Wireless Industry, Broadcasters Clash over Incentive Auctions at CES

LAS VEGAS, January 10, 2011 – Industry and government representatives debated the future of spectrum policy during a panel discussion at the Consumer Electronics Show (CES) on Friday and highlighted the controversy over the FCC’s proposed incentive auctions.

Rick Boucher introduced the discussion with a prepared statement explaining the need to free up more spectrum for mobile broadband use and promoting both voluntary incentive auctions as well as the re-auction of the D-block, a controversial segment of spectrum.  Boucher served as the Chair of the House Subcommittee on Communications, Technology and the Internet during the 111th Congress.

The D-block is a segment of spectrum in the 700Mhz range – considered prime real estate for mobile broadband use – that the FCC attempted to auction off in 2008, but bids failed to meet the Commission’s reserve price.  Currently the swath is allocated for use by public safety. Boucher supports re-auctioning it for commercial use, in part because of budgetary concerns.  As he explained prior to the panel, the Congressional Budget Office assumed $2.5B in income for the auction, but if the government does not realize that income, it will be forced to cut the amount from elsewhere in the federal budget.

Politico’s Kim Hart moderated the panel, which was part of the Tech Policy Summit series at CES, and invited participants to explain the spectrum issue and discuss solutions going forward.

As part of the National Broadband Plan (NBP), the FCC has set a goal to reallocate 500Mhz of radio spectrum to mobile broadband through various programs over the next 10 years.  Among the prospective plans is a voluntary incentive auction, which would allow existing spectrum licensees to elect give up part or all of their spectrum in exchange for monetary compensation.  The plan requires Congressional approval before going forward.

“There is a bright future for broadcasters who want to be entrepreneurial and a bright future for broadcasters who want to carry linear, must-have kind of services,” explained Tom Wheeler, a heavyweight in the industry who chairs the Federal Communications Technology Advisory Council.  “Voluntary incentive auction allows broadcasters to make a economic decision: ‘What’s the future of my business?'”

If the incentive auctions go ahead, broadcasters could stick with traditional services and receive compensation for spectrum that their business models do not require.  Current licensees could also choose to refrain from giving up any spectrum if they feel it is or will be necessary for them to use in the future.

Two other parts of the plan, channel sharing, which would allow broadcasters to double up on a 6Mhz channel, and “repacking,” or compressing broadcasters to free up more contiguous spectrum, are also on the table in the FCC plan.

The National Association of Broadcasters (NAB), which has faced allegations of its members “squatting” on unused spectrum, strongly opposes the FCC plan.  Lynn Claudy, Senior Vice President of Science and Technology for the NAB used a barnyard analogy to explain the association’s position.

“There are three moving parts: incentive auctions, which are like selling off part of your cattle, channel sharing, which is like “piggybacking” your cattle, and repacking, which is like packing your cattle closer together.”

Claudy further asserted that as consumers more and higher quality programming, such as HD and 3-D (which require more bandwidth to broadcast), that taking spectrum away will cause problems for broadcasters.

Rebecca Hanson, the FCC’s Spectrum Director for the National Broadband Plan, however, took exception to the NAB’s portrayal of the plan, emphasizing that it was strictly voluntary on the part of current licensee broadcasters.

“We aren’t requiring any broadcaster to give up spectrum against his or her will,” said Hanson. “How much spectrum [broadcasters] offer for auction is entirely up to the broadcaster.”

Wheeler supported the FCC’s position, calling the auctions “quintessential free market.”  He explained that if broadcasters have a need for their spectrum, they are free to refrain from giving any up, but if they do not, it can become a salable asset.

“The market,” Hanson asserted, “will allow the right amount of spectrum to go to the right buyer at the right price.”