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Contents Introduction Broadband Policy and Spectrum Needs Planning for Broadband Meeting Broadband Policy Goals Broadband Requires Bandwidth New Policies for New Technologies Shared Resources Technology Introduction of Auctions Spectrum Caps Market Concentration Providers to Markets Market Competition Spectrum Auctions and Competition Network Access and Competition Issues for the 111th Congress The Hunt for More Spectrum Federal Relocation Fees as a Spectrum Management Tool Access to Spectrum Community Broadband National Deployment of Free Broadband Unlicensed Use Public Safety Conclusion Appendixes Appendix A. Top Ten U.S. Wireless Companies by Number of Subscribers Appendix B. Spectrum-Hungry Technologies Appendix C. Barriers to Competition in the Wireless Industry Appendix D. International Policies for Spectrum Management
February 3, 2010
The convergence of wireless telecommunications technology and Internet protocols is fostering new generations of mobile technologies. This transformation has created new demands for advanced communications infrastructure and radio frequency spectrum capacity that can support high-speed, content-rich uses. Furthermore, a number of services, in addition to consumer and business communications, rely at least in part on wireless links to broadband backbones. Wireless technologies support public safety communications, sensors, smart grids, medicine and public health, intelligent transportation systems, and many other vital communications.
Existing policies for allocating and assigning spectrum rights may not be sufficient to meet the future needs of wireless broadband. A challenge for Congress is to provide decisive policies in an environment where there are many choices but little consensus. In formulating spectrum policy, mainstream viewpoints generally diverge on whether to give priority to market economics or social goals. Regarding access to spectrum, economic policy looks to harness market forces to allocate spectrum efficiently, with spectrum license auctions as the driver. Social policy favors ensuring wireless access to support a variety of social objectives where economic return is not easily quantified, such as improving education, health services, and public safety. Both approaches can stimulate economic growth and job creation.
Deciding what weight to give to specific goals and setting priorities to meet those goals pose difficult tasks for federal administrators and regulators and for Congress. Meaningful oversight or legislation may require making choices about what goals will best serve the public interest. Relying on market forces to make those decisions may be the most efficient and effective way to serve the public but, to achieve this, policy makers may need to broaden the concept of what constitutes competition in wireless markets.
This report considers the possibility of modifying spectrum policy: (1) to support national goals for broadband deployment by placing more emphasis on attracting new providers of wireless broadband services; and (2) to accommodate the wireless broadband needs of industries that are considered by many to be the economic drivers of the future, not only communications, but also areas such as energy, health care, transportation, and education. The Federal Communications Commission (FCC) is expected to address these and other issues in the National Broadband Plan, a report on broadband policy mandated by Congress in the American Recovery and Reinvestment Act of 2009 (ARRA).
Among the spectrum policy initiatives that have been proposed in Congress are: allocating more spectrum for unlicensed use; auctioning airwaves currently allocated for federal use; and devising new fees on spectrum use, notably those collected by the FCC's statutory authority to implement these measures is limited. Substantive modifications in spectrum policy would almost surely require congressional action. The Radio Spectrum Inventory Act introduced in the Senate (S. 649, Kerry) and the similar House-introduced Radio Spectrum Inventory Act (H.R. 3125, Waxman) would require an inventory of existing users on prime radio frequencies, a preliminary step in evaluating policy changes. The Spectrum Relocation and Improvement Act of 2009 (H.R. 3019, Inslee) and the Wireless Microphone Users Interference Protection Act (H.R. 4353, Rush) would address separate issues related to spectrum allocation.
Wireless broadband (1) can play a key role in the deployment of broadband services. Because of the importance of wireless connectivity, radio frequency spectrum policy could be a critical factor in national broadband policy and planning. Wireless broadband, with its rich array of services and content, requires new spectrum capacity to accommodate growth. Spectrum capacity is necessary to deliver mobile broadband to consumers and businesses and also to support the communications needs of industries that use fixed wireless broadband to transmit large quantities of information quickly and reliably.
