Spectrum Policy in the Age of Broadband:
Issues for Congress
Linda K. Moore
Specialist in Telecommunications Policy
January 5, 2012
Congressional Research Service
7-5700
www.crs.gov
R40674
CRS Report for Congress
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epared for Members and Committees of Congress
Spectrum Policy in the Age of Broadband: Issues for Congress
Summary
The convergence of wireless telecommunications technology with the Internet Protocol (IP) is
fostering new generations of mobile technologies. This transformation has created new demands
for advanced communications infrastructure and radio frequency spectrum capacity that can
support high-speed, content-rich uses. Furthermore, a number of services, in addition to consumer
and business communications, rely at least in part on wireless links to broadband (high-
speed/high-capacity) infrastructure such as the Internet and IP-enabled networks. Policies to
provide additional spectrum for fixed or mobile broadband services are generally viewed as
drivers that would stimulate technological innovation and economic growth.
In the 112th Congress, the House of Representatives and the Senate have announced plans to
address job creation and deficit reduction in bills that may include provisions to expedite the
availability of spectrum for commercial use. Bills under consideration address deficit reduction,
spectrum policy, public safety communications, and research and development for emerging
communications technologies.
In December 2011, the House of Representatives approved the Middle Class Tax Relief and Job
Creation Act of 2011 (H.R. 3630, Representative Camp). H.R. 3630, Title IV contains spectrum
reallocation and assignment provisions from the Discussion Draft of the Jumpstarting
Opportunity with Broadband Spectrum (JOBS) Act of 2011, as amended, approved in markup on
December 1, 2011, by the Subcommittee on Communications and Technology, House Committee
on Energy and Commerce. H.R. 3630 is under consideration by a conference committee for
which a major focus of discussion is an extension of payroll tax cuts and how to fund them. On
the Senate side, some provisions for compromise legislation may come from the American Jobs
Act of 2011 (S. 1549, S. 1660) and from the Public Safety and Wireless Innovation Act (S. 911,
as amended, Senator Rockefeller). S. 911 received bipartisan approval by the Committee on
Commerce, Science, and Transportation.
These bills would, among other provisions: address incentive auctions, which would permit
television broadcasters to receive compensation for steps they might take to release some of their
airwaves for mobile broadband; require that specified federal holdings be auctioned or reassigned
for commercial use; apply future spectrum license auction revenues toward deficit reduction;
establish a planning and governance structure to deploy public safety broadband networks, using
some auction proceeds for that purpose; and reassign spectrum resources available for public
safety. The bills include provisions that would affect the development of new technologies and
the availability of spectrum for unlicensed use and for shared use.
This report discusses key spectrum policy provisions in the bills, as well as other spectrum policy
issues that are being considered in the 112th Congress, such as the role of wholesale networks like
that being deployed by LightSquared.
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Spectrum Policy in the Age of Broadband: Issues for Congress
Contents
The Role of Spectrum Policy........................................................................................................... 1
Spectrum Policy Legislation in the 112th Congress ......................................................................... 1
Directed Auctions ...................................................................................................................... 3
Advanced Wireless Services ............................................................................................... 3
Satellite Spectrum ............................................................................................................... 4
Wholesale Networks ........................................................................................................... 4
Television Broadcast Spectrum and Incentive Auctions ........................................................... 5
Repurposing Federal Spectrum ................................................................................................. 6
Shared Spectrum ................................................................................................................. 7
Unlicensed Use.................................................................................................................... 7
Public Safety Spectrum Assignment and Use............................................................................ 8
Spectrum License Fee Provisions.............................................................................................. 8
Competition and Technology Policy................................................................................................ 9
Spectrum-Efficient Technology............................................................................................... 10
Conclusion ..................................................................................................................................... 11
Appendixes
Appendix A. Spectrum-Hungry Technologies ............................................................................... 13
Appendix B. Competition.............................................................................................................. 16
Appendix C. International Policies for Spectrum Management .................................................... 22
Contacts
Author Contact Information........................................................................................................... 23
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Spectrum Policy in the Age of Broadband: Issues for Congress
The Role of Spectrum Policy
The purpose of spectrum policy, law, and regulation is to manage a natural resource1 for the
maximum possible benefit of the public. Access to radio frequency spectrum is managed; the
assignment of spectrum rights does not convey ownership. Radio frequency spectrum is managed
by the Federal Communications Commission (FCC) for commercial and other non-federal uses
and by the National Telecommunications and Information Administration (NTIA) for federal
government use.
Wireless broadband,2 with its rich array of services and content, requires new spectrum capacity
to accommodate growth. Spectrum capacity is necessary to deliver mobile broadband to
consumers and businesses and also to support the communications needs of industries that use
fixed wireless broadband to transmit large quantities of information quickly and reliably.
Policy tools that might be used to increase the availability of radio frequency spectrum for
wireless broadband include allocating additional spectrum, reassigning spectrum to new users,
requiring that wireless network infrastructure be shared, pooling radio frequency channels,
moving to more spectrum-efficient technologies, and changing the cost structure of spectrum
access.
Although radio frequency spectrum is abundant, usable spectrum is currently limited by the
constraints of applied technology. Spectrum policy therefore requires making decisions about
how radio frequencies will be allocated and who will have access to them.3 Spectrum policy also
entails encouraging innovation in wireless technologies and their applications. Arguably, the role
of technology policy in crafting spectrum policy has increased with the need to reduce or
eliminate capacity constraints that may deter the expansion of broadband mobile services.
Spectrum Policy Legislation in the 112th Congress
There are a number of bills before Congress that address the interlaced issues of spectrum policy
and deficit reduction. The two issues are connected because, when radio frequency spectrum
licenses are auctioned for commercial purposes by the FCC, the net proceeds are deposited in the
U.S. Treasury.4
1 The Code of Federal Regulations defines natural resources as “land, fish, wildlife, biota, air, water, ground water,
drinking water supplies and other such resources belonging to, managed by, held in trust by, appertaining to, or
otherwise controlled by the United States.... ” (15 CFR 990, §990.30).
2 Broadband refers here to the capacity of the radio frequency channel. A broadband channel can quickly transmit live
video, complex graphics, and other data-rich information as well as voice and text messages, whereas a narrowband
channel might be limited to handling voice, text, and some graphics.
3 Spectrum allocation and assignment is addressed in Appendix B, Competition.
4 47 USC §308 (j) (8). Net proceeds are the auction revenues minus the FCC’s expenses. Congress has twice in the past
amended the provision in order to use auction proceeds for other purposes by creating special funds to hold and
disburse auction proceeds. The Commercial Spectrum Enhancement Act, Title II of P.L. 108-494 created the Spectrum
Relocation Fund; the Deficit Reduction Act of 2005 created the Public Safety and Digital Television Transition Fund.
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The legislation that first authorized the FCC to establish “competitive bidding systems”5 was
included in the Omnibus Budget Reconciliation Act of 1993 (P.L. 103-66). Requirements to
release radio frequency spectrum used for analog television broadcasting, and to auction licenses
in part of the cleared spectrum were included in the Balanced Budget Act of 1997 (P.L. 105-33).
The Deficit Reduction Act of 2005 (P.L. 109-171) provided a deadline for the release of the
frequencies used for analog TV and expanded the range of frequencies to be auctioned. The
Deficit Reduction Act specifically required that $7.363 billion of auction proceeds be applied to
deficit reduction, based on an estimate of predicted auction revenues provided by the
Congressional Budget Office (CBO). Because the auction results exceeded expectations, over $15
billion in revenue was deposited with the Treasury.
The Balanced Budget Act of 1997 gave the FCC auction authority until September 30, 2007. This
authority was extended to September 30, 2011, by the Deficit Reduction Act of 2005 and to 2012
by the DTV Delay Act (P.L. 111-4). Revenue from auctions held after FY2012 is therefore
considered new revenue.
The Balanced Budget Act of 1993 and the Deficit Reduction Act of 2005 also included measures
to provide additional resources for public safety communications. The 1993 act required the FCC
to identify 24 MHz of spectrum to assign for public safety use within the 700 MHz band6—the
band that was to be released in the transition from analog to digital television. The Deficit
Reduction Act of 2005 specified a deadline for the release of spectrum within the 700 MHz band
and provided $1 billion for a grant program to assist in improving public safety communications.
In the 112th Congress, several bills have been introduced that would fund a new wireless network
for public safety communications using proceeds from spectrum license auctions.
The House of Representatives, on December 13, 2011, approved the Middle Class Tax Relief and
Job Creation Act of 2011 (H.R. 3630, Representative Camp). H.R. 3630, Title IV contains
provisions from the Discussion Draft of the Jumpstarting Opportunity with Broadband Spectrum
(JOBS) Act of 2011, as amended, approved in markup on December 1, 2011, by the
Subcommittee on Communications and Technology, House Committee on Energy and
Commerce. H.R. 3630 is under consideration by a conference committee for which a major focus
of discussion is an extension of payroll tax cuts and how to fund them.
