Experts Debate Incentive Auctions at Brookings

WASHINGTON May 6, 2011 -The Brookings Institution gathered key industry and government experts Thursday to discuss how solve the impending spectrum crunch through voluntary incentive auctions.

Incentive auctions would allow current spectrum owners to obtain a part of the proceeds from the auction of part or all of their spectrum holdings. Currently any revenue obtained from the sale of spectrum by the Federal Communications Commission goes directly to the Treasury Department. To increase participation in the auctions, the FCC has proposed to share the proceeds with the spectrum holders. Congress must first pass legislation changing the law to allow for the sharing of auction proceeds before the incentive auctions could be held.

“Wireless is the fastest-growing information communications technology around the world and it can become a key solution to bring broadband to the most remote Americans,” said Matthew Hussey, Legislative Assistant to Sen. Olympia Snowe (R-ME).

According to Hussey, however, Incentive auction may not be enough to solve the spectrum crunch many experts forecast.

Though incentive auctions are a useful tool in obtaining additional spectrum, he says, they would not be able to provide enough spectrum to meet the full needs of the wireless industry. Key innovations such as spectrum sharing and advanced radios must also be considered in determining solutions.

Hussey also called upon the FCC to conduct an in-depth spectrum inventory to determine if license holders are currently using their spectrum or if it is lying fallow.

Sen. Snowe, along with Sen. John Kerry (D-MA) called for a spectrum inventory earlier this year, but FCC Chairman Julius Genachowski stood by the information available on the Commission’s website, insisting that such an inventory had already been completed.

“The spectrum dashboard the FCC created presents a very broad overview of the current spectrum holdings; we need a much more granular view,” Hussey said. “We must remember that spectrum is a public good and must be used in a way to maximize the benefits of the American people.”

Christopher Ornelas, vice president and chief strategy officer at the National Association of Broadcasters, agreed that wireless broadband is the best solution to reach the most remote 8 percent of Americans who cannot access wireline broadband, but indicated he feels that spectrum should not be recklessly taken away from broadcasters.

“We do not have a problem of holding a truly voluntary auction, but broadcasters should not be coaxed into participating,” Ornelas said. “We need to first conduct a deep inventory of the spectrum currently being used before we make any decisions and right now, we lack the data to make the most informed decision. This is something that we can only do once, so we have to do it right.”

Ornleas also warned that after the auctions, any repacking of spectrum would have to be done very carefully to ensure that broadcasters who kept their spectrum would still be able to reach their original consumers. Repacking would create a contiguous block of users rather than having them spread out across the band.

Uzoma Onyeije, president of telecommunications consulting firm, Onyeije Consulting, echoed Ornleas’ sentiments on the lack of data.

“Before we act we need a truly complete and up to date inventory of how spectrum is being used,” said Onyeije.

“Incentive auctions are the key to meeting our future spectrum needs,” said Christopher Guttman-McCabe, vice president of regulatory affairs at the CTIA – the Wireless Association. “The rest of the world has already allocated hundreds of megahertz for mobile use while the U.S. only has 50.”

Mobile broadband is experiencing explosive growth according to Guttman-McCabe, even as more mobile phones allow users to use Wi-Fi networks.

Guttman-McCabe told the assembled crowd that U.S. consumers use considerably more data and voice services than their international counterparts which makes the lack of spectrum a major issue for mobile carriers.