Tag: spectrum

Commissioner Pai: A ‘Consensus’ Of Incumbents Without Consumers Is No Consensus And means Disaster For 600 MHz.

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Last week, the Federal Communications Commission (FCC) Wireless Bureau issued what should have been a fairly routine and highly technical Public Notice about possible alternative band plans for the 600 MHz Auction aka the Incentive Auction aka “that incredibly crazy, complicated deal Congress came up with last year where broadcasters sell back licenses to the FCC so the FCC can sell them to wireless companies.” Since public comment makes it clear that the various proposals present a lot of challenges (see my incredibly long and wonky explanation here), it shouldn’t surprise anyone that the Wireless Bureau asked for further comment after holding a band plan workshop a few weeks ago.

 

But Commissioner Pai issued a separate statement blasting the Wireless Bureau. In particular, Pai berated the Bureau for departing from what he called the “consensus framework” for one particular band plan – the band plan favored by AT&T, Verizon, the National Association of Broadcasters (NAB) and the largest equipment manufacturers. Pai ignored objections to the AT&/VZ/NAB plan and support from consumer groups (including Public Knowledge), competitors such as Sprint, or tech companies such as Microsoft. Over and over in his statement, Pai cited to the comments of AT&T, Verizon and NAB as proof of a “broad consensus” as if none of these objections existed.

As someone fairly active in this proceeding, who actually participated in the Band Plan Workshop, I am more than a little peeved. Yoo hoo! Commissioner Paaaaiiiiii!!! What am I, chopped liver? I am also more than a little irked at the allegations that the Bureau somehow behaved improperly in issuing the Public Notice. Pai’s accusation that the PN violates the Bureau’s delegated authority by soliciting comment on alternatives to the AT&T/VZ/NAB “consensus plan” appears designed to bully the Bureau into submission.

Setting my personal pique aside, as I keep trying to explain, letting the broadcasters and the largest wireless incumbents write the rules for the auction spells absolute disaster. If Pai genuinely wants to see a successful Incentive Auction, that means looking past industry “consensus” and getting into the very nasty and complicated details to figure out the right set of tradeoffs that will (a) get the broadcasters and wireless guys to the auction, but (b) not let them short the U.S. Treasury out of the cash it expects to collect in the process.

I vent and take one more shot at explaining this below . . . .

 

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Is Fear of Wireless Foreclosure “Speculative?” Depends. Is this About Intent Or Effect?

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Recently, the Antitrust Division of the Department of Justice  (DOJ) filed these comments with the Federal Communications Commission (FCC) in the proceeding on spectrum aggregation limits (aka spectrum screen v. spectrum cap). The DOJ comments have some good stuff about the economics of the wireless industry and competition (in a theoretical way), and about why it is important to make sure potential competitors have spectrum, particularly low-band spectrum. Mostly, DOJ’s argument rests on the idea of “foreclosure,” that a wireless firm will bid on licenses at auction just to keep them out of the hands of competitors.

Asked about this on a recent earnings call, VZ CFO Fran Shammo basically said that there is no evidence that Verizon is bidding on licenses just to keep them out of the hands of rivals, so DOJ’s argument is “theoretical” and the FCC should not adopt any limits.

VZ basically argues that we should not worry about possible foreclosure unless there is evidence of an actual intent to foreclose. This treats a spectrum screen (and concern about foreclosure) as a precaution against bad actors. As long as bidding on licenses at auction makes sense for reasons other than foreclosure, and there is no evidence of any intent to foreclose, then everything should be just fine even if the outcome has the same effect as a foreclosure strategy (e.g., competitors don’t have enough spectrum to offer viable competing services.)

But the Communications Act does not work this way. Specifically, Section 309(j)(3)(B). Whether Verizon (or any other carrier’s) intent is as pure as the driven snow, or black as any comic opera villain, does not matter one iota. What matters is whether we avoid a “concentration of licenses” and “disseminate licenses among a wide variety of applicants” so that we “promot[e] economic opportunity and competition and ensur[e] that new and innovative technologies are readily accessible to the American people.”

As I will discuss below, the evidence from the 700 MHz auction and subsequent transactions demonstrates that we are feeling the effects of foreclosure, regardless of whether there was an actual intent to foreclose. As a result, the DOJ concern is not “theoretical,” but very real.

 

More below . . .

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AT&T to FCC: “I double dare you to show you’re serious about wireless competition.”