In the Senate, the legislative response to H.R. 3630 may include provisions from the American
Jobs Act of 2011 (S. 1549 and others) and from the Public Safety and Wireless Innovation Act (S.
911, as amended, Senator Rockefeller). S. 911 received bipartisan approval by the Committee on
Commerce, Science, and Transportation.
Spectrum policy issues, discussed below, that may be actively debated in the second session of
the 112th Congress include extension of the auction authority of the FCC in order to generate
revenue toward deficit reduction; directed auctions of specific frequencies; unlicensed spectrum;
incentive auctions for spectrum assigned to television broadcasters; reallocation of federal
5 47 USC §308 (j) (3).
6 Spectrum is segmented into bands of radio frequencies and typically measured in cycles per second, or hertz. Standard
abbreviations for measuring frequencies include kHz—kilohertz or thousands of hertz; MHz—megahertz, or millions
of hertz; and GHz—gigahertz, or billions of hertz. The 700 MHz band includes radio frequencies from 698 MHz to 806
MHz.
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spectrum to commercial use, licensing spectrum now used for satellite services; wholesale
networks; the assignment and use of spectrum for public safety; and new fees on license-holders.7
Directed Auctions
In its 2010 National Broadband Plan (NBP),8 the Federal Communications Commission (FCC)
established the need to increase the amount of spectrum available for commercial mobile
broadband services. It has proposed taking steps to add 300 MHz of licensed spectrum for
broadband within 5 years and a total of 500 MHz of new frequencies in 10 years. The FCC
anticipated that much of this spectrum would be auctioned. The likely sources for the additional
capacity would include spectrum already available to the FCC for licensing; licenses held by the
federal government that could be released or shared; and new licenses that encourage spectrum
efficiency through incentive auctions. At the request of Congress, the Government Accountability
Office (GAO) prepared a study about key spectrum policy recommendations in the NBP. 9
Bills actively under consideration by Congress would provide new authorities to the FCC to carry
out the plan and direct FCC actions in identifying and auctioning spectrum.
Advanced Wireless Services
The FCC has identified approximately 50 MHz of radio frequency spectrum to be released for
mobile broadband in the immediate future by the completion of existing auction plans. For
example, in 2007 the FCC issued a Notice of Proposed Rulemaking to establish service rules for
the auction of a license or licenses at 2155-2175 MHz, designated as Auction AWS-3.10 The FCC
did not act on the AWS-3 auction proposal but announced new plans in the NBP that included the
2155-2175 MHz frequencies.11 As outlined in the NBP, the FCC would seek to pair the 2155-
2175 MHz frequencies with an additional 20 MHz of frequencies reassigned from federal use.
The plan had proposed using federal frequencies in the 1755-1780 MHz range for this purpose,
but the NTIA offered instead to assess the feasibility of using frequencies in the 1675-1710 MHz
band.12 The FCC is also working with the NTIA to identify spectrum used by federal agencies
that might be made available for commercial use. The NTIA has produced a Ten-Year Plan and
Timetable that identifies bands of spectrum that might be available for commercial wireless
broadband service. As part of its planning efforts, NTIA prepared a “Fast Track Evaluation”13 of
spectrum resources that might be repurposed in the near future. Specific recommendations were
to make available 15 MHz of spectrum from frequencies between 1695-1710 MHz and 100 MHz
7 Additional information is provided in Congressional Distribution Memoranda, “Spectrum Policy and Deficit
Reduction: Administration-Sponsored Bills,” December 7, 2011, and “Public Safety and Spectrum Policy Provision in
H.R. 3630 and Other Bills,” December 14, 2011, available on request to the author.
8Connecting America: The National Broadband Plan, 2010 at http://www.broadband.gov.
9 GAO, Commercial Spectrum: Plans and Actions to Meet Future Needs, Including Continued Use of Auctions,
November 23, 2011, GAO-12-118 at http://www.gao.gov/assets/590/587319.pdf.
10 FCC, Notice of Proposed Rulemaking, WT Docket No. 07-195, released September 19, 2007.
11 Connecting America, Recommendation 5.8.3.
12NTIA, “Plan and Timetable” at http://www.ntia.doc.gov/reports/2010/TenYearPlan_11152010.pdf.
13 NTIA, An Assessment of Near-Term Viability of Accommodating Wireless Broadband Systems in the 1675-1710
MHZ, 1755-1780 MHz, 3500-3650 MHz, and 4200-4220 MHz, 4380-4400 MHZ Bands (President’s Spectrum Plan
Report), November 15, 2010, at http://www.ntia.doc.gov/report/2010/assessment-near-term-viability-accommodating-
wireless-broadband-systems-1675-1710-mhz-17.
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of spectrum within bands from 3550-3650 MHz. The Fast Track Evaluation also recommended
studying two 20 MHz bands to be identified within 4200-4400 MHz for possible repurposing.
In addition to the AWS-3 frequencies, there are two blocks of spectrum under the designation of
AWS-2 “H” and “J” that have been under consideration by the FCC for auction since 2004. The
AWS-2 “J” band, with paired frequency assignment at 2020-2025 MHZ and 2175-2180 MHz,
might be paired with AWS-3 or with an adjacent Mobile Satellite Service band.
Satellite Spectrum
In the NBP, the FCC proposed to expand terrestrial wireless networks in frequency bands
designated for Mobile Satellite Services (MSS). Of the four bands allocated for MSS since 1986,
the FCC has identified three bands that are “broadband capable.” The bands are known as the L-
Band (1225-1559 MHz and 1626.5-1160.5 MHz), the S-band (2000-2020 MHz and 2180-2200
MHz), and Big LEO (1610-1626.5 MHz and 2483.5-2500 MHz). Since February 2003, the FCC
has permitted selected MSS license-holders such as LightSquared to construct and operate
Ancillary Terrestrial Components that allow the deployment of terrestrial broadband networks
using MSS frequency assignments. The FCC has proposed developing a new ruling on terrestrial
use of MSS frequencies that have the potential of adding 90 MHz of capacity for broadband
services. Additionally, the FCC might pair unassigned frequencies at 2020-2025 MHz and 2175-
2180 MHz with an adjacent MSS band.
Wholesale Networks
In the 2008 auction of spectrum licenses at 700 MHz,14 several companies associated with Silicon
Valley and Internet ventures petitioned the FCC to set aside a block of spectrum as a national
license with a requirement that the network be available—open—to all.15 The FCC was also
petitioned to designate spectrum licenses at 700 MHz for networks that would operate on a
wholesale business model. It was argued that the wholesale business model would be the most
viable for new entrants and that the auction rules and conditions adopted by the FCC were
prejudicial to small business.16
Proponents of open access argue that only an open network that anyone can use—not just
subscribers of one wireless company—can provide consumer choice. From this perspective, a
wholesale network could provide more market opportunities for new wireless devices, especially
wireless devices that could provide unrestricted access to the Internet. A wholesale network
would allow customers to choose their own wireless devices without necessarily committing to a
service plan from a single provider. The network owner would operate along the same principles
used for shopping malls, providing the infrastructure for others to retail their own products and
services.
14 For information, see Auction 73 at http://wireless.fcc.gov/auctions/default.htm?job=auction_summary&id=73.
15 Comments, for example, made by Ram Shriram and Vanu Bose at the Frontline Town Hall, July 12, 2007,
Washington, DC, and by Jason Devitt at a panel discussion during the State of the Net conference, January 30, 2008,
Washington, DC.
16 Petition for Reconsideration of Frontline Wireless, LLC, WT Docket No. 96-86.
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LightSquared
In early 2010, the mobile satellite service operator SkyTerrra Communications was acquired by
the private equity group Harbinger Capital Partners. With FCC approval of the merger, Harbinger
began construction of a nationwide fourth-generation wireless broadband network that will be
integrated with satellite service, called LightSquared.17 The business model adopted for
LightSquared is based on selling wholesale access to the network’s infrastructure. Projected
customers include retailers, cable operators, device manufacturers, web players, contents
providers, and telecommunications companies. Customers will have the choice of terrestrial-only,
satellite-only, or integrated communications support. An advantage for potential customers is the
opportunity to move a new wireless product to market in a short time (once the network is in
place). Advantages to LightSquared include costs savings by using only Internet-Protocol (IP)
enabled Long Term Evolution (LTE) technology. Also, the wholesale customers of LightSquared
will effectively be leasing a location from which to sell to individual customers, thereby assuming
the cost of marketing, customers service, and billing and payment—all of which are expensive
components of operating costs. LightSquared, if successful, will be building a giant national mall
in the “cloud,” referring to the concept of remote services sometimes called cloud computing.18
The frequencies that LightSquared intends to use are adjacent to spectrum bands used for Global
Positioning System (GPS) devices of many types, and by the U.S. Department of Defense.
