National Broadband Plan: A Look at Chapter 5 and Spectrum

Editor’s Note: This is the sixth in a series of articles written by BroadbandBreakfast.com staff summarizing each chapter of the FCC’s National Broadband Plan.

WASHINGTON, April 19, 2010 – Chapter Five of the plan focuses on spectrum, and its content is the most technical of the entire 360-page document.

The two key issues surrounding spectrum policy are the number of stakeholders that own large chunks of spectrum, and the possibility of moving or reallocating that spectrum. The process of reallocating some spectrum could take years while the need is pressing now, and not everyone favors the initiative.

The Federal Communications Commission recommends that it should make 500 megahertz of spectrum available, with the first 300 MHz between 225MHz to 3.7 gigahertz available within the next five years. In order to simplify future spectrum policy, the plan recommends that the FCC work with the Commerce Department’s National Telecommunications and Information Administration to develop a spectrum plan in consultation with U.S. tribal communities and other organizations.

Mobile broadband is expected to be the next great expansion in Internet connectivity, and Internet service providers have noticed. Currently, every major wireless ISP, including Verizon, AT&T and Sprint, all have plans to upgrade their current networks from third-generation, or 3G, to 4G services by 2013. Additionally, some wired ISPs are entering the wireless market. Most of the wireless ISPs have chosen to use Long Term Evolution (LTE) as their preferred choice of 4G while a few companies have chosen to embrace WiMax technologies. The first company expected to implement 4G is Verizon with LTE in 2010.

The plan cites the U.S. Department of Justice’s comments on wireless services: “Given the potential of wireless services to reach underserved areas and to provide an alternative to wireline broadband providers in other areas, the Commission’s primary tool for promoting broadband competition should be freeing up spectrum.”

In order to allow for the increased use of spectrum, the plan recommends that the lag time between allocation and action be decreased. Spectrum rights need to be maintained to allow for the secondary market to work properly.

In addition, spectrum transparency needs to be increased to allow for this market to work properly. In order to increase transparency, the FCC already has launched a spectrum dashboard, which is simply the digital version of its traditional spectrum chart. The plan also recommends that a comprehensive inventory be taken and the allocation rights be made available in order for future access.  This new inventory should include a county-by-county listing of which organization or company holds which band of spectrum.

To allow for the easier distribution of spectrum, the plan recommends that Congress grant the FCC authority to conduct incentive auctions, which it has successfully done in the past.

The plan reads: “Incentive auctions present a more efficient alternative to the FCC’s overlay auction authority, in which the FCC auctions encumbered overlay licenses and lets the new overlay licensees negotiate with incumbents to clear spectrum. These piecemeal voluntary negotiations between new licensees and incumbents introduce delays as well as high transaction costs as new licensees contend with holdouts and other bargaining problems. Anticipating these delays and negotiating costs, bidders typically pay significantly less for encumbered spectrum. The value of spectrum that must be cleared through such a voluntary process is reduced even more by uncertainty about the final cost of clearing.”