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Rarely do you see companies double-dare the FCC to back up their brave talk about promoting competition. That is, however, what AT&T has just decided to do – with a little help from Verizon. After gobbling a ton of spectrum last year in a series of small transactions, AT&T announced earlier this week it would buy up ATNI, which holds the last shreds of the old Alltel Spectrum. To top this off, Verizon just announced it has selected the purchaser for the 700 MHz spectrum it promised to sell off to get permission to buy the SpectrumCo spectrum. And guess what? The purchaser of the bulk of Verizon’s 700 MHz licenses, which Verizon promised to divest to promote competition – is AT&T!

 

In the last few months, we have seen billions of dollars in new investment as a result of the FCC’s decision to deny AT&T/T-Mo, force Verizon to divest in VZ/SpectrumCo, and otherwise draw some lines in the sand against further consolidation and to promote competition. For reasons I explain below, this transaction crosses just about every single red line the FCC (and Department of Justice (DoJ)) have ever indicated they had about wireless spectrum concentration. The question is — will the FCC (or DoJ) actually do anything about it?

 

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Crest’s Moronic Petition To Deny In Sprint/CLWR Symptom of Broader Idiocy That Actually Matters.

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OK, I suppose I should really wait until they file, but this story detailing Crest Financial’s planned Petition to Deny in Sprint/Softbank/CLWR appears to be, in my humble opinion, the single dumbest grounds for a Petition to Deny. EVAR. For those just tuning in, Sprint, backed by Softbank, has offered approximately $3/share for the outstanding shares of Clearwire (CLWR). Because some analysts with no understanding of the actual spectrum market think CLWR is sitting on a spectrum pot ‘o gold, Crest is pissed and wants more money. It has already filed a shareholder derivative suit claiming that Sprint leveraged its insider position to buy out Clearwire below fair market value. Given how corporate law has crapped all over minority shareholder rights in recent decades, I am not giving this much hope. Apparently, Crest feels the same way, because they are now taking the fight to the FCC.

According to the story: “In going to the FCC, Crest will argue that the Clearwire deal artificially undervalues the company’s spectrum holdings, Schumacher said. That in turn potentially devalues future revenue for the U.S. government when it auctions off spectrum licenses.” Crest apparently thinks CLWR’s spectrum holdings are worth $30 billion, prompting me to wonder what planet they live on and whether they share it with House Republicans who keep thinking spectrum auctions are automatic pots of gold.

What makes this utterly dumb is the combination of a false factual premise combined with an utter lack of legal grounds, on top of a near zero chance of holding things up politically (unless AT&T or possibly DISH file, which might introduce greater political uncertainty). I would normally confine myself to simply snickering but there is a rather important point to be made here — especially for all those listening to analysts telling broadcasters they can make gajillions in the upcoming incentive auction –about spectrum valuations.

More below . . . .

 

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AT&T, Anger Management and Spectrum Legislation

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Based on recent statements, it’s hard to tell whose angrier at the Federal Communications Commission (FCC) and its Chair, Julius Genachowski: AT&T’s Upper Management or the House Commerce Committee Republicans. Mere mention of Genachowski’s name converts House Commerce Committee Republicans, such as Telecom Subcommittee Chair Greg Walden (R-OR), from urbane sophisticated legislators into sputtering mad parodies of Elmer Fudd.  “Oooh that wascally Chaiwman! Always wegulating the fwee market! I’ll fix his wagon!” Meanwhile, AT&T CEO Randal Stephenson devoted the main part of his recent earnings call to repeating variations on “Juliuth, you’re desthpicable.”

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Smart Cities, Spectrum, and Senator Snowe — Will Any Republican Presidential Candidates Show Vision?

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Thomas Friedman writes in his column yesterday that none of the Republican candidates has focused much on technological innovation, then proceeds to focus on the matter of “smart cities.” Friedman’s thesis is fairly straightforward: to maintain our competitive edge, we will need to keep pumping up our bandwidth, particularly in cities and towns which historically act as the incubators for The Next Big Thing and all its associated, Highly Useful Little Things. Blair Levin’s Gig U gets favorable mention, and Blair gets quoted a lot on why we want huge bandwidth in urban areas as well as making sure everyone gets access to functional broadband.

Let me give the Republican candidates that care (and I just know y’all hang on my every word) some advice. When you want to know where to stand on spectrum, follow the lead of Senator Olympia Snowe (R-ME). Most importantly, do NOT follow the lead of House Republicans. Why? See below . . . .

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My Insanely Long Field Guide To Cisco’s War On The TV White Spaces

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Will Cisco’s war against the TV white spaces tank incentive auctions? No doubt this question comes as a surprise to the vast majority of people unaware Cisco was running a war against TV white spaces (TVWS). True, Cisco has mostly tried to stay behind the scenes. But as we get closer to the Super Committee deadline, which include negotiations for incentive auction rules that would let TVWS survive, Cisco has become increasingly willing to go public with its anti-TVWS lobbying efforts.