Potential interference on these frequencies is being addressed by the FCC but remains a major
concern for Congress and has prompted a number of hearings. 19
Television Broadcast Spectrum and Incentive Auctions
Bills being actively considered by Congress would give the FCC authority to conduct incentive
auctions, that is, to establish a mechanism whereby spectrum capacity could be relinquished for
auction by some license-holders, who would then share in the proceeds. Many commercial
wireless licenses can be resold directly by their license-holders for comparable uses; the purpose
of incentive auctions is to reward license-holders, such as television broadcasters, who repurpose
their spectrum for a different use.
The Balanced Budget Act of 1997, which mandated the eventual transition to digital television,
represented the legislative culmination of over a decade of policy debates and negotiations
between the FCC and the television broadcast industry on how to move the industry from analog
to digital broadcasting technologies. To facilitate the transition, the FCC provided each qualified
broadcaster with 6 MHz of spectrum for digital broadcasting to replace licenses of 6 MHz that
were used for analog broadcasting. The analog licenses would be yielded back when the
transition to digital television was concluded. The completed transition freed up the 700 MHz
band for commercial and public safety communications in 2009.
The FCC has revisited the assumptions reflected in the 1997 act and has made new proposals, and
decisions based on, among other factors, changes in technology and consumer habits. The NBP
announced that a new proceeding would be initiated to recapture up to 120 MHz of spectrum
from broadcast TV allocations for reassignment to broadband communications. This proceeding
17 The FCC approval of the acquisition is Release DA 10-535, 25 FCC Record 3059, adopted March 26, 2010.
18 A discussion of these technologies appears in Appendix A, Spectrum-Hungry Technologies.
19 Current information is at http://www.pnt.gov/interference/lightsquared/.
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would propose four sets of actions to achieve the goal; a fifth set of actions to increase efficiency
would be pursued separately.20 The FCC stipulated in the NBP that its recommendations “seek to
preserve [over-the-air television] as a healthy, viable medium going forward, in a way that would
not harm consumers overall, while establishing mechanisms to make available additional
spectrum for flexible broadband uses.”21
Many of the proposals for redirecting TV broadcast capacity are based on refinements in the way
frequencies are managed and are procedural in nature. Because over-the-air digital broadcasting
does not necessarily require 6 MHz of spectrum, the NBP has proposed that some stations could
share a single 6 MHz band without significantly reducing service to over-the-air TV viewers.
Among the proposals for how broadcasters might make better use of their TV licenses, the NBP
has raised the possibility of auctioning unneeded spectrum and sharing the proceeds between the
TV license-holder and the U.S. Treasury. The FCC and the NTIA have called on Congress to
provide new legislation that would allow this type of incentive auction.
Repurposing Federal Spectrum
The Commercial Spectrum Enhancement Act (Title II of P.L. 108-494) put in place, in 2004,
statutory rules for covering the costs to federal agencies of relocating wireless communications
facilities to new spectrum assignments. The act created the Spectrum Relocation Fund to provide
a means for federal agencies to recover relocation costs directly from auction proceeds when they
are required to vacate spectrum slated for auction. In effect, successful commercial bidders would
cover the costs of relocation. Among key provisions of the act were requirements that the auctions
must recoup at least 110% of the costs projected by the NTIA, and that unused funds would revert
to the Treasury after eight years. Specific frequencies were designated for immediate auction22
but the law applies to other federally used frequencies scheduled for reallocation and possible
auction.
Bills actively under consideration would require that additional frequencies be reallocated from
federal to commercial use and would provide amendments to the Commercial Spectrum
Enhancement Act. The bills would address how spectrum resources would be repurposed through
auction or sharing, and how costs would be defined and compensated, among other provisions.
Planning for potential or planned auctions would be included as a reimbursable cost. Other
reimbursable costs would apply across a wide range of technical options, including spectrum
sharing.
20 Connecting America, Recommendation 5.8.5. The first Notice of Proposed Rulemaking to address implementation of
these proposals was released November 30, 10, ET Docket No. 10-235 at http://www.fcc.gov/Daily_Releases/
Daily_Business/2010/db1130/FCC-10-196A1.pdf.
21 Connecting America, p. 89.
22 Following the procedures required by the act, the FCC scheduled an auction for Advanced Wireless Services (AWS),
designated Auction 66, which was completed on September 18, 2006. The AWS auction attracted nearly $13.9 billion
in completed bids, substantially above the cost established by the NTIA of almost $936 million for the move.
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Shared Spectrum
The NTIA, as outlined in its “Plan and Timetable,” has recommended policies that would
encourage sharing among federal agencies, between federal agencies and private users, and
among private users.
The NBP recommends that the FCC identify and free up a “new, contiguous nationwide band for
unlicensed use” by 2020;23 and provide spectrum and take other steps to “further development
and deployment” of new technologies that facilitate sharing.24
From a policy perspective, actions to speed the arrival of new, spectrally efficient technologies
might have significant impact on achieving broadband policy goals over the long term. In
particular, support for technologies that enable sharing could pave the way for dramatically
different ways of managing the nation’s spectrum resources. Among the technologies that
facilitate spectrum sharing are cognitive radio and Dynamic Spectrum Access (DSA).25 Enabling
technologies such as these allow communications to switch instantly among network frequencies
that are not in use and therefore available to any radio device equipped with cognitive technology.
Unlicensed Use
Another policy option for increasing the amount of spectrum available for commercial broadband
is to allocate spectrum for unlicensed use. Unlicensed spectrum is not sold to the highest bidder
and used for the services chosen by the license-holder but is instead accessible to anyone using
wireless equipment certified by the FCC for those frequencies. Both commercial and non-
commercial entities use unlicensed spectrum to meet a wide variety of monitoring and
communications needs. Suppliers of wireless devices must meet requirements for certification to
operate on frequency bands designated for unlicensed use. Examples of unlicensed use include
garage door openers and WiFi communications.
New technologies, sometimes referred to as Super WiFi, are being developed to expand the
amount of unlicensed spectrum without causing interference. Technology is being put in place to
use vacant spectrum, known as white spaces, between broadcasting signals of digital television.
On September 11, 2006, the FCC announced a timetable for allowing access to the spectrum so
that devices could be developed.26 An order issued in September 2010 allowed plans for new
technology to move forward.27 Super WiFi devices are expected to reach the market by 2013.28
23 Connecting America, Recommendation 5.11.
24 Connecting America, Recommendation 5.13.
25 Dynamic Spectrum Access, Content-Based Networking, and Delay and Disruption Technology Networking, along
with cognitive radio, and decision-making software, are examples of technologies that can enable Internet-like
management of spectrum resources. DSA is part of the neXt Generation program, or XG, a technology development
project sponsored by the Strategic Technology Office of the Defense Advanced Research Projects Agency (DARPA).
The main goals of the program include developing both the enabling technologies and system concepts that
dynamically redistribute allocated spectrum.
26 FCC, First Report and Order and Further Notice of Proposed Rule Making, ET Docket No. 04-186, released
October 18, 2006 at http://fjallfoss.fcc.gov/edocs_public/attachmatch/FCC-06-156A1.pdf.
27 FCC, Second Memorandum Opinion and Order, ET Docket No. 04-186, released September 23, 2010, at
http://www.fcc.gov/Daily_Releases/Daily_Business/2010/db1025/FCC-10-174A1.pdf.
28 “Spectrum Bridge Gains Final FCC Approval, White Spaces Broadband Era to Begin,” by Joan Engebretson,
telecompetitor.com, December 22, 2011.
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Similar technologies are being used to expand the availability of spectrum for unlicensed use at 5
GHz by sharing with existing federal users in those frequencies.29
Public Safety Spectrum Assignment and Use
The FCC is responsible for assigning spectrum for public safety wireless communications. The
end of analog television broadcasting in the 700 MHz band freed up 24 MHz of spectrum for
public safety use within that band. Of this, half has been designated for narrowband (voice)
networks. 10 MHz is to be used for broadband (data) networks and 2 MHz are designated as
guard bands. The announced intention of public safety agencies is to combine the D Block with
12 MHz of adjacent spectrum already assigned for public safety use, referred to as the Public
Safety Broadband License, to build a broadband network, or networks, for nationwide coverage.
The Public Safety Broadband License was originally assigned by the FCC to the Public Safety
Spectrum Trust (PSST), a not-for-profit corporation created for that purpose.
Planning and implementation of broadband networks for public safety communications are still in
the early stages. Among the barriers to moving forward are incomplete development of
technology and standards; inadequate planning; insufficient coordination among public safety
agencies; lack of governance structure to direct and administer a nationwide, interoperable
network; and lack of sufficient funding.
