Everyone involved in the National Broadband Plan (with the possible exception of broadcasters) says we need more spectrum. Everyone from Chairman Genachowski to the Department of Justice and the NTIA all agree we need “more spectrum“ to meet increasing demand and avoid a “spectrum crisis.”
As Gigi pointed out at the FCC workshop last October, this should sound familiar to anyone who has listened to our national debate on the “energy crisis.” And, like the energy crisis, we need a long-term sustainable strategy. Unfortunately, the proposals getting the most traction amount to the equivalent of expanding offshore drilling and other ways to squeeze out more product without changing our consumption habits. In wireless policy, the spectrum equivalent of “drill, baby, drill” is “clear and auction.” This competes with the vision of open spectrum solutions, such as the broadcast white spaces, or trying to stretch existing allocations, such as through roaming agreements and improving receiver standards. Not that the FCC has entirely neglected these things. To the contrary, the FCC has recently taken steps to move forward with the broadcast white spaces proceeding and may well include recommendations to enhance receiver standards. But what grabs headlines and takes up all the air at spectrum policy debates these days is finding more spectrum to auction.
To use the energy crisis analogy, if clearing and auctioning is like expanding drilling and adding ethanol, improving receiver standards and mandating roaming is like raising mileage requirements, and shared spectrum is like developing an electric car that works on hydrogen fuel cells.
As you might have gathered, we at PK like “clear and auction” the least (although it may be necessary in the short term) and prefer implementing open spectrum solutions for a variety of reasons. Start with the fact that whether you think of “spectrum” as the “public airwaves” or as an artificial limitation based on the fact that until we developed “smart” devices we needed to carefully control radio transmissions to avoid interference, auctioning little government monopolies to access spectrum to a handful of licensees runs against the idea of an open platform where all can innovate freely without permission.
But clear and auction has an advantage in policy circles. In addition to fitting existing business models and legacy technology, clear and auction provides money to the U.S. Treasury without raising taxes. In the annual budget games, an ability to score several billion dollars in revenue without raising taxes (whether or not it really happens) has a lot of value for an Administration trying to fund two wars and a host of economic and social programs. So while we have an FCC and an Administration that understands the value of promoting open spectrum (as shown by continuing work on the broadcast white spaces) a pragmatic sustainable spectrum policy also has to generate some direct revenue to satisfy the bean counters at OMB who don’t care about spectrum efficiency or innovation, or the importance of the “public airwaves” as a public resource, or any of the other things supporters of open spectrum usually talk about.
At the same time, clear and auction faces resistance from federal agencies other than OMB. While everyone has focused on reclaiming broadcast spectrum, the federal government holds the largest blocks of exclusively allocated spectrum. The federal government also does a phenomenally poor job of accounting for what agencies do with this spectrum, except in the most general way (e.g., “the Defense Department uses it for secret stuff”). This convinces everyone who wants more clear-n-auction spectrum that the federal government could easily get more efficient and produce a couple of hundred more megahertz for auction. From the perspective of federal users, however, the only reward for getting more efficient and using less spectrum is that you spend money and lose resources you may need someday in the future. Federal demand for spectrum is rising as federal agencies modernize and improve their own operations to include mobile operations or fixed wireless broadband. Clear-n-auction means an agency that needs more spectrum in the future, or needs spectrum instantly in a crisis, won’t have it or must spend money to get it from the private sector licensees.
To be clear, while we speak about “federal spectrum” as if it were one thing controlled by one entity, what we actually have is a set of agency allocations managed independently and zealously guarded against private sector “poaching.” A pragmatic and sustainable spectrum policy will recognize these constraints as well, rather than keep trying to brow beat resistant federal agencies into submission while simultaneously starving them of spectrum they may need for the future. It would also be nice to centralize and standardize federal spectrum management to the extent possible, to maximize economies of scale and make it easier for federal entities to upgrade their systems and interoperate.
Finally, on the private sector side, a spectrum access policy should get spectrum to market quickly. Clear-n-auction spectrum takes years to go from initial designation of spectrum to rules to auction to clearing the band of pre-existing users. The 700 MHz auction took from passage of the 1996 Act to June 12, 2009. And even now, it will take another year to clear out the wireless microphones. Federal spectrum policy should also introduce competition, encourage innovation, and meet the needs of non-CMRS spectrum users. Right now, spectrum policy is driven by the perceived iPhone onslaught, with nary a thought for the much less sexy but equally critical industrial and machine-to-machine (M2M) spectrum. Yes, companies can purchase M2M service from existing cellular providers, but this remains a sideline business and secondary to their primary residential and enterprise customer voice and data services.
Where could we find a set of spectrum policy recommendations that: (a) generates federal revenue, (b) doesn’t clear and auction federal spectrum, while (c) working to make federal users more efficient while meeting future federal need, and (d) encourages innovation and competition? Why right here, with a little economic study to support the claim of generating revenue for OMB.