The purpose of spectrum policy, laws, and regulation is to manage a natural resource (2) for the maximum possible benefit of the public. Although radio frequency spectrum is abundant, usable spectrum is limited by the constraints of technology. Spectrum policy therefore entails making decisions about how radio frequencies will be allocated and who will have access to them. (3) Radio frequency spectrum is managed by the Federal Communications Commission (FCC) for commercial and other non-federal uses and by the National Telecommunications and Information Administration (NTIA) for federal government use. International use is facilitated by numerous bilateral and multilateral agreements covering many aspects of usage, including mobile telephony. (4)
Current spectrum policy relies heavily on auctions to assign spectrum rights through licensing. Economy of scale in wireless communications has become an important determinant in the outcome of these auctions. Companies that have already made substantial investments in infrastructure have been well placed to maximize the value of new spectrum acquisitions. Corporate mergers and acquisitions represent another way to improve scale economies. Efficiencies through economy of scale have contributed to creating a market for wireless services where four companies--Verizon Wireless LLC, AT&T Inc., Sprint Nextel Corporation, and T-Mobile USA Inc.--had approximately 90% of the customer base of subscribers at the end of 2008. (5) These companies also own significant numbers of spectrum licenses covering major markets nationwide.
The leading position of these few companies in providing a critical distribution channel--wireless--for information and services may need to be considered in plans for national broadband deployment. One approach to ensuring wireless access to meet national broadband goals might be to tighten the regulatory structure under which wireless communications are managed. Other approaches might seek ways to modify spectrum policies to increase market competition and to accommodate the age of broadband.
With the introduction of auctions for spectrum licenses in 1994, (6) the United States began to shift away from assigning spectrum licenses based on regulatory decisions and toward competitive market mechanisms. One objective of the Telecommunications Act of 1996 was to open up the communications industry to greater competition among different sectors. One outcome of the growth of competition was the establishment of different regulatory regimes for information networks and for telecommunications. As a consequence of these and other legislative and regulatory changes, the wireless industry has areas of competition, e.g. for spectrum licenses, within a regulatory shell, such as the rules governing the Public Switched Telephone Network (PSTN). (7) As the bulk of wireless communications traffic moves from voice to data, the necessary infrastructure is less regulated and companies will likely modify their business plans in order to remain competitive in the new environment. The shift in infrastructure technology and regulatory environment (8) could open wireless competition to companies with business plans that are not modeled on telecommunications industry formulae. Future providers of wireless broadband might include any company with a robust network for carrying data and a business case for serving broadband consumers. Potential new entrants, however, may lack access to radio frequency spectrum, the essential resource for wireless broadband.
Broadband Policy and Spectrum Needs
In the American Recovery and Reinvestment Act of 2009 (ARRA), Congress has required the FCC to prepare a national broadband plan, to be delivered not later than February 17, 2010 (later extended to mid-March). The primary objective of the plan is "to ensure that all people of the United States have access to broadband capability...." The plan is to include "an analysis of the most effective and efficient mechanisms for ensuring broadband access...." and "a plan for use of broadband infrastructure and services in advancing consumer welfare...." (9)
Planning for Broadband
As part of its preparation of a national broadband plan, as required by the ARRA, the FCC has gathered information about the role of wireless broadband. Comments have been received about wireless service and spectrum needs in response to the Notice of Inquiries for the National Broadband Plan (10) and on wireless innovation. (11) To solicit further, focused information on spectrum allocation, the FCC has also requested comments on spectrum needs and allocation. (12) The final National Broadband Plan will include a discussion of wireless broadband and spectrum needs. (13)
Meeting Broadband Policy Goals
