wireless spectrum in 2016: a policy update
TRANSCRIPT
Wireless Spectrum in 2016: A Policy UpdateBrent Skorup, Research Fellow, Technology Policy Program
Agenda
• Spectrum Basics• Spectrum History• Spectrum Policy Today• Spectrum Policy in the Future
mercatus.org
Spectrum Characteristics• The “medium” that transmits electromagnetic waves
– Spectrum license – a right to use and a right to exclude others from a certain
frequency in a geographic area
• Scare resource • Like real property, spectrum can be bought, sold, leased,
divided, and subdivided• Most people deal with “MHz” every day
– FM radio dial – 88 MHz to 108 MHz
– Mobile carriers operate at bands between 700 MHz to 3500 MHz (3.5 GHz)
– Most popular Wifi “band” is 100 MHz wide at 2400 MHz (2.4 GHz)
mercatus.org
Increasing Demand for Spectrum…• Valuable input for commercial and government users
– Broadcast television
– Wireless broadband
– GPS
– Training exercises for military
– Public safety communications
• Wireless broadband is driving most use on commercial side
mercatus.org
…But Supply is Constrained by Physics and Policy
• A fiber optic wire has over 2000x the capacity of spectrum licensed for US mobile carriers (Rysavy 2014)
• On average, a cell site in the US is shared by over 1000 users
– As few as three people watching 4K Netflix can consume all LTE capacity
• How do carriers increase capacity?– Upgrade technology and radios that use existing spectrum more efficiently
– Build more towers—over 300,000 sites in US and the cost per cell site
~$550,000 (FCC 2010)
– Buy more spectrum
mercatus.org
Spectrum = Tech Innovation• Inefficient use of spectrum is a costly national problem
– US government holds ~ 60% of “beachfront spectrum,” likely worth
hundreds of billions of dollars
– Freeing 10% of beachfront spectrum could result in $1 trillion in economic
benefits (Lenard et al. 2010)
– Economic costs from inefficient spectrum use exceed $1 trillion (Furchtgott-
Roth 2013)
• More commercial spectrum = more innovation– Lower prices and more competitors in broadband and TV
– Cheaper to test and deploy Internet of Things applications, drones,
driverless cars, virtual reality, and medical devices mercatus.org
History• 1927 – Radio Act creates Federal Radio Commission
– Effectively nationalizes radio spectrum
– Members of Congress concerned about broadcast radio licensees gaining
vested property rights
– All spectrum is collectively owned by the public and administered on behalf
of the public by the US government according to the “public interest”
• 1934 – Communications Act creates Federal Communications Commission
• 1959 – Ronald Coase urged market allocation of spectrum• 1993 – Congress permitted spectrum auctions
mercatus.org
History• Federal spectrum is administered by the President
– Delegated to the Department of Commerce – National Telecommunications
& Information Administration (NTIA)
– But: agencies have a lot of discretion over their spectrum
• Non-federal spectrum is administered by the FCC– Commercial
– State government
– Utilities
• Decision about whether spectrum is federal or non-federal is decided informally by the NTIA and FCC
mercatus.org
Spectrum Policy Today
mercatus.org
AWS-3 Auction• Concluded in January 2015.• Bidders: AT&T, Verizon, Dish and its
affiliates, T-Mobile, others• 50 MHz of paired spectrum sold for over
$40 billion• $7 billion+ earmarked for a nationwide
public safety network• $20 billion+ to US Treasury for debt
repayment
mercatus.org
mercatus.org
mercatus.org
Uses of Beachfront Spectrum• ~ 3200 MHz total,
– spanning 300 MHz to 3500 MHz
• ~ 20% for mobile broadband (580 MHz) (FCC 2014)• ~ 10% for broadcast TV (294 MHz)
– NBC, ABC, CBS, FOX, PBS and affiliates
– Around 10-15% of Americans watch broadcast TV solely
• ~ 60% has a dominant federal use (1500 MHz+) (PCAST 2012)– ~ 18% is exclusively federal, the rest is nominally shared with non-federal
users
– “effectively precludes substantial commercial use of those bands” (PCAST
2012)
– NTIA analyzing about 30% of beachfront spectrum for sharing and transfer
(960 MHz)
mercatus.org
mercatus.org
mercatus.org
Valuable Federal Asset• ~ 1 to 2% of beachfront spectrum sold for over $40 billion in
2015.• ~ 60% is precluded from commercial use by federal users.
– About 60 agencies and departments have 240,000 spectrum assignments
– Big nine: DoD, FAA, DOJ, DHS, DOI, Ag., US Coast Guard, DOE, and
Commerce
• Spectrum is underpriced for agencies—encourages overuse– Agencies pay a $122 annual fee to NTIA for each assignment (GAO 2012)
– Fees paid to NTIA totaled about $30 million in FY 2012
– But: agencies purchase other necessary inputs at approximately market
rates (vehicle fleets, electricity, labor, gasoline, office space, etc.)mercatus.org
Recent Spectrum Bills• “Incentive Auction” – March 2016
– From 2012 Middle Class Tax Relief Act
– FCC pays TV broadcasters in 600 MHz band for spectrum for re-sale to
carriers
• Federal Spectrum Incentive Act (Reps. Guthrie, Matsui)– Allows agencies to receive 1% of auction proceeds for sequestration-related
cuts
• Wireless Innovation Act (Sen. Rubio) – NTIA tracks opportunity costs
• Mobile Now Act (Sen. Thune, Nelson)– Make 255 MHz available for wireless broadband by 2020 (under 6 GHz)
– Easier wireless network deployment on federal property
– Requires Commerce report about incentivizing agencies to share or
relinquish spectrum
mercatus.org
Spectrum Policy in the Future
mercatus.org
Repurposing Federal Spectrum• More clearing agencies after auction
– Auction off encumbered spectrum and force agencies to move
– CSEA (2004) allowed payments to agencies for relocation activities
– Middle Class Tax Relief Act (2012) allowed payments for planning relocation
• More commercial-federal geographic sharing• Densifying networks• Unlicensed dynamic spectrum sharing?
– TV White Spaces results has been discouraging
– “Legacy device problem”
• GSA for spectrum?mercatus.org
Overlay Auctions?• Based on proposal from FCC Commissioner Jessica Rosenworcel• Encumbered federal spectrum is auctioned off to commercial
users
– Licensee can deploy in markets where no federal operations are
– In areas where agencies operate, licensee can negotiate compensation (in-
kind or cash) for agency to cease or decrease operations
• Overlay auctions helped free about one third of mobile broadband spectrum (encumbered commercial spectrum)
• But: Miscellaneous Receipts Act generally precludes agencies from selling their assets
mercatus.org
Conclusion
• Spectrum Basics• Spectrum History• Spectrum Policy Today• Spectrum Policy in the Future
mercatus.org
Bridging the gap between academic ideas and real-world problems