LAS VEGAS – Federal Communications Commission Chairman Julius Genachowski came to CES on this week to ruin the wireless party by urging Congress to authorize an auction of airwaves held by American TV broadcasters. Action must be taken, he said in his keynote address, to help relieve what he called "a looming spectrum crunch" that threatens America’s lead in rolling out fourth-generation mobile broadband services.
"If you shut off the internet virtually nothing on the CES floor would work," Genachowski noted. The chairman wants Congress to give his agency the authority to conduct voluntary incentive auctions that would free up spectrum for broadband bandwidth. Broadcasters would voluntarily vacate their spectrum under that plan, for a price.
"The incentive auction needs to become law now," said Genachowski. “We're going to get swamped by an ocean of demand" on mobile networks that could lead to slower speeds and higher prices he warned the CES audience. AT&T, Verizon Wireless and other mobile carriers have warned that their current spectrum will top out in the next four or five years the result of more users buying multiple wireless connected devices, including smartphones and tablets.
(Ed note: It’s worth adding here that while AT&T and Verizon are now deploying LTE products and services on spectrum reclaimed from broadcasters there in 2009, here in Canada we don’t even yet have rules set for the auction of airwaves in those very same frequencies, in the 700 MHz band, that our broadcasters stopped transmitting upon in August. An auction won't even happen until 2013, assuming the Canadian government announces the rules, as it is hoped, in the next few weeks.)
Until recently mobile carriers have relied on mergers and acquisitions to add spectrum. But the agency's denial of the $39 billion AT&T/T-Mobile deal, and its concerns about Verizon's plan to acquire spectrum from a coalition of cable providers, indicates that this strategy may no longer open.
Congress is now considering a bill to run voluntary auctions of little used spectrum licenses owned by broadcasters and will rule by March 1, said Genachowski. "Spectrum is a vital public asset," he added. Proceeds from the spectrum would be split between companies, mostly broadcasters, that own the spectrum and the U.S. Treasury, under Genachowski’s plan.
He cautioned that the U.S. risks falling behind in the global race to provide broadband at levels that can compete with other nations. While Europe pulled ahead of the U.S. on 3G technology, the U.S. has built up an early lead in 4G that it risks losing.
Just how much spectrum needs to be freed up is still up for debate. In 2010 the FCC's National Broadband Plan estimated that growth in mobile broadband applications, customers, and usage required an additional 300 MHz of prime spectrum by 2015, and 500 MHz by 2020. Of course that prediction was before the iPad took off and the advent of full-time digital assistants like the iPhone 4S’ Siri. (Ed note: Again, in Canada, we have no similar plan, beyond how to get broadband to rural folks.)
Since 1994, when Congress first introduced spectrum auctions the FCC has conducted more than 80 auctions, generating more than $50 billion in revenue for the Treasury. But today there’s nearly no spectrum left, much of it given away for free in the early days of radio and television.
In response the National Broadband Plan first proposed a new system of "voluntary incentive auctions," or VIAs, under which broadcasters and other private license holders would be encouraged to offer some, or all of their current allocations to the FCC to package into new auctions. The revenues raised from the incentive auctions would be split between the license holder and the government. However, the FCC cannot conduct VIAs without authorization from Congress.
Critics of Genachowski contend he has been too focused on VIAs as a solution and has nothing to fall back on if they don’t work. Given that the design and execution of new auctions can take three to five years, and the agency still needs the go-ahead from Congress before they can even begin, the predicted wireless crunch could impact users well before a working solution is put in place.
John Bugailiskis, Cartt.ca’s consumer electronics editor, was in Las Vegas this week covering the Consumer Electronics Show.