This blog post on the Cisco blog, followed by this letter from the High Tech Spectrum Coalition (HTSC), finally say publicly what Cisco and its allies have been saying privately since debate over spectrum legislation began last January: “Death to the TV White Spaces.” Instead, argues Cisco, open up a new block of 5 GHz spectrum to “replace” the white spaces. But with spectrum legislation in trouble – as evidenced by CTIA’s non-stop radio advertising here in D.C. and it’s recent ‘we love unlicensed, can’t we all get along?’ letter to the Super Committee – Cisco’s continued opposition to white spaces threatens to tank any hope of getting incentive auctions passed either in the Super Committee or elsewhere.

Incentive auctions, while popular as a revenue generator, were always a tough sell because of broadcaster passive/aggressive opposition. Adding D Block reallocation made it even more difficult. Cisco’s war on the TVWS threatens to be the final straw that makes this lift just too heavy. It splits a tech community that would otherwise wholly support incentive auctions, while simultaneously pissing off key members of Congress who helped get TVWS done in the first place.

So the time has come for Cisco, CTIA, and others who really want incentive auctions, to ask themselves whether it’s worth it to risk incentive auctions just so that Cisco can keep Microsoft, Google/Motorola, Dell, and others from bringing a competing product to market. The Hutchison/Rockefeller Bill, S.911, was a compromise that kept spectrum for TVWS, gave Cisco the 5 GHz block it wants, and made sure that a minimum threshold of 84 MHz would be auctioned before allocating any recovered spectrum to replace white spaces lost by auction or repacking. While not great from my perspective as a white spaces supporter (and I’d still like to see it tweaked some), it was at least a livable compromise. Cisco’s anti-TVWS campaign already backfired once, with the Republican discussion draft to require auction for all unlicensed spectrum. Will Cisco and CTIA fail to learn just how easy it would be for them to blow this for everyone? Or will they settle for the compromise that got a bipartisan bill out of the Commerce Committee?

Why Cisco has been gunning for the TVWS, the quiet little war of the last ten months, and how to get out of this quagmire before it’s too late, below. . . .

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PK Action Alert To Save the Future of Unlicensed Spectrum

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Despite the obvious reliance on unlicensed spectrum by Americans every day in the form of everything from wifi to baby monitors to RFID, the current mania for spectrum auction revenues combined with lobbying from companies opposed to the TV white space has put the future of unlicensed spectrum at risk. This is particularly true under the discussion draft circulated by House Republicans last week. That draft would require that before the FCC could allocate any new spectrum for unlicensed use, it would first have to have an auction that would allow companies to buy the spectrum for exclusive use. Only if everyone collectively outbid AT&T or Verizon for unlicensed would the spectrum go to unlicensed use. As Stacy Higginbotham at GigaOm notes, this would have devastating impact on the future of unlicensed and the innovation that comes out of the unlicensed bands.

As if that were not enough, the proposed bill literally allows companies to buy their way out of FCC consumer protection regulation.

We are trying to stop this before it’s too late.  Public Knowledge has created an Action Alert asking anyone who cares about protecting unlicensed, or opposed to letting companies literally buy their own rules, then help us this Friday (tomorrow) by telling your member of Congress not to sell off our digital future or let companies buy their way out of public interest obligations. Sign up for the PK mobile Action Alert and you will get a text message tomorrow letting you directly contact your member of Congress so you can tell them why this bill is a really, really bad idea.

I reprint the PK Action Alert below.

Stay tuned . . . .

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My Insanely Long Field Guide to Lightsquared v. The GPS Guys

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For some time now, I’ve been rooting for Lightsquared. Despite the fact that it faces tough odds trying to build out an expensive wireless network, a wireless network built from ground up for wholesale only could totally change the wireless market (which is entirely different from the mobile cellphone (aka the “commercial mobile radio service” or “CMRS”)  market, but that’s a rant for another time). But now, I just love the fight between Lightsquared and the GPS industry because it manages to contain everything that makes spectrum policy in this country like running a marathon with concrete blocks on your feet: bad neighbors operating critical systems so they can get away with being prima donnas, hostility from other federal agencies, unanticipated interference issues that crop up on deployment, and efforts to politicize the FCC’s technical process.

And, as always, a special guest appearance by a very tired looking Julie Knapp.

