December 8, 2016 —
As we move into the fourth stage of the TV spectrum incentive auction, one thing is obvious. The wireless industry does not value the spectrum enough to meet the targets set by the broadcasters. From stage one when amount bid was less than 25 percent of the target to the third stage where it was less than fifty percent, the sides are still not too close.
The Middle Class Tax Relief and Job Creation Act of 2012, which included several provisions for increasing the amount of spectrum available for broadband wireless service, authorized the FCC to use incentive auctions in which TV broadcasters would receive compensation for giving up the use of their airwaves to mobile broadband users. There were several factors that doomed this auction to be less successful than it could have been.
First, the 39-month transition period demanded by broadcasters to move off of the 600 MHz spectrum is a pretty long time for the carriers to wait to put the spectrum to work after they have purchased it.
Second, the size of the spectrum licenses are not in line with what the wireless industry needs. The carriers need a hell of a lot more spectrum than what can be pieced together in these blocks. It’s more like 100’s of megahertz.
Third, this spectrum might be good for a new entrant into mobile services that is trying to cover as much area as possible with the fewest sites as possible. But most of the carriers that have the money to buy the spectrum are already built out coverage-wise and are looking to densify their networks. They are looking for higher frequencies and more of them for a lot less money in the AWS bands and above, and channel sizes of 20 megahertz to 200 megahertz are becoming the sweet spot.
Fourth, it is not a question of whether the carriers have the money or not. They are not going to be spending a lot of money for low-band spectrum that they don’t need. However, I don’t believe the auction will fail. As the amount of spectrum up for auction comes down and the target price comes down, it will eventually match the amount bid. Equilibrium will be found.
I am optimistic about all of the actions the government is taking to make spectrum available for broadband wireless. The FCC is getting creative and making it happen through licensed and unlicensed spectrum, as well as the Citizens Broadband Radio Service, which is something in between. Changing the use of a spectrum block is not an easy thing. The FCC is doing a good job of making it happen.