Genachowski Renews Warnings of Spectrum Crisis

In 2009, when data demands were relatively small, the U.S. had a spectrum surplus of almost 400 MHz, a chart in the paper showed. That surplus is expected to be halved next year and disappear shortly after. The FCC also tried to put a value on getting sufficient spectrum into industry hands quickly. The report said meeting the demand could create “$120 billion in spectrum value, with hundreds of billions more in total value to the economy."

The forecast “demonstrates that the amount of mobile data demanded by American consumers is likely to exceed capacity of our wireless networks in the near-term, and that meeting this demand by making additional spectrum available is likely to create significant value for the mobile economy,” the report said.

"Spectrum is finite,” Genachowski said. “Demand will soon outpace the supply available for mobile broadband. This is not the first time I've said this, and it won’t be the last. The coming spectrum crunch is a vital strategic and economic issue for our country and a vital consumer issue since increased congestion will lead to growing consumer frustration with their mobile devices.” The U.S. has reached an “inflection point,” the chairman said. “The explosive growth in mobile communications is outpacing our ability to keep up."

"I am pleased that we are starting to do the heavy lifting -- to undertake the longer term spectrum planning -- now,” said Commissioner Robert McDowell, who also addressed the summit. McDowell warned that working out a process under which broadcasters can sell their spectrum won’t be easy. “We are at the very beginning of what will surely be a lengthy process,” he said.

All panelists agreed that a spectrum crunch is here. Mary Brown with Cisco Systems called the FCC’s projection of spectrum deficit as early as 2013 “ultra conservative.” The country may have a shortfall sooner than most expect, she warned. Executives and analysts from Qualcomm, Dell and T-Mobile USA agreed that it’s crucial to free up more spectrum to meet an anticipated increase of 35 times in data demand, driven in part by the proliferation of multiple-device users.

But spectrum problems may not be solved as quickly as needed, said moderator Tom Wheeler, managing director of Core Capital Partners. The consensus that there’s a spectrum crunch hasn’t gotten through to Congress, said Danny Sepulveda, senior adviser to Senate Communications Subcommittee Chairman John Kerry, D-Mass. There are multiple spectrum revamp proposals on the Hill, and lawmakers want to hear more from stakeholders about what specifically they support, what steps are needed, he said. It’s hard to get anything done until a consensus is established, Sepulveda said. That means it must wait at least until next year, he said. “We need to have a larger conclusive conversation that expands beyond the committee,” he said. Meanwhile, it’s time to discuss price, Sepulveda said. The appropriations committee matters a lot because public money is involved, he said.

A complete spectrum inventory is critical, said Matt Hussey, aide to Sen. Olympia Snowe, R-Maine. After that, spectrum reallocation, sharing and incentive auctions need to be considered, said Amy Levine, counsel with the House Energy and Commerce Committee. “We need all tools on the table as we move forward,” she said. The goal of spectrum legislation is to establish a self-sustaining model in which some auction revenue can go into a spectrum reallocation fund, said Hussey. Spectrum is a bipartisan issue and “we do intend to move the issue forward,” Sepulveda said. But he emphasized that nothing can be done without true consensus.

Many-sided solutions are needed to deal with the spectrum crisis, Hussey said. Another challenge is that the U.S. is running out of IP addresses, he said. Only 20 to 25 percent of the Internet infrastructure is IPv6 compatible, he said. It’s essential to solve the IP address crisis, especially as carriers move to LTE or WiMAX, both IP-based technologies, he said.

"We need to move to incentive [spectrum] auctions,” because they can turn inefficiency and political obstacles into advantages, said Peter Pitsch, Intel’s general counsel. “The time has come.” But over the long term, structural changes are needed from the government, carriers and consumers, said MIT’s John Chapin. He urged policy makers to look at spectrum sharing and related policy options. Incentive auctions can be used in bands outside broadcasting, some panelists suggested. Extending them would be up to the FCC, Levine said.

Incentive auctions are a tremendous tool to help the FCC switch commercial spectrum to new uses, Cisco’s Brown said. The outcome benefits everyone, she said. It’s important that the new incentive auction tool proposed not be limited to specific commercial spectrum, she said. The spectrum crunch has to be addressed scientifically, factually and objectively, said Jonathan Blake of Covington & Burling, who has represented broadcasters. The broadcasters aren’t on record as opposing incentive auctions, but making sure auctions are to be done right is important, he said.

The crunch is here and regulators and policy makers should act quickly to release additional spectrum, said panelists from the industry. Backhaul is critical, the panelists said. The industry is in the process of upgrading backhaul from copper to fiber, said Simon Flannery, a Morgan Stanley analyst.

Industry executives urged policymakers to act quickly to release additional spectrum. The National Broadband Plan is a huge step in the right direction and is driving the discussion forward, said Neville Ray, T-Mobile USA’s chief technology officer. But “we have to turn the plan into reality quickly,” he said. He urged evaluating freeing up spectrum in the federal government’s hands. Early visibility into when and what spectrum will be available is important for the industry, said Liam Quinn, a director with Dell. “We need to be more aggressive in freeing up spectrum,” he said. The lack of knowledge and uncertainty of what spectrum will become available is a real problem, Ray said.

Freeing up licensed spectrum is the only solution in the constrained environment for delivering data securely, said Peggy Johnson, executive vice president of Qualcomm. Forecasting spectrum is far from an exact science, said Flannery. It’s important to set up an incentive system that allows easier release, transfer and allocation of spectrum, he said.

Meanwhile, early public adoption of Mobile DTV has been disappointing, several panelists said. It’s an issue of content availability and functionality, Flannery said. But there’s still much growth in video, because consumers are seeking the ability to get content whenever they want it, he said.

CTIA, CEA, TIA and other industry groups mostly applauded the FCC for the spectrum report. NAB “looks forward to working with policymakers” on Genachowski’s proposal for broadcast spectrum, a spokesman said.

"The FCC’s forecast and the supporting analysis are fully borne out by what we see daily on our wireless broadband networks,” said AT&T Senior Vice President Robert Quinn. “Faster, more intelligent networks, coupled with increasingly more sophisticated connected devices and prolific application development has led to accelerated growth across the mobile broadband ecosystem.”