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CES Feature Articles

January 12, 2012

Spectrum Incentive Auctions Highlight FCC Chairman's CES Keynote

Federal Communications Commission (FCC) Chairman Julius Genachowski (News - Alert) took full advantage of his keynote spot on the CES program to use the big stage as a big microphone. 

The headline grabber was his prepared and extended remarks (as reported by Reuters, based on their post-talk interview) for quick action for the U.S. Congress to enable the auctioning off of radio spectrum currently controlled by broadcasters to mobile data operators without contemplated restrictions. 

Genachowski also took the opportunity to beat the drum for all of the activities on the FCC’s (News - Alert) platter —Universal Service Fund (USF) and Inter Carrier Compensation (ICC) reform, Lifeline service reform, and a host of other public and private initiatives — he feels are needed to intensify commitment to and accelerate the path toward universal broadband. His message has been consistent for years. Every chance he gets, he trumpets the role the FCC must play in ensuring we don’t fall behind the rest of the world which is racing to provide universal broadband (wired and increasingly wireless) access for competitive advantage and sustainable economic growth.  

He also could not help himself and even took a shot at Verizon’s lawsuit challenging the FCC’s network-neutrality regulations which went into effect in November when he told CES (News - Alert) president Gary Shapiro that it was “distracting.” The context for this being that the regulations are basically a form of rough justice and are designed to spur not hinder innovation or impede network-based competition.

Bi-partisan support for airwaves auctions

The FCC is looking for congressional approval to give broadcasters a financial incentive to return un-used spectrum to the FCC so it can auction it off to spectrum-starved mobile operators. The chairman noted that he has recently received a letter from legislators showing a “broad bi-partisan agreement we need incentive auctions."   However, he expressed some exasperation to the audience that, "As we get down to the wire on incentive auctions the sticking points are proposals" restricting how the auctions should be run. These restrictions include:

  • Restricting the FCCs ability to allow the spectrum to be used for services similar to un-licensed capabilities like Wi-Fi.
  • Preventing the FCC from deciding whether it needs to put restrictions on who can bid in the auction in order to protect competition.

Genachowski hopes for action without the inclusion of restrictions on FCC powers to run the auctions as they see fit by March 1. This is the deadline for a vote on the controversial payroll tax legislation in which the incentive auction would be included. He feels that the commission’s track record speaks for itself. And his point is well taken given that the FCC has successfully managed roughly 80 wireless spectrum auctions in the last 20 years that raised about $50 billion.

Just as a cautionary note to readers not familiar with auction history, however, Genachowski probably should have been more temperate with his remarks. Yes, auctions have generated a lot of money for U.S. taxpayers, as well they should, since spectrum is a scarce national resource that requires vigilant stewardship. Yet auctions were supposed to create a healthy competitive environment. It can be argued that with AT&T (News - Alert) and Verizon -- subsidiaries of the two largest landline carriers in the U.S. -- being the dominant cellular companies after all these years of auctions (and the FCC looking askance as a result of the now dead AT&T acquisition of T-Mobile (News - Alert)), whether auctions lead to robust competition is worth examining since it calls into question the quality of FCC stewardship. 

That said, broadcasters should be incentivized to get off what they are not using given the spectrum crunch, and consumers should be allowed to benefit sooner rather than later, get a return on our resources rather than seeing telecom companies cut deals with broadcasters and other spectrum holders as has been happening and have all of the devices they own or soon will own that are spectrum consumption intensive have the access needed to provide quality experiences.

Spectrum scarcity is not a matter of if but when. Operators and analysts all agree that time is short and action is needed.  This is true not just in the U.S. but around the globe in developing countries with saturated wireless markets now facing a tsunami of bandwidth hungry devices seeking quality connectivity. Will the FCC get its way and have a clean bill, or any bill for that matter, by March? Given the toxic political environment being stoked by the presidential election year, it is unfortunate that fate rests on the payroll extension vote. As the saying goes, “One can only hope!”

Want to learn more about 4G wireless technologies and issues impacting the mobile industry? Then be sure to attend the 4GWE Conference, collocated with TMC’s ITEXPO East 2012taking place Jan. 31-Feb. 3 2012, in Miami, FL. The 4GWE Conference provides unmatched networking opportunities and a robust conference program representing the wireless ecosystem. The conference not only brings together the best and brightest in the wireless industry, it actually spans the communications and technology industry. To register, click here.

Peter Bernstein is a technology industry veteran, having worked in multiple capacities with several of the industry's biggest and best known brands, and has served on the Advisory Boards of 15 technology startups. To read more of Peter's work, please visit his columnist page.

Edited by Rich Steeves

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