Unlicensed vs. Licensed Spectrum, Divides Lawmakers

WASHINGTON – Guard bands are designed to prevent interference, rather than cause static as they did yesterday in a House Communications and Technology subcommittee hearing. A schism has formed between members who view unlicensed guard band spectrum as lost revenue, and those see it as an crucial incubator for new technologies.

“Guard bands… are suboptimal use of spectrum,” said subcommittee chairman, Oregon Republican Greg Walden at the hearing on spectrum law. “Their size should be minimized.”

Walden blasted the Federal Communications Commission’s Notice of Proposed Rulemaking on incentive auctions, which sets aside two 6 MHz guard bands between TV channels and anticipated wireless broadband transmissions on adjacent frequency blocks. The NRPM proposes allowing these guard bands, and any leftover frequencies, to be used for unlicensed devices. Those frequencies would not be subject to auction.

“Every megahertz of broadcast television spectrum the FCC doesn’t auction means less revenue to fund prerogatives already determined by this committee and this Congress,” Walden said, including FirstNet, the wireless broadband first-responder network, and next-generation 911.

Democrat Anna Eshoo of California followed by asking that a letter signed by 300 parties supporting unlicensed spectrum be submitted for the record. Fellow Democrat, Henry Waxman, also of California, noted that Wi-Fi and Bluetooth, were developed in unlicensed spectrum.

Walden countered with a pie chart suggesting that the unlicensed guard bands might bring as much as $7 billion at auction—enough to pay for FirstNet, he said. FCC Commissioner Robert McDowell testified that it could actually be twice that amount based on past auctions.

All five FCC commissioners testified at the hearing. FCC Chairman Julius Genachowski defended unlicensed spectrum. He said it contributed “hundreds of billions of dollars of value creation” to the economy. When Eshoo later asked him if the guard band set-aside was “a giveaway,” he responded that any economic analysis should look at innovation in unlicensed platforms.

“No one predicted Wi-Fi,” he said.

Commissioner Mignon Clyburn said in her opening statement that Congress gave the commission the authority to “promote the use of unlicensed spectrum.” She cited a study from the Consumer Federation of America that said offloading data traffic onto Wi-Fi and other shared spectrum has saved wireless carriers $25 billion in cell-site construction costs. Overall, she testified, unlicensed spectrum generates between $16 billion and $37 billion a year for the U.S. economy.

Commissioner Jessica Rosenworcel, formerly senior telecom counsel for the Senate Commerce Committee, was measured in her approach to unlicensed spectrum. Licensing ensures interference protections, while unlicensed spectrum provides “low barriers to entry and promotes the efficient use of limited resources,” she said. “Good spectrum policy requires both.”

Short of decrying unlicensed spectrum along party lines, Republican Commissioner Ajit Pai suggested opening 200 MHz in the 5 GHz band.

“Doing so is a legal obligation—the Spectrum Act requires us to do so,” Pai said in his opener. “But I am especially exited about it because it’s smart policy.”

He later told Rep. Bob Latta (R-Ohio) that the 5 GHz band was ideal for unlicensed uses because it offered fast data transmission in small areas, and that transmissions in the band wouldn’t penetrate walls and would therefore be secure.

McDowell questioned whether the 5 MHz block scheme laid out in the NPRM left too much spectrum for unlicensed use. The NPRM anticipates creating a band plan that allocates reclaimed TV spectrum in 5 MHz blocks, on either side of Ch. 37, which is now dedicated to Radio Astronomy. He also questioned where 6 MHz guard bands were “truly necessary to prevent harmful interference.”

McDowell and his fellow Republicans on the subcommittee were concerned about the incentive auctions generating enough money to cover what’s already been spent. The bill authorizing the auctions anticipates as much as $30 billion in revenues. It factored in $20.4 billion to help pay for extended unemployment benefits, after allocations of up to roughly $10 billion for creating FirstNet, repacking broadcasters, and other expenses.

“Given today’s unprecedented budget deficits and the consumer benefits of exclusive-use licenses, I question whether the U.S. can afford not to auction any and all spectrum recovered in this band,” he said.