Bills under active consideration would require the FCC to assign an additional 10 MHz of radio
frequency spectrum in the 700 MHz band for public safety use. These frequencies—at 758-763
MHz and 788-793 MHz—are known as the D Block. The bills would combine the existing Public
Safety Broadband License and the D Block in a single license. The bills would also provide
mechanisms for planning and governance and would establish grants programs for financial
assistance.
Spectrum License Fee Provisions
The Obama Administration has proposed that the FCC be given the authority to levy fees, and to
use other economic mechanisms, as a spectrum management tool.30 Similar proposals were made
in budget proposals during the Administration of President George W. Bush.31
The FCC’s statutory authority to impose new spectrum user fees is limited. The FCC was
authorized by Congress to set license application fees32 and regulatory fees to recover costs.33 A
29 These and other frequencies for unlicensed use are discussed in The Economic Value Generated by Existing and
Future Allocations of Unlicensed Spectrum, Perspective, Ingenious Consulting Network, September 28, 2009;
sponsored by Microsoft, Inc.
30 Office of Management and Budget, Budget of the U.S. Government, Fiscal Year 2011, Appendix, “Other Independent
Agencies,” p. 1263. See also, FCC, Fiscal Year 2011 Budget Estimates Submitted to Congress, February 2010 at
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-296111A1.pdf.
31 For example, the President’s budget for FY2004 and again for 2006 proposed that (1) the FCC’s authority to conduct
auctions be extended indefinitely; (2) user fees be levied on unauctioned licensed spectrum; and (3) broadcasters pay an
annual lease fee on analog TV spectrum that they are holding as part of the Congressionally-mandated transition to
digital television. In his budget for 2005, the President supported proposals for indefinitely extending the FCC’s
auction authority and giving the FCC the authority to set user fees on unauctioned spectrum.
32 47 USC §158 (a).
33 47 USC §159 (a).
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new fee structure seeking recovery beyond costs would require congressional authorization, either
through an appropriations bill or through new legislation.
In the NBP, the FCC asked Congress to consider granting it authority to impose spectrum fees on
license holders as a means of addressing inefficient use.34 The report presented the hypothesis that
“Fees may help to free spectrum for new uses such as broadband, since licensees who use
spectrum inefficiently may reduce their holdings once they bear the opportunity cost” of holding
the spectrum.35
In response to Bush Administration proposals, the 108th Congress instructed the GAO to take note
of the possible impact of changing the spectrum license fee structure. In the Commercial
Spectrum Enhancement Act, the GAO was instructed to examine “national commercial spectrum
policy as implemented by the Federal Communications Commission” and report on its findings in
2005.36 The GAO was to examine the impact of auctioning licenses on the economic climate for
broadcast and wireless technologies and to assess whether the holders of spectrum licenses
received before the auction process was instituted (i.e., largely for free) have an economic
advantage over license holders that purchased spectrum rights through the auction process. The
GAO was also to evaluate whether the disparate methods of allocating spectrum had an adverse
impact on the introduction of new services. The conclusions of the study were to be reviewed in
the context of an Administration proposal to introduce license user fees on licenses that had not
been auctioned. The GAO was also to provide an evaluation for Congress regarding the impact of
assessing license fees on the competitive climate in the wireless and broadcast industries.
After consultation with the committees of jurisdiction, the GAO did not include an analysis of
license fees in its report. Instead it focused on the impact of auctions on factors such as end-user
prices, investment in infrastructure, and competition. One of the report’s conclusions was that the
cost of purchasing licenses did not affect price and competition in the long run because the cost
was a one-time, sunk cost.37 New licensing regimes were mentioned in the report as a possible
means of increasing spectral efficiency but the suggestion received no discussion in the report.38
Competition and Technology Policy
With the introduction of auctions for spectrum licenses in 1994, the United States began to shift
away from assigning spectrum licenses based on regulatory decisions and toward competitive
market mechanisms. One objective of the Telecommunications Act of 1996 was to open up the
communications industry to greater competition among different sectors. One outcome of the
growth of competition was the establishment of different regulatory regimes for information
networks and for telecommunications.39 As a consequence of these and other legislative and
34 Connecting America, Recommendation 5.6.
35 Connecting America, p. 82.
36 P.L. 108-494, Title II, §209 (a).
37 GAO, Telecommunications: Strong Support for Extending FCC’s Auction Authority Exists, but Little Agreement on
Other Options to Improve Efficient Use of Spectrum,” December 20, 2005, GAO-06-236, p. 2.
38 Ibid., p. 10, footnote 15.
39 For a discussion of policy issues, see CRS Report R40234, The FCC’s Authority to Regulate Net Neutrality After
Comcast v. FCC , by Kathleen Ann Ruane, and CRS Report R40616, Access to Broadband Networks: The Net
Neutrality Debate, by Angele A. Gilroy.
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regulatory changes, the wireless industry has areas of competition (e.g. for spectrum licenses)
within a regulatory shell, such as the rules governing the Public Switched Telephone Network
(PSTN).40 As the bulk of wireless communications traffic moves from voice to data, companies
will likely modify their business plans in order to remain competitive in the new environment. A
shift in infrastructure technology and regulatory environment41 might open wireless competition
to companies with business plans that are not modeled on pre-existing telecommunications
industry formulae. Future providers of wireless broadband might include any company with a
robust network for carrying data and a business case for serving broadband consumers. Potential
new entrants, however, may lack access to radio frequency spectrum, the essential resource for
wireless broadband.
Current spectrum policy relies heavily on auctions to assign spectrum rights through licensing.
However, the adoption of spectrum-efficient technologies is likely to require a rethinking of
spectrum management policies and tools. The assignment and supervision of licenses might give
way to policies and procedures for managing pooled resources. Auctioning licenses might be
replaced by auctioning access; the static event of selling a license replaced by the dynamic
auctioning of spectrum access on a moment-by-moment basis.
Spectrum-Efficient Technology
Mobile communications became generally available to businesses and consumers in the 1980s.
The pioneering cell phone technologies were analog.42 Second-generation (2G) wireless devices
were characterized by digitized delivery systems. Third-generation (3G) wireless technology
represents significant advances in the ability to deliver data and images. The first commercial
release of 3G was in Japan in 2001; the technology successfully debuted in the United States in
2003. 3G technologies can support multi-function devices, such as the BlackBerry and the
iPhone. Successor technologies, often referred to as 4G, are expected to support broadband speeds
that will rival wireline connections such as fiber optic cable, with the advantage of complete
mobility. 4G wireless broadband technologies include WiMAX43 and Long Term Evolution (LTE)
networks. Both are based on TCP/IP, the core protocol of the Internet.44
Wireless technologies to facilitate broadband deployment for which spectrum may need to be
allocated that were identified by the NBP include 4G networks; fixed wireless as an alternative to
fiber optic cable; and broadband on unlicensed frequencies.
The NBP spectrum assignment proposals are based on managing radio channels as the way to
maximize spectral efficiency while meeting common goals such as minimizing interference
among devices operating on the same or nearby frequencies. Today, channel management is a
40 PSTN is a global system; rights of access and usage in the United States are regulated by the FCC.
41 On December 1, 2009, the FCC published a public notice seeking comments on the “appropriate policy framework to
facilitate and respond to the market-led transition in technology and services, from the circuit-switched PSTN system to
an IP-based communications world.” “Comment Sought on Transition from Circuit-Switched Network to All-IP
Network,” NBP Public Notice #25, DA 09-2517 at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-09-
2517A1.pdf.
42 A wireless analog signal uses a continuous transmission form. Digital signals are discontinuous (discrete)
transmissions.
43 WiMAX stands for Worldwide Interoperability for Microwave Access.
44 Key technologies for mobile broadband are summarized in Appendix A, Spectrum-Hungry Technologies.
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significant part of spectrum management; many of the FCC dockets deal with assigning channels
and resolving the issues raised by these decisions. In the future, channel management is likely to
be replaced by technologies that operate without the need for designated channels. In the NBP,
the FCC refers to these spectrum-seeking technologies as opportunistic. Identifying an
opportunity to move to an open radio frequency is more flexible—and therefore more
productive—than operating on a set of pre-determined frequencies. The primary benefit from
these new technologies will be the significant increase in available spectrum but new efficiencies
in operational and regulatory costs will also be realized.
The concept of channel management dates to the development of the radio telegraph by
Guglielmo Marconi and his contemporaries. In the age of the Internet, however, channel
management is an inefficient way to provide spectrum capacity for mobile broadband. Innovation
points to network-centric spectrum management as an effective way to provide spectrum capacity
to meet the bandwidth needs of fourth-generation wireless devices.45 Network-centric
technologies organize the transmission of radio signals along the same principle as the Internet. A
transmission moves from origination to destination not along a fixed path but by passing from
one available node to the next. Pooling resources, one of the concepts that powers the Internet
now, is likely to become the dominant principle for spectrum management in the future.