Ideally, spectrum policy should be synchronized with broadband policy. The effort to move to energy efficiency is an example of how spectrum policy can affect other policy goals. The installation of smart meters in homes and other buildings is a key component of Smart Grid planning. (14) Furthermore, an efficient Smart Grid requires spectrum capacity to support the broadband communications infrastructure required to operate the grid. A Smart Grid policy that presumes the availability of suitable spectrum for wireless connections could fall short of its intended goal unless spectrum policy is aligned. UTC--The Utilities Telecom Council--has published a report that argues for shared access to 30 MHz of spectrum at 1800-1830 MHz to meet wireless communication needs. (15) This band is currently allocated to federal users. Canada is in the process of a rule-making procedure that would make the 1800-1830 MHz band available for "electrical infrastructure;" (16) operating smart grids on compatible frequencies would facilitate cross-border management of power sources. The FCC requested comments on the implementation of Smart Grid technology, including questions about spectrum needs and use and its role in Smart Grid deployments. (17) Reportedly, the FCC will include recommendations for Smart Grid development as part of the National Broadband Plan. Recommendations could include ways for utilities to share federal spectrum bands. (18)
Broadband Requires Bandwidth
Estimates of how much spectrum is needed for national coverage with 4G technologies vary but several experts have estimated that 40 MHz (19) is a minimum requirement per network, and 100 MHz of spectrum bandwidth might be needed for a network to meet demand for projected growth. (20) Among the means available to license-holders to increase their network capacity (bandwidth) are: increasing spectral efficiency (usually by moving to a newer technology); increasing the number of cell sites; (21) and acquiring access to additional radio frequencies. Policy tools that could be used to increase the availability of radio frequency spectrum for wireless broadband include allocating additional spectrum, reassigning spectrum to new users, requiring that wireless network infrastructure be shared, pooling radio frequency channels, and changing the cost structure of spectrum access. Each of these possible solutions (and others not mentioned here) challenges the vested interests of current beneficiaries of past spectrum policy decisions. There is, therefore, an ongoing, vigorous debate as to how spectrum policies might be revised.
In a preliminary step to address future needs for spectrum, two bills have been introduced in the 111th Congress that would require an inventory of spectrum bands and their users. This information could be used to identify unused or potentially under-used radio frequencies that could be redirected to wireless broadband.
New Policies for New Technologies
Many factors shape spectrum policy decisions. The arrival of new technologies, societal values, political motivations, perceptions about the importance of technologies, and business climate are among the external forces that go into the making of spectrum policy. Policy, however, tends to be less flexible than technology. To benefit from new broadband technologies, a restructuring of spectrum policy and regulation may be needed to meet social and economic goals established by the Administration and Congress. (23)
Among the regulatory options available to the FCC to increase the utility of available spectrum are various forms of sharing. Sharing resources is a growing trend that is viewed by regulators in many countries as a pro-competitive way to encourage the efficient deployment of next-generation wireless networks. (24) Requiring wholesale access to a network obliges the network owner to negotiate sharing agreements with third-party providers. Network sharing can also occur through co-ownership or co-operative agreements. Spectrum licenses can be shared by contract or regulatory requirement. The NTIA has recommended exploring "ways to create incentives for more efficient use of limited spectrum resources, such as dynamic or opportunistic frequency sharing arrangements in both licensed and unlicensed uses." (25) This suggestion was incorporated into the 2011 Budget prepared by the Office of Management and Budget. The budget document directs the NTIA to collaborate with the FCC "to develop a plan to make available significant spectrum suitable for both mobile and fixed wireless broadband use over the next ten years. The plan will focus on making spectrum available for exclusive use by commercial broadband providers or technologies, or for dynamic, shared access by commercial and government users." (26)
The primary difficulty for regulators in overseeing the sharing of spectrum is to minimize interference among devices operating on the same or nearby frequencies. It was primarily to prevent interference to wireless messages that spectrum licensing was first instituted. Today, a number of administrative and technological methods are available to minimize interference of wireless transmissions. In theory, all spectrum bands can be shared if interference can be managed. Among the technologies that facilitate spectrum sharing are cognitive radio and Dynamic Spectrum Access, also referred to as XG networks. (27) These enabling technologies allow communications to switch instantly among network frequencies that are not in use and therefore available to any radio device equipped with cognitive technology.
Among the …