By comparison, the 2008 auction of 108 MHz of TV spectrum brought in $19 billion, and there was certainty with regard to how much spectrum was available, and where. That’s not the case this time around. While the National Broadband Plan calls for the reclamation of 120 MHz of TV spectrum, the Spectrum Act mandates that broadcaster participation is voluntary. Consequently, various estimates have emerged, but no hard numbers are available. (Walden noted at one point that Preston Padden’s broadcast seller group now had 25 stations, which Padden confirmed yesterday for John Eggerton of B&C.)

Walden tossed out a figure 55 MHz on his pie chart. McDowell told him it was “optimistic.” He later expanded on the subject when Rep. Steve Scalise (R-La.) asked about the Congressional Budget Office’s $25 billion spectrum revenue estimate.

“We have to keep in mind where we need spectrum the most—the cities,” McDowell said. “That’s also where broadcasting is most profitable. In order to yield 60 MHz… that’s 10 TV station licensees, that would have to go dark or channel share, in New York, for example. That’s a lot. I think we need to be more cautious and fiscally conservative on the CBO estimate.”

Pai noted that nothing in the FCC’s NPRM ensures maximum revenues, much less the type of money necessary to cover the set-asides. He said maximized net revenues should be set forth as a closing condition.

“The only closing condition set forth in the NPRM is that the revenues from the forward auction must cover the costs of the reverse auction,” he said. “I do not believe that this closing condition is sufficient since it is essentially like ending a traditional auction as soon as the reserve price is met.”

If the auction fails to raise enough revenue to cover the set-asides, no TV spectrum will reassigned for wireless broadband. Rep. Doris Matsui (D-Calif.) asked Genachowski if the commission had a back-up plan in case not enough broadcasters participated.

“My hope and expectation is that we’ll have a successful process,” he said.

Matsui also brought up incentives for spectrum sharing among federal users. Rosenworcel said federal agencies lack incentives to use spectrum efficiently.

As we move forward, need to be creative about how to incentivize agencies to share spectrum,” Matsui said. “We need to have a long-term process with benchmarks along the way.”

Texas Republican, Joe Barton said the subcommittee was facing “conflicting goals. We want maximum revenue and maximum participation, to free a maximum amount of spectrum and to protect incumbents.”

Barton also brought his concerned for low-power television stations to the table. He noted that the FCC incentive auction NRPM suggests LPTVs without Class A designations might be pushed onto the Internet or cable-only access.

“I didn’t envision that a LPTV would simply end up off the air,” Barton said. “Personally believe that a LPTV that’s been a good licensee shouldn’t end up off the air.”

Genachowski said the commission would keep LPTV stations on the air where it makes sense, “but we haven’t made a determination on this yet.”

Other topics raised at the hearing included Title II, under which broadband networks are regulated as common carriers. Genachowski said there were no immediate plans to close the FCC’s Title II docket. It remains a public forum for comments about network neutrality, he said.

Democrat John Dingell of Michigan brought up the Allotment Optimization Model to be used for repacking TV stations in whatever spectrum remains after the auction, now set for June of 2014. The FCC used some form of an AOM in determining that 120 MHz of TV spectrum could be reclaimed, and despite several pledges to produce it for Dingell, Genachowski never did. The senior member of Congress has since addressed the FCC Chairman as “Ginaski.”

He asked “Chairman Ginaski” if the commission intended to “define explicitly” what reasonable efforts would be made to preserve TV coverage areas according to FCC OET Bulletin No. 69, to which the chairman replied in the affirmative. Dingell also asked if the commission would “commit to sharing with the public its repacking methodology and its elements,” to which the chairman also said, “Yes.”

“We in the border states are very much concerned about losing service, seeing stations go dark, and seeing conflict with our neighbors north and south,” said Dingell, referring to Canada and Mexico.

Rep. Bobby Rush, (D-Ill.) was one of the last members to drill the commissioners, whom he told to “get serious” about media ownership. He said that only 24 full-power TV stations were owned by minorities, and asked each of the commissioners if they thought that was “right.”

One after another, each replied, “No.”