The latest generation of smartphones provides examples of how the Internet is likely to change
wireless communications as more and more of the underlying network infrastructure is converted
to IP-based standards. The arriving generation of wireless networks, 4G, for Fourth Generation,
will be supported by technologies structured and managed to emulate the Internet. Smartphones
use the Internet Protocol to perform many of their functions; these require time and space—
spectrum capacity—to operate. The wireless devices that use these new, IP-powered networks
will be able to share spectrum capacity in ways not currently available on commercial networks,
greatly increasing network availability on licensed bandwidths. Another technological boost will
come from improved ways to use unlicensed spectrum.
More efficient spectrum use can be realized by integrating adaptive networking technologies,
such as DSA, with IP-based, 4G commercial network technologies such as LTE. Adaptive
networking has the potential to organize wireless communications to achieve the same kinds of
benefits that have been seen to accrue with the transition from proprietary data networks to the
Internet. These enabling technologies allow communications to switch instantly among network
frequencies that are not in use and therefore available to any wireless device equipped with
cognitive technology. Adaptive technologies are designed to use pooled spectrum resources.
Pooling spectrum licenses goes beyond sharing. Licenses are aggregated and specific ownership
of channels becomes secondary to the common goal of maximizing network performance.
Conclusion
Telephone service was once considered a natural monopoly, and regulated accordingly. The
presumption was that redundant telephone infrastructure was inefficient and not in the public
45 A leading advocate for replacing channel management of radio frequency with network-centric management is
Preston Marshall, the source for much of the information about network-centric technologies in this report. Mr.
Marshall is Director, Information Sciences Institute, University of Southern California, Viterbi School of Engineering,
Arlington, Virginia.
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interest. State and federal regulators favored granting operating rights to a single company, within
a specific facilities territory, to benefit from economies of scale, facilitate interoperability, and
maximize other benefits. In return for the monopoly position, the selected provider was expected
to fulfill a number of requirements intended to benefit society. Thus, for decades, the regulated
monopoly was seen by most policy-makers as (1) ensuring that costly infrastructure was put in
place and (2) meeting society’s needs, as interpreted by regulations and the law.46 Past policies to
regulate a monopolistic market may have influenced current policies for promoting competition.
The FCC’s emphasis on efficiency for delivering services to a pre-determined market could be
leading wireless competition toward monopoly; new regulatory regimes might be a consequence
of this trend, if it continues.
Current spectrum policy seeks to maximize the value of spectrum by encouraging economies of
scale and appears to treat spectrum assets as an extension of existing infrastructure (spectrum
license ownership and network management, for example) instead of an alternative infrastructure
(WiFi and wireless backhaul are examples). This policy course has provided a form of workable
competition that has brought wireless services (until 2006, almost exclusively voice) at affordable
prices to most of the country. However, wireless technology has reached an inflection point and is
shifting from voice to data. Some argue that wireless policy should also shift, placing a greater
value on innovation to achieve goals deemed to be in the public interest. A policy that prioritizes
providing spectrum to spur innovation, for example, could create new markets, new models for
competition, and new competitors. If spectrum policy serves broadband policy and broadband
policy serves multiple sectors of the economy, then perhaps spectrum should be more readily
available for a wider pool of economic participants.
The amount of spectrum needed for fully realized wireless access to broadband is such that
meeting the needs of broadband policy goals could be difficult to achieve through the market-
driven auction process unless large amounts of new radio frequencies can be identified and
released for that purpose.47 Without abandoning competitive auctions, spectrum policy could
benefit from including additional ways to assign or manage spectrum that might better serve the
deployment of wireless broadband and the implementation of a national broadband policy.
Legislation geared to improve auction mechanisms might benefit from the consideration of
measures that would use technology to increase the amount of spectrum available, thereby
opening the field to new players, fostering competition, and spurring innovation.
46 The original Communications Act of 1934 codified many regulations for monopolies as practiced at the time.
47 International Telecommunications Union projects an estimated need for additional spectrum capacity that could
reach nearly 1,000 MHz in the United States, as reported in “Summary of Results of ITU-R Report M. 2079,” p. 13,
presented by Cengiz Evci, Chief Frequency Officer, Wireless Business Group, Alcatel-Lucent, August 28, 2007.
Available at http://standards.nortel.com/spectrum4IMT/Geneva/R03-WRCAFR07-C-0024.pdf. See also CTIA-The
Wireless Association, Written Ex Parte Communication, FCC, GN Docket No. 09-51, September 29, 2009, which
suggests a goal of at least 800 MHz, based on extrapolations from the ITU research.
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Appendix A. Spectrum-Hungry Technologies
Enabling technologies that are fueling both the demand for mobile broadband services and the
need for radio frequency spectrum include Long Term Evolution (LTE); WiMAX; fixed wireless;
WiFi; high performance mobile devices such as smartphones and netbooks; and cloud computing.
Fixed wireless and WiFi are not new technologies but mobile broadband has given them new
roles in meeting consumer demand. Future technologies include network-centric technologies,
which include opportunistic solutions such as Dynamic Spectrum Access (DSA).
Long Term Evolution (LTE)
LTE is the projected development of existing 3G networks built on Universal Mobile Telephone
System (UMTS) standards.48 Like all fourth-generation wireless technologies, LTE’s core
network uses Internet protocols. The network architecture is intended to facilitate mobile
broadband deployment with capabilities that can deliver large amounts of data, quickly and
efficiently, to large numbers of simultaneous users. LTE will likely be implemented in stages
through modifications to networks using frequencies in bands already allocated for commercial
wireless networks.49 LTE might operate on spectrum bands at 700 MHz, 1.7 GHz, 2.3 GHz, 2.5
GHz, and 3.4 GHz.50
WiMAX
WiMAX provides mobile broadband but its earliest applications were for fixed wireless services.
WiMAX (Worldwide Interoperability for Microwave Access) refers to both a technology and an
industry standard, the work of an industry coalition of network and equipment suppliers.51
WiMAX uses multiple frequencies around the world in ranges from 700 MHz to 66 GHz. In the
United States, available frequencies include 700 MHz, 1.9 GHz, 2.3 GHz, 2.5 GHz and 2.7 GHz.
The introduction of WiMAX in the United States is being jointly led by Sprint Nextel
Corporation and Clearwire Corporation.
Fixed Wireless Services
Fixed wireless services have taken on new importance as a “backhaul” link for 4G. Backhaul is
the telecommunications industry term that refers to connections between a core system and a
subsidiary node. An example of backhaul is the link between a network—which could be the
Internet or an internetwork that can connect to the Internet—and the cell tower base stations that
route traffic from wireless to wired systems. Two backhaul technologies well-suited for mobile
48 See, for example, “Mobile Broadband Evolution: the roadmap from HSPA to LTE,” UMTS Forum, February 2009,
Universal Mobile Telephone System Forum at http://www.umts-forum.org/.
49 Implementation summarized in Connecting America, Exhibit 5-B, p. 77.
50 Spectrum is segmented into bands of radio frequencies and typically measured in cycles per second, or hertz.
Standard abbreviations for measuring frequencies include kHz—kilohertz or thousands of hertz; MHz—megahertz, or
millions of hertz; and GHz—gigahertz, or billions of hertz.
51 Founding members of the WiMAX Forum include Airspan, Alvarion, Analog Devices, Aperto Networks, Ensemble
Communications, Fujitsu, Intel, Nokia, Proxim, and Wi-LAN. For additional information, see
http://www.wimaxforum.org/.
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Internet access are fiber optic cable and point-to-point microwave radio relay transmissions.52
Network expansion plans for WiMAX and LTE include microwave links as a cost-effective
substitute for fiber optic wire under certain conditions. Radio frequencies available in the United
States for microwave technologies of different types start in the 930 MHz band and range as high
as the 90 GHz band.
WiFi
The popularity of WiFi is often cited as a successful innovation that was implemented using
unlicensed frequencies.53 WiFi provides wireless Internet access for personal computers and
handheld devices and is also used by businesses to link computer-based communications within a
local area. Links are connected to a high-speed landline either at a business location or through
hotspots. Hotspots are typically located in homes or convenient public locations, including
airports and café environments such as Starbucks. WiFi uses radio frequencies in the free 2.4 GHz
and 5.4/5.7GHz spectrum bands. Many 3G and 4G wireless devices that operate on licensed
frequencies can also use the unlicensed frequencies set aside for WiFi.54
Cloud Computing
Cloud computing is a catch-all term that is popularly used to describe a range of information
technology resources that are separately stored for access through a network, including the
Internet. An Internet search on Google, for example, is using cloud computing to access a rich
resource of data and information processing. Network connectivity to services is another resource
provided by cloud computing. Google Inc., for example, offers word processing, e-mail, and
other services through Google Docs. Although off-site data processing and information storage
are not new concepts, cloud computing benefits from the significant advances in network
technology and capacity that are hallmarks of the broadband era. Cloud computing can provide
economies of scale to businesses of all sizes. Small businesses in particular can benefit from
forgoing the costs of installing and managing hardware and software by buying what they need
from the cloud. Consumers also can benefit because they no longer need to buy personal
computers in order to run complex programs or store large amounts of data. The convergence of
4G wireless technology—with its smartphones and netbooks—and the growing accessibility of
cloud computing to businesses and consumers alike will contribute to the predicted explosive
growth in demand for wireless bandwidth.
