Collateral Damage: How White Spaces Could Get Squeezed By Incentive Auctions

Cover Story

Collateral Damage: How White Spaces Could Get Squeezed By Incentive Auctions

By Paula Bernier, Executive Editor, TMC  |  November 01, 2011

This article originally appeared in the Nov. 2011 issue of INTERNET TELEPHONY.

It’s no secret that the U.S. is in the red.

We’ve racked up a national debt of $14.7 trillion. That’s $47,250 per person, if you average it out by the U.S. population.

Now some players in the wireless space are concerned that this red ink will bleed over into white spaces.

Red, White & Blue

Various efforts at the federal level that call for the repacking of TV channels could significantly diminish the potential for white spaces. Perhaps the most prevalent effort on this front is known as S.911, which the Senate Commerce Committee passed in June. Other potential threats to white spaces, according to Stephen Coran, an attorney with Rini Coran, include a discussion draft from the House majority of the Energy and Commerce Committee, a draft from the House minority, language in the debt ceiling bill, and President Obama’s jobs initiative.

Standing committee recommendations were due to the Joint Select Committee on Deficit Reduction on Oct. 14, said attorney Martin L. Stern of K&L|Gates. The Joint Select Committee on Deficit Reduction, aka the Super Committee, is expected this month to make its recommendations for decreasing the national debt. As of press time, the Super Committee was slated to make its recommendations by Nov. 23 for $1.5 trillion in deficit reductions over the next decade. If a majority of the 12-member bipartisan panel agrees with the proposal, it could come before Congress by Dec. 23.

The idea behind the efforts described by Coran is to move TV channels closer together to free up more spectrum for so-called incentive auctions. Such auctions would make more spectrum available to cellular service providers, several of which have been talking about ways to address the spectrum crunch. The federal government, which has made big money in the past from selling off spectrum, could use the bulk of this windfall to support new government programs and/or pay down the national debt. It also would likely give a cut of the proceeds to the TV broadcasters that would have to hand over their spectrum as part of the deal.

Yet another key bullet in this whole shooting match is the nationwide public safety network, which has been on the drawing board since the terrorist events of Sept. 11, 2001.

“Right now public safety is front and center,” Stern said in an early October interview with INTERNET TELEPHONY.

House Democrats want to give public safety organizations a cut of the incentive auction action to enable them to create the nationwide public safety network championed in The National Broadband Plan. Public safety officials earlier this fall staged media events pushing a message that they need control of D-block spectrum for a national public safety network to keep the populace secure.

Meanwhile, others argue that public safety has more than ample spectrum and that even if a portion of incentive auction proceeds were earmarked for infrastructure to create the network, it still wouldn’t be near enough to fund the build. The FCC report called “The Public Safety Nationwide Interoperable Broadband Network: A New Model for Capacity, Performance and Cost” suggests the creation of a nationwide public safety network would cost on the order of $40 billion. Yet, as attorney Barlow Keener of Keener Law Group pointed out in his blog earlier this year, the Rockefeller-Hutchinson bill talked about selling off 84mHz to 120mHz of TV spectrum and giving public safety organization made up of leaders from cities, states, and federal agencies just $12 billion.

Then there’s the potential white spaces problem.

If the powers that be decide to put rules in place calling for the repacking of TV channels, that would lessen the amount of unlicensed white spaces spectrum available, and could significantly impact the equipment economies of scale and economic business models for white spaces entrepreneurs.

“It would be a tragedy” if such legislation is passed, said Richard Shockey (News - Alert) of Shockey Consulting.

Carl Ford of Crossfire Media, which puts on the 4GWE and SuperWiFi Summit events co-located with TMC’s ITEXPO, added: “The bills enabling incentive auction strategies floating through Congress are in some ways like the stimulus package. They have frozen plans for development of products as companies wait to see if the white spaces market is taken away.”

While these federal efforts aren’t active moves against white spaces, added Coran, white spaces could nonetheless become “collateral damage.”

The Value of Unlicensed Spectrum

That would be a shame, especially considering all the innovation, jobs and creation of wealth that has happened to date as a result of unlicensed spectrum. Considering its broad prospective applications, Shockey said, the prospects of activities related to white space to create jobs and contribute to the nation’s gross domestic product are significant.

Indeed, FCC Chairman Julius Genachowski himself has projected that the new white spaces would deliver “$7 billion in new economic value annually.” 

Brough Turner, founder and CTO at netBlazr Inc, recently wrote a piece for TMC’s (News - Alert) new publication Next Gen Mobility: “For decades, more innovation and more products have been based on the few available slivers of unlicensed spectrum than on any other bands, even mobile. So the prospect of license-exempt access to TV white spaces has been hailed as a big step for U.S. innovation.

“Unfortunately, Congress has peculiar budgeting rules,” Turner continued. “If the Congressional Budget Office estimates a future spectrum auction could bring $X and Congress mandates the sale of that spectrum within the next four years, then that possible future money can be spent today. It’s free money immediately. If the auctions don’t happen or don’t bring in what was estimated, that’s a hole in a future budget – not our problem. Thus spectrum policy is caught in a bind with little hope of meaningful reform.”

How this all ultimately plays out is anyone’s guess at this point. There are powerful companies and organizations on both sides of these discussions.

White spaces supporters include such big names as Dell, Microsoft and Google (News - Alert). Although some INTERNET TELEPHONY sources have suggested that Google may opt to keep quiet on this one given the anti-trust scrutiny it’s been facing of late.

Meanwhile, CTIA (News - Alert) has been pushing for incentive auctions to make more spectrum available to its membership. In a recent interview, Chris Guttman-McCabe, vice president of regulatory affairs at the CTIA, told me that his organization and the Consumer Electronics Association jointly presented a paper to the FCC in February that said reallocating and auctioning off 120mHz of what they call “underutilized broadband television spectrum” would produce more than $33 billion in net proceeds for the U.S. Treasury. This money, which the associations say represents a conservative estimate, could be used in part by the government to offset the deficit and fulfill the vision outlined in The National Broadband Plan, he said.

However, even if incentive auctions happen, it doesn’t necessarily mean white spaces will be squeezed out, at least not entirely. And there are alternatives to incentive auctions that could help the country move toward many of the same goals.

Jim Carlson, CEO of equipment manufacturer Carlson Wireless (News - Alert) Technologies Inc., in September was happy to note that his company and other white spaces proponents have had some success in working with politicians to adjust potential legislation so white spaces doesn’t get lost in the shuffle. For example, he said, Microsoft worked with the staff of U.S. Sen. Barbara Boxer (D-Calif.) to add language about the preservation of white spaces to S.911.

Stern of K&L|Gates, meanwhile, suggested that a broadcast flexibility proposal could be a good alternative to the incentive auctions now on the table. Broadcast flexibility, he said, is “a win-win, in that promotes innovation and efficiency; keeps broadcasters in the game and gives them a stake in the mobile broadband future; allows for continued use and development of white spaces; and ensures funds for the Treasury, overall promoting the twin goals of jobs growth and debt reduction.”

As for the Federal Communications Commission, in September it reiterated its support for white spaces and talked about the fall launch of a white spaces database.

Just how that will square with the activities of the rest of the Obama administration, Democratic politicians and Congress as a whole remains to be seen. According to attorney Keener, who moderates at the ITEXPO-co-located events 4GWE and SuperWiFi Summit, the Democrats seems to be afraid to ask that white spaces be exempt from incentive auctions, as it could make it look as though they aren’t serious about deficit reduction.

Edited by Stefania Viscusi