For a spectrum wonk such as myself, it simply does not get better than this. I also get one more real world example where I say to all the “property is the answer to everything” guys: “Ha! You think property is so hot? The rights are clearly defined here. Where’s your precious Coasian solution now, smart guys?” Which usually sends them back muttering that it’s not their fault no one in the real world follows the models that explain how it’s all supposed to work out in the world of rational actors and no transaction costs where unicorns frolic in the golden sunshine.

So, in the latest installment of my occasional “Insanely Long Field Guide” series, I take a lengthy look at Lightsquared, how we got here, and what I think will happen. Short version, ignore all the pseudo-Whitewater nonsense flogged by the conservative conspiracy theorists and complaints that the FCC bypassed their own process. So far, and I do not say this often so please pay attention, the FCC has behaved entirely appropriately, even intelligently. (Yeah, yeah, don’t let it go to your heads.) What matters is that the FCC is about to receive a report that confirms that, yes, when Lightsquared operates it system, it creates interference for existing deployed GPS systems. As a result, only the following things matter:

1. The Lightsquared folks are right about how the GPS guys knew this day would come and conveniently chose to do nothing. But in the short term it doesn’t matter, because the FCC will not allow anything to happen to GPS.

2. OTOH, if the GPS guys get their way, it means taking another 40 MHz of prime spectrum and rendering it useless forever. That also isn’t going to happen. That suggests a phase in/compromise.

3. Whether Lightsquared actually survives the compromise as a viable service will depend on a lot of things. The dimensions of any such compromise will depend on the interference tests. So while it is pretty clear from what’s been leaked that Lightsquared’s system as proposed causes interference with GPS systems, a lot of questions remain about what ought to happen to make it so that GPS and Lightsquared can live together in harmony.

At this point (from my wonkish perspective), the precedent of how to deal with annoying neighbors is almost more important than what actually happens to Lightsquared. If the GPS guys get their “sit on your rear-end veto,” then we can pretty much kiss off spectrum reform in the most useful spectrum bands. Every potentially useful band has neighbors that built systems on the assumption that nothing would ever change. So the FCC either finds a way to balance the interest of incumbents with fostering the expanded use we need for our expanding wireless  demand, or we forget about “spectrum flexibility” and resign ourselves to the current state of the universe pumped up by the occasional auction.

More below . . . .

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Why Chairman Genachowski Should Appoint Commissioner Baker To Chair The Spectrum Task Force

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Federal Communications Commission (FCC) Chairman Julius Genachowski has a spectrum politics problem problem. On the one hand, he learned from last year’s D Block battle that he needs to stay aggressively on message to sell his spectrum reforms.  His every speech on spectrum therefore reads like a campaign speech for incentive auctions. ‘We have a looming spectrum crisis, we need bold action, Congress must act now to pass incentive auctions.’ But, as Genachowski has discovered, this approach can have unintended consequences. Recently, Commissioner Robert McDowell reported that this focus on incentive auctions created uncertainty in Silicon Valley over the FCC’s commitment to the TV white spaces (TVWS). This follows earlier concerns from Senator Snowe (R-ME) and others that the Chairman’s exclusive public focus on incentive auctions invariably means giving short shrift to other, equally important spectrum reforms identified in the National Broadband Plan.

 

Genachowski moved quickly to reaffirm that support for TVWS remains strong and that TVWS is a big part of the FCC’s  spectrum for broadband initiative. Further, the inclusion of several spectrum items for the next open FCC meeting shows that Genachowski remains committed to broad spectrum reform. But these incidents underscore Genachowski’s difficult dilemma. How can he campaign to push through incentive auctions on the one hand, while making sure that other aspects of the spectrum reform agenda receive the prominence and attention they need to move forward? The fact that anyone could doubt the FCC’s continuing commitment to developing the TVWS despite its broad bipartisan support and support from the Obama Administration spectrum team underscores how little it takes to undermine confidence even in reforms already accomplished.

Commissioner Meredith Baker may hold the solution to Chairman Genachowski’s spectrum politics dilemma.  Genachowski should appoint Commissioner Baker chair of the reconstituted Spectrum Task Force. At the moment, the Spectrum Task Force is co-chaired by Julie Knapp (Chief of the Office of Engineering and Technology) and Ruth Milkman  (Chief of the Wireless Bureau). In an ideal world, having two such extraordinarily qualified experts and Bureau Chiefs heading the Spectrum Task Force would be enough to show that Genachowski is not neglecting spectrum reform outside incentive auctions. But in status-conscious Washington DC, the sad truth is that only a Commissioner can give the Spectrum Task Force the “star power” it needs to reassure everyone that serious work continues along multiple fronts.

More below . . . .

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