Network-Centric Technologies
More efficient spectrum use can be realized by integrating adaptive networking technologies,
such as dynamic spectrum access, with IP-based commercial network technologies such as LTE.
Radios using DSA chipsets are more effective at managing interference and congestion than the
52 A discussion of backhaul technology is part of the testimony of Ravi Potharlanka, Chief Operating Officer, Fiber
Tower Corp., at House of Representatives, Committee on Energy and Commerce, Subcommittee on Communications,
Technology, and the Internet, “An Examination of Competition in the Wireless Industry,” May 7, 2009.
53 Unlicensed frequencies are bands set aside for devices approved by the FCC. The frequencies are effectively
managed by the FCC instead of by a license-holder.
54 “Wi-Fi Popular Now in Smartphones, Set to Boom,” by Matt Hamblen, Computerworld, April 1, 2009.
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channel management techniques currently in use. If a channel’s link fails, the radio is cut off.
When radios are networked using DSA, individual communications nodes continue to operate
and can compensate for failed links. The effects of interference are manageable rather than
catastrophic. The network is used to overcome radio limitations.
Adaptive networking has the potential to organize radio communications to achieve the same
kinds of benefits that have been seen to accrue with the transition from proprietary data networks
to the Internet. Adaptive technologies are designed to use pooled spectrum resources. Pooling
spectrum licenses goes beyond sharing. Licenses are aggregated and specific ownership of
channels becomes secondary to the common goal of maximizing network performance.
The Department of Defense (DOD) is working to implement network-centric operations (NCO)
through a number of initiatives.55 Leadership and support to achieve DOD goals in the crucial
area of spectrum management is provided by the Defense Spectrum Organization (DSO) created
in 2006 within the Defense Information Systems Agency (DISA). The DSO is leading DOD
efforts to transform spectrum management in support of future net-centric operations and warfare,
and to meet military needs for dynamic, agile, and adaptive access to spectrum. The DSO is
guiding DOD spectrum management along a path that envisions moving away from stove-piped
systems to network-centric spectrum management and, ideally, to bandwidth on demand and
cognitive self-synching spectrum use.
Among the steps to advance toward the goal of spectrum access that is fully adaptable to any
situation is the testing of network-centric technologies developed by the Defense Advanced
Research Projects Agency (DARPA) within the Wireless Network After Next (WNaN) program.
WNaN is evaluating DSA, Disruptive Tolerant Networking, and other tools, possibly to replace
the existing Joint Tactical Radio System (JTRS) now in use. JTRS uses software-programmable
radios to provide interoperability, among other features.56
55 A discussion of the goals of NCO is included in CRS Report RL32411, Network Centric Operations: Background
and Oversight Issues for Congress, by Clay Wilson.
56 Information at http://jpeojtrs.mil/.
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Appendix B. Competition
In formulating spectrum policy, mainstream viewpoints generally diverge on whether to give
priority to market economics or social goals. Regarding access to spectrum, economic policy
looks to harness market forces to allocate spectrum efficiently, with spectrum license auctions as
the driver. Social policy favors ensuring wireless access to support a variety of social objectives
where economic return is not easily quantified, such as improving education, health services, and
public safety. Both approaches can stimulate economic growth and job creation.
The National Broadband Plan (NBP) has concluded that an effective way to improve competition
among wireless broadband providers is to increase the amount of spectrum available.57 This
approach was validated by a number of filings with the FCC; for example, the Department of
Justice provided arguments as to why the “primary tool for promoting broadband competition
should be freeing up spectrum.”58
One of the management tools available to the FCC is its power to assign spectrum licenses
through auctions. Auctions are regarded as a market-based mechanism for rationing spectrum
rights. Economy of scale in wireless communications has increasingly become an important
determinant in the outcome of these auctions. Companies that have already made substantial
investments in infrastructure have been well placed to maximize the value of new spectrum
acquisitions. Corporate mergers and acquisitions represent another way to improve scale
economies. Efficiencies through economy of scale have contributed to creating a market for
wireless services where four companies—Verizon Wireless LLC, AT&T Inc., Sprint Nextel
Corporation, and T-Mobile USA Inc.—had approximately 90% of the customer base of
subscribers at the end of 2010. These companies also own significant numbers of spectrum
licenses covering major markets nationwide.
The leading position of these few companies in providing a critical distribution channel—
wireless—for information and services may need to be considered in plans for national broadband
deployment. One approach to ensuring wireless access to meet national broadband goals might be
to tighten the regulatory structure under which wireless communications are managed. Other
approaches might seek ways to modify spectrum policies to increase market competition and to
accommodate the age of broadband.
In evaluating competition within an industry, economists and policy makers examine barriers to
entry, among other factors.59 Barriers might come from high costs for market entry such as
investment in infrastructure or there might be legal and regulatory barriers to entry. As part of its
evaluation of competition for mobile services, the FCC has identified three factors that could
constitute barriers to entry to the commercial mobile communications industry. These barriers
affect not only competitiveness but also access to networks and investment in new technology.
The factors are “first-mover advantages, large sunk costs, and access to spectrum.”60 All three of
57 Connecting America, Chapter 5.1.
58 Ex Parte Submission of the United States Department of Justice, In the matter of Economic Issues in Broadband
Competition: A National Broadband Plan for Our Future, GN Docket 09-51, January 4, 2010, p. 21 at
http://fjallfoss.fcc.gov/ecfs/document/view?id=7020355122.
59 For example, U.S. Department of Justice and the Federal Trade Commission, “Horizontal Merger Guidelines,”
Jointly issued April 2, 1992, revised April 8, 1997.
60 FCC, “Wireless Telecommunications Bureau Seeks Comment on Commercial Mobile Radio Services Market
(continued...)
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these factors are subject to regulations that have been influenced by past or existing policies
regarding spectrum allocation and assignment.
First-mover advantages61 have accrued primarily to the early entrants in the wireless industry.
Early in the development of the cell phone industry, the FCC created cellular markets and
assigned two spectrum licenses to each market; one license went automatically to the incumbent
provider in that market. The second license was made available to a competing service provider
(not the market incumbent); the difficulties in choosing the competitors that would receive
licenses contributed to the subsequent move to auctions as a means for assigning spectrum
rights.62 These early entrants, and the successor companies that acquired them and their licenses,
have maintained their core customer base and benefit from early investments in infrastructure.
Many first movers into the wireless market, therefore, acquired their market-leader status through
regulatory decisions that provided them with spectrum licenses, not through market competition.
Large sunk costs refer to the high levels of investment needed to enter the wireless market. Not
including the price of purchasing spectrum, billions of dollars are required to build new
infrastructure. The sunk costs of incumbent wireless service providers set a high bar for new
entrants to match if they are to compete effectively in major markets. In the mobile telephone
industry, the FCC has observed that most capital expenditures are spent on existing networks: to
expand and improve geographic coverage; to increase capacity of existing networks; and to
improve network capabilities. Performance requirements for spectrum license-holders, such as the
size of a market that must be served or deadlines for completing infrastructure build-outs, are
some of the policy decisions that can add to the cost of entry.
Spectrum Auctions and Competition
The FCC, acting on the statutory authority given to it by Congress, has broad regulatory powers
for spectrum management. The FCC was created as part of the Communications Act of 193463 as
the successor to the Federal Radio Commission, which was formed under the Radio Act of
1927.64 The first statute covering the regulation of airwaves in the United States was the Radio
Act of 1912, which gave the authority to assign usage rights (licenses) to the Secretary of the
Department of Commerce and Labor.65 Licensing was necessary in part because, as radio
communications grew, it became crucial that frequencies be reserved for specific uses or users, to
minimize interference among wireless transmissions.66 A key component of spectrum policy is the
(...continued)
Competition,” Public Notice, February 25, 2008, DA 08-453, WT Docket No. 08-27 at http://hraunfoss.fcc.gov/
edocs_public/attachmatch/DA-08-453A1.pdf. Earlier annual reports have also cited these barriers.
61 The initial occupant of a market segment may benefit from a number of advantages such as preemption of resources,
advantageous relationships with customers and suppliers, and early profits for reinvestment in infrastructure.
62 The distribution of licenses for cell phone networks from the early days of the technology until the introduction of
auctions is described in Wireless Nation: The Frenzied Launch of the Cellular Revolution in America, by James B.
Murray, Jr., Perseus Press, 2001, 2002.
63 47 U.S.C. §151.
