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Debate Heats Up over Spectrum Auctions

Media outlets, regulators and lobbyists this week cranked up the rhetoric over the potential effects of the FCC’s upcoming wireless spectrum auctions.

In the online articleThe myth of the wireless spectrum crisison, Tim Farrar used the Wireless Association's (CTIA's)Semi-Annual Wireless Industry Surveyto show CTIA's own numbers show wireless data growth is actually slowing.

He writes, “Last week, CTIA trumpeted the latest results of their semi-annual wireless industry survey with the headline 'Consumer Data Traffic Increased 104 Percent.' Among their conclusions were that Americans have a voracious appetite for mobile data, and that the wireless industry in turn needs more spectrum to meet those demands. However, underlying the statistics are numbers that tell a far different story: in fact, there was a dramatic slowdown in wireless traffic growth during the first half of 2012. Of course, CTIA doesn’t want anyone to realize that, because it is significantly at variance with CTIA’s narrative of an impending 'spectrum crunch' into which so much lobbying effort has been invested.”

Farrar, president of Telecom, Media and Finance Associates, cites several reasons wireless carriers are warning of a spectrum crisis including large carriers wanting to avoid a cap on spectrum holdings, small wireless operators who want more spectrum to lower the cost of network expansion (more spectrum allows fewer cell sites), and manufacturers like Cisco that want to sell more networking hardware. As Farrar, notes, “Those who have made speculative investments in spectrum want their investors to believe these assets will become more valuable.” He backs up his arguments with links to data and research.

On Monday, CTIA responded to the posting with a postingThe Truth about the Wireless Spectrum Crisis byDr. Robert Roche. Roche begins, “I’ve been at CTIA for 19 years, which means that I’ve been responsible for our semi-annual survey since 1993. As those who have worked with me know, I’m a stickler for the facts and ensuring we’re 100% honest and on the “up and up” when it comes to how we convey the statistics.” He continues, “So forgive me as this may be a heated blog post since some people have chosen to suggest that I am 'hiding' information, which is categorically false and disingenuous. It’s also offensive. CTIA’s interest is in fact-based analysis, not speculative and hyperbolic insinuations. The fact of the matter is that American’s data usage did increase, whether you look at twelve-month or six-month increments.”

Regarding Farrar's contention that wireless data growth is slowing, Roche says, “In fact, if you look at the year-to-year growth from June 2010’s six-month volume (161 billion MB) to June 2011 (341 billion MB) to June 2012 (633 billion MB), you see a usage curve that is shooting up dramatically. In fact, this pace would bear out Cisco’s projections.”

In conclusion, Dr. Roche says, “We think that conclusion is completely backwards. In spite of significant efforts by carriers and consumers to offload traffic to Wi-Fi, there was still an 86% increase from the first six months of 2011 to the first six months of 2012, an increase in traffic of almost 292 billion MB—more than the entire volume of data traffic in the first twelve months CTIA measured it in 2009 and 2010.”

On Tuesday, web site carried a story from Molly Bernhart Walker sayingFCC official tempers spectrum auction estimates.She writes, “It's possible that initial estimates on the amount of spectrum to be freed up by incentive auctions are overly optimistic, said a Federal Communications Commission official Oct. 18.” The official, Gary Epstein, a senior advisor to FCC Chairman Julius Genachowski, co-leads the Commission's incentive auction task force.

The National Broadband Plan recommended the FCC take 120 MHz of spectrum from the TV broadcast figure. Although many people feel the FCC is still out to take away 20 UHF TV channels (close to half the useable TV spectrum), one way or the other, the FCC has been moving away from that number. Last March IreportedFCC Commissioner McDowell stated, “Congress passed legislation that some estimate could place up to an additional 80 Megahertz of prime television broadcast spectrum into American consumers' hands.”

Last week, Epstein, in hisprepared remarks to the Media Institute, made it clear that the there was no predestined amount of spectrum to be recovered. He said, “Because the forward auction is interdependent with the reverse auction and the repacking, there is no way for us to know in advance the amount of spectrum we can make available in the forward auction, the specific frequencies that will be available and availability may vary by geographical area. Needless to say, this complicates things a bit.”

The incentive auctions were also a topic inCommissioner Mignon Clyburn's remarks to the 2ndAnnual American Spectrum Management Conference. In it, she mentions the Cisco study mentioned earlier, saying “consider this: Cisco projects that mobile-connected tablets will generate as much traffic in 2016, as the entire global mobile network in 2012.” She didn't mention the National Broadband Plan's recommendation that the FCC take 120 MHz of UHF TV spectrum, but echoed Gary Epstein's comments, stating, “While we don’t know exactly how much spectrum incentive auctions will free up, there has been great interest generated from broadcasters and wireless service providers. If we approach this opportunity properly, we should strengthen both the broadcast TV ecosystem and mobile wireless industries.” She also addressed the issues with use of TV broadcast spectrum near the Canadian and Mexican borders: “I would also like to emphasize that we plan to work closely within the region—and particularly with our neighbors to the North and the South – as we move forward with our incentive auction proposals. We are early in the U.S. process and can only benefit from regional input.”

Doug Lung is one of America's foremost authorities on broadcast RF technology. He has been with NBC since 1985 and is currently vice president of broadcast technology for NBC/Telemundo stations.