steven Berry heard were fighting words. Berry is president and CEO of the
Competitive Carriers Association, a lobby representing local and regional
carriers, some with fewer than 5,000 customers.
“I don’t agree with much of anything Mr. Ford just said. If you live in rural
America and you’d like to have access, there are carriers out there that would
like to provide it,” he said. “That’s their business model. The larger
carriers—that’s a decimal on their balance sheet.”
Berry referred to AT&T and Verizon as the “twin Bells,” leading the
industry in a march toward duopoly. The two companies account for 67 percent of
industry revenues, he testified, versus 35 percent for the two top auto makers,
and 24 percent for the two top firms in the oil industry.
“Not surprisingly, the FCC has been unable to find ‘effective competition’ in
the wireless industry in any of its last three annual competition reports,” he
said in prepared remarks.
Steve Largent, former Congressman from Oklahoma and
the president and CEO of the CTIA—The Wireless Association, said he wouldn’t
get into the size debate, yet he did toss in a tidbit about 4G coverage, which is mostly the domain of larger carriers.
“Today, 90 percent of the
people in the market are covered by LTE,” he said.
Berry supports making spectrum available in Cellular Market Areas rather than
solely in nationwide swathes. He said that doing so would yield more auction
revenues because more bidders would participate. The Federal Communications
Commission has put the issue up for comment, to the chagrin of both large
carriers and broadcasters who favor a consolidated band plan.
Interleaving wireless carriers and TV stations on the same channels in
different markets would create unacceptable levels of interference, they say.
Radio frequency expert and TV Technology
contributor Doug Lung also points out that under the interleaved scheme,
cellphones would need filters that could reject high-powered TV transmissions
“in some markets, yet provide reliable wireless service in other markets,”
which would be difficult. “Market-specific radios aren't the
answer, as people will be taking their smartphones and tablets into other
markets.” (See “FCC
Reacts to Split-Band Broadband Wireless Plan Criticism.”
How much broadcast spectrum will become available at auction remains to be
seen. Participation is voluntary and anonymous, and the markets with the
greatest wireless congestion and therefore demand for more spectrum, are also
the most lucrative for TV stations.
“Whether a successful auction can be designed and implemented remains an open
question,” Ford said. “The objectives and constraints on the problem are
mind-boggling, and additional objectives and constraints are being proposed
He instead suggested that to
obtain more spectrum, lawmakers would have to “pry it from the present owners’
hands, pry it from their cold dead hands, in some cases, I suspect.”
While broadcast spectrum is presumably desirable for
its propagation characteristics, the “present owner” with the most spectrum is
the federal government. Both Ford and Largent took aim at the federal spectrum
holdings. Ford said federal agencies hold about half of the licenses between 225
MHz and 3.7 GHz. Largent estimated that the fed holds about 70 percent of all
“We have to find a mechanism
to coerce the government to give up spectrum,” Largent said.
More spectrum for wireless was a mantra at the hearing such that Bill Nelson,
Democratic senator from Florida, asked Largent what would happen if lawmakers couldn’t squeeze it out broadcasters or federal agencies.
“To what degree can you make systems more effective and efficient if we can’t
free up spectrum?” he asked.
Largent first said he’d leave those
technical issues “to the experts,” and then suggested that wireless devices
were reaching the threshold of efficiency.
“What you’ll see happen… my guess is, you’ll see higher prices. That’s how a
carrier or a manufacturer deals with inefficiency in the marketplace,” he said.
Berry disagreed. “We are
going to have to get better on the technology side, whether it’s software-defined
antennas… there are other things we can do to enhance efficiency of spectrum.”
Sen. Ron Johnson (R.-Wis.) asked witnesses what was “the No. 1 stumbling block
to more spectrum.”
Largent said keeping the 2014 auction on track, with two empty seats at the
“And broadcasters may not buy into it. Our companies are working with
broadcasters… to free up 120 MHz if we can,” he said.
Berry said of broadcasters, “for all the good they’ve done, 90 percent of the
people get their service over a cable or a satellite. I think we know where we
have to go get it.”
Doug Webster, vice president of Service Provider Routing, Mobility
and Video Marketing for Cisco, said, “A
hurdle would be the lack of urgency to get as much spectrum as quickly as
possible out into the marketplace. As for the voluntary incentive auction, the
FCC needs to drive education. We can’t expect a broadcaster to understand all
of the nuances of the telecommunications world.”
Webster also told Sen. Mark Pryor (D-Ark.), who is chairman of the Subcommittee
on Communications, Technology and the Internet, that offloading data traffic
onto broadcast networks likely would not work.
“That is one option to
consider, but the large majority of demand right now is on-demand, where
broadcasting doesn’t work,” he said.
~ Deborah D. McAdams