64 P.L. 632, §3.
65 P.L. 264, “License.”
66 An “Act to regulate radio communications,” usually referred to as the Radio Act of 1912, was passed partly in
response to radio problems—including interference—associated with the sinking of the Titanic. Hearings Before a
Subcommittee of the Committee on Commerce, 62nd Congress, 2nd Session, pursuant to S. Res. 283, “Directing the
(continued...)
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allocation of bands of frequencies for specific uses and the assignment of licenses within those
bands. Allocation refers to the decisions, sometimes reached at the international level, that set
aside bands of frequencies for categories of uses or users; assignment refers to the transfer of
spectrum rights to specific license-holders.
Auctions are regarded as a market-based mechanism for assigning spectrum. The FCC was
authorized to organize auctions to award spectrum licenses for certain wireless communications
services in the Omnibus Budget Reconciliation Act of 1993 (P.L. 103-66). The act amended the
Communications Act of 1934 with a number of important provisions affecting the availability of
spectrum. The Licensing Improvement section67 of the act laid out the general requirements for
the FCC to establish a competitive bidding methodology and consider, in the process, objectives
such as the development and rapid deployment of new technologies.68 The law prohibited the
FCC from making spectrum allocation decisions based “solely or predominately on the
expectation of Federal revenues....”69 The Emerging Telecommunications Technologies section70
directed the NTIA to identify not less than 200 MHz of radio frequencies used by the federal
government that could be transferred to the commercial sector through auctions.71 The FCC was
directed to allocate and assign these released frequencies over a period of at least 10 years, and to
reserve a significant portion of the frequencies for allocation after the 10-year time span.72 Similar
to the requirements for competitive bidding, the FCC was instructed to ensure the availability of
frequencies for new technologies and services, and also the availability of frequencies to
stimulate the development of wireless technologies.73 The FCC was further required to address
“the feasibility of reallocating portions of the spectrum from current commercial and other non-
federal uses to provide for more efficient use of spectrum” and for “innovation and marketplace
developments that may affect the relative efficiencies of different spectrum allocations.”74 Over
time, auction rules have been modified in accordance with the changing policy goals of the FCC
and Congress but subsequent amendments to the Communications Act of 1934 have not
substantively changed the above-noted provisions regarding spectrum allocation.75
The rules set by the FCC for using spectrum licenses (service rules) may have been oriented
toward the concepts of building and managing networks that were formed in the days of the
telephone, favoring traditional telecommunications business plans over those of companies with
different business models. Some companies that might be well suited to meet social goals, such as
access in rural areas, might have been precluded from bidding at all because of constraints not
considered relevant to market-driven allocations. For example, public utilities, municipal co-
operatives, commuter railroads, and other public or quasi-public entities face a variety of legal,
(...continued)
Committee on Commerce to Investigate the Cause Leading to the Wreck of the White Star Liner ‘Titanic,’” testimony
of Guglielmo Marconi et al.
67 P.L. 103-66 Title III, Subtitle C, Chapter 1.
68 47 U.S.C. §309 (j), especially (1), (3), and (4).
69 47 U.S.C. §309 (j) (7) (A).
70 P.L. 103-66 Title III, Subtitle C, Chapter 2.
71 47 U.S.C. §923 (b) (1).
72 47 U.S.C. §925 (b) (1).
73 47 U.S.C. §925 (b) (2).
74 47 U.S.C. §925 (b) (3).
75 See United States Code Annotated, Title 47, sections as footnoted, WEST Group, 2001 and the 2007 Cumulative
Annual Pocket Part.
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regulatory, and structural constraints that limit or prohibit their ability to participate in an auction
or buy spectrum licenses. Many of these constraints exist at the state level but federal spectrum
policy plays a role in perpetuating the status quo.
Auction winners are deemed to be the companies that can maximize the value of the spectrum to
society by maximizing its value as a corporate asset. However, auction-centric spectrum policies
appear to have generally focused on assigning licenses to commercial competitors in traditional
markets that serve consumers and businesses. Auctioning spectrum licenses may direct assets to
end-use customers instead of providing wireless services where the consumer may be the
beneficiary but not the customer. Wireless networks are an important component of smart grid
communications. Spectrum resources are also needed for railroad safety,76 for water
conservation,77 for the safe maintenance of critical infrastructure industries,78 and for many other
applications that may not have an immediate commercial value but can provide long-lasting value
to society as a whole.
Spectrum Caps
As part of its preparations for the first spectrum license auctions, the FCC decided to set caps on
the amount of spectrum any one company could control in any geographically designated
market.79 The theory behind spectrum capping is that each license has an economic value and a
foreclosure value. The economic value is derived from the return on investment in spectrum
licenses and network infrastructure. The foreclosure value is the value to a wireless company that
already has substantial market share and wants to keep its dominant position by precluding
competition. Spectrum caps were chosen as the method to prevent foreclosure bidding. The intent
was to ensure multiple competitors in each market and to restrict bidding to only the licenses that
could be used in the near term.
Beginning in 2001, spectrum policy placed increased emphasis on promoting spectrum and
market efficiency through consolidation. The FCC ruled to end spectrum caps, citing greater
spectral efficiency from larger networks as one benefit of the ruling. Spectrum caps were seen as
barriers to mergers within the wireless industry, to the growth of existing wireless companies, and
to the benefits of scale economies. The spectrum caps were eliminated on January 1, 2003.80
Auction rules requiring the timely build-out of networks became a key policy tool to deter
hoarding. The FCC instituted a policy for evaluating spectrum holdings on a market-by-market,
case-by-case basis—a practice referred to as spectrum screening—as a measure of
competitiveness.
76 The railroad industry uses wireless communications as part of their information networks to monitor activity.
77 For example, sensors buried at the level of plant roots recognize when watering is needed and communicate this
information over wireless networks.
78 In general, critical infrastructure industries facilitate the production of critical goods and services such as safe
drinking water, fuel, telecommunications, financial services, and emergency response. A discussion of key issues
appears in CRS Report RL30153, Critical Infrastructures: Background, Policy, and Implementation, by John D.
Moteff.
79 Licenses are designated for a specific geographic area, such as rural areas, metropolitan areas, regions, or the entire
nation.
80 FCC News, “FCC Announces Wireless Spectrum Cap to Sunset Effective January 1, 2003,” November 8, 2001.
Report and Order FCC-01-328. See Docket No. 01-14, Notice of Proposed Rulemaking, released January 23, 2001, at
http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-01-28A1.pdf.
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In 2008, the Rural Telecommunications Group, Inc. (RTG) petitioned the FCC to impose a
spectrum cap of 110 MHz for holdings below 2.3 GHz. In October 2008, the FCC sought
comments on the RTG petition for rulemaking.81 RTG argued that competition in the industry was
declining as it became more concentrated. It claimed that the larger carriers were warehousing
their spectrum holdings in rural areas while rural carriers were struggling to acquire spectrum
capacity for mobile broadband and expansion. Rural carriers, RTG reported, were being shut out
of opportunities to acquire new spectrum holdings and were being outbid in spectrum auctions.82
Opponents to the spectrum cap cited data to support their claims that the wireless
communications market is competitive. They argued that additional amounts of spectrum are
needed to support the growth in mobile broadband and that a spectrum cap could cut off growth
and innovation.83 Implementing spectrum caps as a tool for regulating competition would
represent a significant shift in policy for the FCC, were it to take that course.
In comments filed regarding the National Broadband Plan, the Department of Justice considered
the possibility that “the foreclosure value for incumbents in a given locale could be very high.”84
Although it recognized some form of spectrum caps as an option for assuring new market
entrants, it observed that “there are substantial advantages to deploying newly available spectrum
in order to enable additional providers to mount stronger challenges to broadband incumbents.”85
Market Competition
There are many ways to view competition. Although competitiveness may be evaluated by factors
such as barriers to entry or number of market participants, a key measure of whether market
competition is working is an assessment of the dynamic of a specific market: its prices, variety,
level of service, and other indicators that are considered hallmarks of competitive behavior. The
Federal Trade Commission, for example, promotes competition as “the best way to reduce costs,
encourage innovation, and expand choices for consumers.”86 Viewpoints about the level of
competitiveness in providing wireless services to the U.S. market differ.87 However,
telecommunications business analysts generally describe the U.S. market for wireless services as
competitive because consumers benefit in many ways from competition on price, service,
coverage, and the availability of new devices.
81 FCC RM No. 11498, October 10, 2008. Comments supporting and opposing the petition are published in this
proceeding.
82 Those supporting the RTG petition included the Organization for the Promotion and Advancement of Small
Telecommunications Companies (OPASTCO), the National Telecommunications Cooperative Association, the Public
Interest Spectrum Coalition, and a number of smaller (non-dominant) wireless carriers.
83 Opponents to spectrum caps that filed comments were AT&T Inc., Verizon Wireless, CTIA—The Wireless
Association, the Telecommunications Industry Association, and the Wireless Communications Association
International.
