CAPITAL CURRENTS: More spectrum auctions
There are a couple of spectrum auctions coming up that you should know about. The big one is the 700 MHz auction that is tied to the 2009 termination of analog TV broadcasting. But there is an interesting chunk of spectrum at 2 GHz that is still up for grabs.
A chunk of spectrum at
2 GHz is up for grabs
You probably heard earlier this year about the intense lobbying by Google to have the FCC adopt “open access” requirements and wholesale offering requirements for a portion of this 700 MHz spectrum. The FCC made a decision July 31 to auction 62 megahertz of this spectrum, including 22 megahertz (746-757 and 776-787 MHz) that will be subject to open access. That means that licensees will be required to allow customers, device manufacturers, third-party application developers, and others to use devices and applications of their choice in this band. Unhappily for Google, the FCC did not require licensees to offer any of this spectrum on a wholesale basis.
At first, I couldn’t get too excited about that requirement. After all, neither T-Mobile nor AT&T impose any restrictions on the phones I can use on their networks. T-Mobile sent me instructions on unlocking my Dash smart phone, so I could use it on the AT&T cellular network if I wanted. And if I were to buy an unlocked iPhone, I could use it on the T-Mobile network.
But then Verizon filed a lawsuit against the FCC decision, held meetings to lobby the FCC commissioners, and submitted reports of those meetings. Although Verizon has not said so publicly, based on those reports, I conclude that Verizon is concerned about piracy of video programming. The cable industry is subject to open access requirements, although we call them the navigation device rules. Cable operators use encryption and copy protection technologies to protect valuable programming property. Evidently Verizon wants to protect its programming property by restricting reception to only those devices that it supplies, in the same way the cable companies used to restrict programming reception to operator-supplied cable boxes.
The lawsuit has cast some doubt over the value of the 700 MHz spectrum; the open access requirement clearly makes the spectrum less valuable to Verizon. And that in turn has cast some doubt about the schedule for the 700 MHz auctions. Some bidders would rather postpone the auctions until the lawsuit is resolved and the uncertainty over its value is resolved. The FCC is holding fast to the January 2008 date, at least for now. But the fallout from postponing the auctions could be substantial – it could result in the postponement of the February 2009 shutoff of analog TV broadcasting, by giving more ammunition to those complaining that the U.S. government has not done enough to educate the public about the shutoff.
There’s another interesting band of spectrum opening up. It will probably be auctioned, but maybe not. That’s the 2155-2175 MHz band. The band is currently used by fixed point-to-point links and by the Multipoint Distribution Service (MDS) (which was renamed the Broadband Radio Service), and whoever the new licensees turn out to be must pay for the relocation of the incumbent users.
Unlike most other band plans used by the FCC, this is a single band, not a pair of bands. So in a new proceeding, the FCC is considering three different technological approaches to this band: (1) permitting both base station transmissions and mobile handset transmissions in the band; for example, using Time Division Duplexing; (2) permitting both base station transmissions and mobile handset transmissions in the band, but only in separate parts of the band; or (3) allowing only base station transmissions in the band.
Even before the FCC started up this new proceeding, several companies filed license applications to try to pre-empt the auctioning of the band. For example, more than a year ago, M2Z applied to lease this spectrum, paying the U.S. government a fee of 5 percent of gross revenues, to provide free broadband Internet service. (I assume they would also offer some services that are not free, or else the U.S. government would not get much revenue.)
Others have called for opening the band for use on an unlicensed basis. That seems unlikely. But with this FCC, you never know.
Over the next few years, the uncertainties over these spectrum bands will be clarified, they’ll be auctioned, and then maybe the FCC will start the process of relocating existing users all over again to free up even more spectrum. That 3700-4200 MHz band, now used for C-band satellite distribution to cable headends, looks very inviting. Don’t go away.