Last month, we warned about how some folks in Congress (with support of the usual suspects) wanted to get some really bad law on the future of wireless included in the Payroll Tax Cut Extension. The proposed law would have:
a. Stopped the FCC from having any kind of net neutrality conditions on any future wireless services the FCC would create by auctioning more wireless spectrum licenses.
b. Stopped the FCC from setting aside licenses for new entrants or competitors. As a result, the largest wireless carriers, AT&T and Verizon, would continue to buy up all available spectrum — hamstringing existing competitors and effectively preventing any new wireless carriers from getting into the business.
c. Stopped the FCC from protecting the new “Super Wifi,” the unlicensed wireless use now authorized in empty TV channels (TV “white spaces”), by requiring the FCC to auction off all wireless capacity recovered from TV broadcasters through the voluntary “incentive auctions” created by the statute. (More details on incentive auctions and unlicensed spectrum here).
Yesterday, Congress reached a deal on the Payroll Tax bill which included the spectrum reform piece. Happily, a lot of changes happened over the last few weeks. Here’s how we did:
a. Net Neutrality. We got a total win here. The provision was stripped out of the bill entirely.
b. Wireless Competition. We got a partial win. The law does take away the FCC’s ability to prevent anybody who meets the financial, technical, and character rules from participating in “any system of competitive bidding.” But it includes a clause that the FCC can still make “rules of general applicability, including rules concerning spectrum aggregation that promote competition.”
So what does that mean? As we read it, that means the FCC could do any of the following. It could impose an absolute limit on how much spectrum anyone could have (called a “spectrum cap”). A company could still participate in an auction, but if it went over the limit it would need either to get rid of some other spectrum or not get the new licenses. Also, the FCC could set a rule for any specific auction that prevents any one company from winning too much (as happened in the 700 MHz auction, where Verizon and AT&T won most of the licenses). For example, the FCC could say “No one bidder is allowed to win more than 20% of the licenses.” That would be a rule of general applicability, and would still prevent the largest companies from getting everything.
What the FCC can’t do is say: “The two largest wireless carriers are not allowed to participate in this auction. AT&T and Verizon, you guys sit this one out and give someone else a chance.”
I score this as an 80% win for us. Needless to say, AT&T has a different view. And yes, it does make it harder for the FCC to have narrowly tailored auction rules to promote competition, and AT&T can claim that this expresses a clear intent of Congress to let everybody bid on every single license. But on the whole, especially as House Republicans made this their biggest issue over the course of the negotiations and it attracted the hardest industry lobbying, we are pleased with what we got.
c. Unlicensed Spectrum/SuperWifi. One the whole, we think we potentially did very well here, but it’s complicated and will depend a lot on implementation by the FCC when the auctions finally happen. But the critical thing this means is that there will absolutely be unlicensed TV white space everywhere in the country, which is what we needed to keep developers investing in the technology.
What the legislation does is set up a “white spaces for white spaces” swap. The bill makes it clear that the FCC can have “gaurd bands” when it designs the new wireless service from reclaimed broadcast spectrum, and that it can put unlicensed spectrum in the guard bands. The bill also makes it clear that nothing is meant to affect the use of TV white spaces in the remaining broadcast band. If a lot of broadcasters cash out, that will eliminate a lot of existing TV white space (because the bands empty channels will either be filled by the surviving broadcasters or combined with other stuff to be auctioned off), but it will create more guardband space. If broadcasters like staying broadcasters and don’t cash out, then we will still have the TV white space we have now.
What this means is that all the people building and deploying the new Superwifi devices can keep doing so, knowing that one way or another they will still work. Meanwhile, because the gaurd band use doesn’t count against the budget score as spectrum “given away,” the folks who wanted to auction everything can claim (as they are doing) that they stopped the FCC from “giving awayspectrum.” (We will pause to consider the peculiar world view that says letting the public use the public airwaves for free, it’s a “give away,” but when you pay broadcasters billions of dollars to give back the licenses to use the public airwaves they got for free, that’s being “fiscally responsible.”)
It’s a good day in policy land where everyone can claim some kind of win. We’ve always said here at Public Knowledge that smart spectrum policy can actually be the proverbial “win-win” scenario rather than a zero-sum game with a set of winners and a set of losers. Thanks to the many allies and individuals that worked with us — particularly in the last two months — to turn this bill around, we converted a disaster to something that can be made to create a vibrant, competitive wireless future for all of us. Like always, a lot will depend on how ell or poorly the FCC does its job when it comes time to make this stuff happen. But for today at least, the wireles future looks a lot brighter than it used to look.
Anyone who wants to read the full text of the wireless part of the Payroll Tax Bill, you can find it here.