84 Ex Parte Submission of the United States Department of Justice, In the matter of Economic Issues in Broadband
Competition: A National Broadband Plan for Our Future, GN Docket 09-51, January 4, 2010, p. 23 at
http://fjallfoss.fcc.gov/ecfs/document/view?id=7020355122.
85 Ibid., p. 24.
86 “Competition in the Technology Marketplace” at http://www.ftc.gov/bc/tech/index.htm.
87Different assessments of competition in the wireless market have been filed as comments in FCC Docket No. 09-66,
part of the process for the preparation of the FCC’s Fourteenth Report; annual report and analysis of competitive
market conditions with respect to commercial mobile services.
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Both the wireless industry and its regulator have focused on “wireless consumer welfare”88 in
evaluating competition and the effectiveness of spectrum policies for assigning spectrum licenses.
Auctions are judged to be an efficient way of assigning spectrum for commercial uses that adhere
to traditional business plans.89
Competition in Rural Markets
Over the years, various legislative and policy initiatives have created a number of requirements to
help small and rural carriers acquire spectrum licenses.90 Some of the FCC’s efforts to encourage
spectrum license ownership for small, rural, or entrepreneurial businesses are in response to
congressional mandates.91 These and other statutory and regulatory programs may have allowed
many small carriers to remain in business even though many others have been absorbed by larger
carriers.92 As wireless traffic, revenue, and profits migrate to broadband, business models that
were effective for voice traffic may no longer be viable, especially for companies that have relied
on the regulatory environment to protect their markets. This change in operating environment
may have disproportionately affected the ability of rural wireless carriers, in particular, to
compete effectively.93 A study of how new technologies might be affecting the competitiveness of
small and rural carriers might be useful in reviewing the effectiveness of policies intended to aid
them.94
88 This phrase is used in the written statement of AT&T Inc. submitted for a hearing before the House of
Representatives, Committee on Energy and Commerce, Subcommittee on Communications, Technology, and the
Internet, “An Examination of Competition in the Wireless Industry,” May 7, 2009. In written testimony submitted by
Verizon Wireless for the same hearing, comments stated that wireless providers need suitable and sufficient spectrum
because of “consumers’ reliance on broadband services.”
89The GAO has reported this viewpoint in several reports, including Telecommunications: Strong Support for
Extending FCC’s Auction Authority Exists, but Little Agreement on Other Options to Improve Efficient Use of
Spectrum,” December 20, 2005, GAO-06-236 and Telecommunications: Options for and Barriers to Spectrum Reform,
March 14, 2006, GAO-06-526T.
90 For example, most auctions have provided bidding credits for small businesses.
91 In 47 USC §309 (j) (3) (B), the FCC is instructed to promote “economic opportunity and competition and ensuring
that new and innovative technologies are readily available to the American people by avoiding excessive concentration
of licenses and by disseminating licenses among a wide variety of applicants....”
92 The Congressional Budget Office (CBO) reported in a 2005 study that a significant number of small companies that
acquired spectrum licenses through preferential programs later transferred the licenses to larger companies: Small
Businesses in License Auctions for Wireless Personal Communications Services, A CBO Paper, October 2005, at
http://www.cbo.gov/ftpdocs/68xx/doc6808/10-24-FCC.pdf.
93 A number of rural wireless carriers and their associations have filed comments on the increasing difficulties they face
in competing for wireless customers. Comments are in a number of FCC dockets, such as RM11498, regarding
spectrum caps, and WT Docket No. 09-66, on the state of wireless competition.
94 The CBO study cited above was prepared at the request of the Senate Budget Committee to examine the impact of
small-bidder preferences on federal revenue and was completed before data traffic became a significant factor in
providing wireless services.
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Appendix C. International Policies for Spectrum
Management
Wireless companies also compete as providers in global markets. Although international traffic
may be a small part of wireless voice communications, competition in providing services is
global.95 AT&T, Verizon, and T-Mobile are major players internationally as well as in the United
States.96 Corporate decisions such as the introduction of new technologies and services are made
for both the United States and international markets. Actions taken for domestic markets may
influence decisions made to enhance global competition and vice versa. Therefore, policies for
assigning spectrum assets might incorporate U.S. goals for global competiveness.
Spectrum allocation is not a uniquely domestic process. Some spectrum allocations are governed
by international treaty. Additionally, there is a trend to harmonize spectrum allocations for
commercial use across countries through international agreements. Harmonization of radio
frequencies is achieved by designating specific bands for the same category of use worldwide.
With harmonization, consumers and businesses are able to benefit from the convenience and
efficiency of having common frequencies for similar uses, thus promoting development of a
seamless, global communications market. Spectrum allocation at the national level, therefore, is
sometimes coordinated with international spectrum allocation agreements. The Advanced
Wireless Services (AWS) auction in the United States, completed in 2006,97 was the conclusion of
a process initiated by an agreement for international harmonization of spectrum bands.98 At this
auction, T-Mobile was able to acquire new spectrum licenses that improved its competitiveness in
the United States99 and, consequently, the worldwide competiveness of its owner, Deutsche
Telekom.100
The International Telecommunications Union (ITU), the lead United Nations agency for
information and communication technologies, has been vested with responsibility to ensure
interference-free operations of wireless communication through implementation of international
agreements.101 The ITU adopts a Table of Frequency Allocations in conjunction with International
Radio Regulations. This International Table allocates spectrum for various radio services and
95 The international framework for spectrum management and wireless competition is summarized in Appendix C,
International Policies for Spectrum Management.
96 Verizon Wireless is 45% owned by the British telecommunications giant Vodafone, PLC. T-Mobile is 100% owned
by Deutsche Telecom.
97 FCC News, “FCC’s Advanced Wireless Services (AWS) Spectrum Auction Concludes,” September 18, 2006.
98 The WRC-2000 agreed on spectrum bands to be harmonized for advanced wireless services, referred to as IMT 2000.
See FCC News, “International Bureau Reports on Success of the 2000 World Radio Communications Conference,”
June 8, 2000, http://www.fcc.gov/Bureaus/International/News_Releases/2000/nrin0009.html.
99 FCC, Twelfth Report; annual report and analysis of competitive market conditions with respect to commercial
mobile services, Docket No. 07-71, released February 4, 2008, p. 9 and paragraph 75, at http://hraunfoss.fcc.gov/
edocs_public/attachmatch/DA-08-453A1.pdf.
100 Deutsche Telekom owns 100% of T-Mobile International, which includes T-Mobile USA. For information see
“Global Player on the Mobile Communications Market” at http://www.telekom.com/dtag/cms/content/dt/en/530494.
101 The GAO notes that “The federal government considers ITU the principal, competent, and appropriate international
organization for the purpose of formulating international treaties and understandings regarding certain
telecommunications matters.” Better Coordination and Enhanced Accountability Needed to Improve Spectrum
Management, GAO-02-906, September 2003, p. 19, fn. 26.
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includes, directly or indirectly, conditions for the use of the allocated spectrum.102 There is also a
domestic table for each country. The United States Table of Allocations is maintained by the
National Telecommunications and Information Administration (NTIA). The U.S. Table of
Allocations is modified to correspond with changes in international spectrum allocations agreed
to under the auspices of the ITU. These agreements are reached through processes such as the
World Radiocommunications Conferences (WRC). Each WRC provides an opportunity to revise
the International Radio Regulations and International Table of Frequency Allocations in response
to changes in technology and other factors. Modifications to rules from one WRC to the next are
part of an ongoing process of technical review and negotiations. WRC meetings are held
approximately every two years. Provisions that require changes in frequency allocation to
accommodate new technology will typically take effect 10 to 15 years after agreement is reached.
These delays give time to phase out older technologies and to formulate new investment
strategies.
The possibility of allocating additional spectrum for mobile broadband was among the
deliberations of WRC-07 (October 22-November 16, 2007) and may be considered at the next
WRC, scheduled to be held in January 2012.103 Future decisions about spectrum allocation for
broadband in the United States might be influenced by international agreements. Worldwide
harmonization of frequencies for mobile broadband may be sought in bands at 3 GHz and higher.
Author Contact Information
Linda K. Moore
Specialist in Telecommunications Policy
lmoore@crs.loc.gov, 7-5853
102 There are 39 internationally defined wireless services, including broadcasting, meteorological satellite, and mobile
services. Description of ITU-R functions are at http://www.itu.int/ITU-/index.asp?category=information&rlink=
rhome&lang=en.
103 The NTIA and FCC websites carry information about planning for WRC 2012. For FCC, see IB Docket No. 04-286,
Public Notice at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-09-763A1.pdf. An NTIA overview is at
http://www.ntia.doc.gov/osmhome/wrc/ntia.html. The ITU site is at http://www.itu.int/ITU-R/index.asp?category=
conferences&rlink=wrc-11&lang=en.
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