With more than a third of Americans subscribed to 5G, the advent of fixed wireless access and the 5G-enabled Titanium economy of advanced manufacturing, spectrum policy experts gathered at an R Street Institute event on Capitol Hill to discuss the importance of replenishing the spectrum pipeline and transferring long-term auction authority to the Federal Communications Commission (FCC).
FCC Commissioner Brendan Carr opened the event in a fireside chat with R Street Policy Counsel Jonathan Cannon, recounting the heyday of the previous administration’s enacted spectrum policies that are bearing fruit today. Former Chairman Ajit Pai’s FCC conducted a series of 5G spectrum auctions, including the upcoming 3.45MHz and the record-breaking C-band auction that raised more than $90 billion. Additionally, the site selection and associated regulatory reforms from this period helped streamline the infrastructure rollout process, breaking the flatline from just 706 sites established in 2016 to more than 64,000 just two years later.
Contrast this action to today’s doldrums in spectrum policy — both in the White House and on The Hill, where Congress is poised to nullify the FCC’s spectrum authority. It also hasn’t developed a rigorous plan for a long-term pipeline of new auctions, which is unthinkable if it expects the wireless economy to continue growing. Furthermore, neither the White House nor Congress seem interested in forcing federal agencies to vacate government spectrum so it can be put to its best use and auctioned off in a timely manner.
Key takeaways from R Street panelists
Scott Bergmann, CTIA’s senior vice president for regulatory affairs, explained that up to two-thirds of all wireless spectrum is held by federal agencies, 12 times that of the wireless industry. While cellphone companies have paid for the rights to use the public airwaves, government holders have received their spectrum for free and have little incentive to use it efficiently. Due to spectrum scarcity, there is no “new spectrum” for wireless users today. Recovering from the state owners must be a priority. A CTIA report details the most likely tapes that could be auctioned.
Joe Kane, director of broadband and spectrum policy at the Information Technology and Innovation Foundation (ITIF), explained:
“In a perfect world, we could just extend auction authority indefinitely and let the FCC allocate tapes as needed. But the reality is that most of the spectrum we need to reallocate is held by federal agencies, and they’re reluctant to relinquish it unless they have a congressional mandate. So right now it’s important to have that legislative umph behind the reallocation of spectrum to tell federal agencies that they really need to play along. This should apply even to licensed spectrum skeptics: if you want more unlicensed or shared spectrum, it has to come from somewhere; and right now that means keeping Congress in the loop.”
Paroma Sanyal, senior consultant and co-head of the practice at Brattle Group, noted:
“A long-term auction authority (typically 10-year terms) is best from an economic standpoint because it reduces uncertainty for both the FCC and the industry. It gives the FCC a longer time horizon to plan future spectrum auctions, the transfer of spectrum to higher value uses – for example through spectrum refarming and reallocation – and allows for long-term telecommunications investments.”
Jeff Westling, director of technology and innovation policy at American Action Forum (AAF), posed the trillion-dollar question to the panel: “We’ve moved away from beauty pageants in the context of licensing, but essentially we still have beauty pageants ? for allocation decisions? Can/should we look for new ways to value services?”
New research sheds light on the future of Spectrum
However, as the value of 5G proves itself, other nations are taking more aggressive action to deploy their spectrum resources. China expects to deploy the entire 6GHz band for 5G. The UK and Chile are reversing previous decisions in favor of unlicensed use to allow the tape to be auctioned. See the important work by Kalvin Bahia and Pau Castels on the socio-economic value of the 6 GHz band for licensed use in 24 countries.
US policymakers should do everything in their power to make licensed spectrum available for more exclusive use in order to build the most robust and high-performing networks in the world. But resistance remains. Unlicensed proponents argue that the FCC should introduce new regulations such as the Citizen’s Broadband Radio Service (CBRS) for key areas of mid-band spectrum. But as new research from Recon Analytics shows, this system is unproven and underused. The market has demonstrated that full-power-only spectrum is a proven spectrum management framework that has generated billions of dollars in revenue for the public.
The licensed spectrum has also created innovative new technologies for consumers. 5G has introduced new products like Fixed Wireless Access (FWA) that have lowered the price of broadband and brought serious competition to cable. In order to exploit the full potential of 5G, however, exclusive use of the entire range of services is required. In a companion study to Recon Analytics, Rysavy Research found that seven times as many CBRS cell sites would be required to cover the same rural areas as C-band.
In considering whether a band can be offered for licensed, shared or unlicensed use, we need to consider the opportunity cost, as licensed spectrum auctions have proven to be the most rational and fiscally responsible policy tool of all. At its peak, 4G accounted for about four percent of gross domestic product (GDP) and many millions of jobs, an achievement largely achieved through the repurposing of low-band spectrum. But Congress is now spurring it on to 5G as China vie for global leadership. There is essentially no spectrum in the pipeline and the FCC’s auction authority is about to expire. Congress and the FCC must realign themselves if the US is to continue to enjoy success and leadership in the wireless space.