Carriers Offer Opposing Messages on Criticality of Low-Band Spectrum

A carrier executive opposed to limits said the order is built on a few faulty assumptions. One false assumption is that Sprint and T-Mobile would build out to rural America if they have access to low-band spectrum, the executive said. Both Sprint and T-Mobile know that the cost of expanding their networks to serve rural America is often prohibitive, the official said. “In order to get to the last 20 percent [of customers they don’t serve] you've got to build out to 60, 70 percent of the country,” the executive said. “The FCC is assuming that Sprint and T-Mo are going to buy a bunch of rural spectrum and then build it out. I'll bet money that that isn’t going to be the case."

The carrier executive also said low-band spectrum is not the panacea often portrayed by competitors. Densification and getting cell sites close to the population served is more important than low-band spectrum, the executive said. “If low-band spectrum was the be all and end all, why are [come carriers] spending billions of dollars to densify our networks to push more fiber?” the executive asked. “We are spending that capital because in the urban markets we have got make the cell ranges shorter to build more capacity into the network and more backhaul into the market. This notion that there is some huge advantage in an urban market to having low-band spectrum, it’s nonexistent in the broadband world. ... It is an urban myth.”

Competitive carrier executives said any argument against the importance of low-band spectrum could be made only by a carrier that already has sub-1 GHz spectrum, with its superior propagation characteristics. Low-band spectrum goes further, one executive said. In rural areas, “it is a lot more efficient to use low-band spectrum,” the official said. Operators are already densifying their markets in urban areas through the use of small cells, the executive said, adding that the issue is reliability of service. “It turns out low-band penetrates into buildings through walls and structures much more reliably than mid-band or high-band,” the official said. “This goes back to the physics of radio propagation, but the differences are fairly substantial.” Treated, multilayered glass in modern buildings in urban areas makes low-band spectrum even more critical because such windows otherwise are difficult to penetrate, the official said. “Increasingly we're having to rely on the penetration through walls so low-band is a tremendous asset in that case to provide reliable coverage in buildings.”

Meanwhile, those on Capitol Hill continue to weigh in. Republicans on the House Communications Subcommittee issued a warning to Wheeler in a letter Friday. “The FCC must not be in the business of picking winners and losers by excluding parties from the auction or constraining parties’ ability to bid,” every Republican member of the subcommittee said in the letter. “We urge the Commission to reconsider any plans that would further cloud an already complex auction and threaten the outcome for providers, consumers, and the public safety community.” The outcome the FCC hopes to achieve is “potentially impossible” and thus “borders on reckless,” they said, citing “serious concerns.” The Republicans slammed the FCC’s plans as not based on market structure so much as how “a cartel controls price."

In a mid-April letter, 78 House Democrats had also urged the agency not to impose limits on the incentive auction (CD April 15 p5). That letter, which requested the FCC welcome as many participants as possible “on equal terms” to an “open and fair” broadcast TV spectrum incentive auction, included signatures of four members of the Communications Subcommittee. Between the Democrats’ and Republicans’ letters, 19 of the 29 members of the Communications Subcommittee have now backed an unrestricted incentive auction. Wheeler told these Democrats (CD April 18 p7) that smaller carriers deserve a “fair shot” at low-band spectrum and chalked their lack of low-band spectrum up to “the historical accident of previous spectrum assignments.” The Republican letter mentioned the Democratic one and stressed that “we join them.”

Congress had intended in its legislation to “bring market forces, via auctions, to bear on the question of how best to allocate spectrum resources,” the Republicans said. The letter did not address potential congressional reaction if the FCC did not abide by the Republicans’ wishes, but Communications Subcommittee Chairman Greg Walden, R-Ore., had told reporters last fall (CD Nov 18 p5) about a potential “strong” congressional reaction if the FCC were to impose auction limits.

T-Mobile officials said in a call with FCC staffers, including Wireless Bureau Chief Roger Sherman, the FCC is on the right track in its proposed rules for the incentive auction. “The reserve mechanism, in particular, promises to advance many of the objectives identified by section 309(j) of the Communications Act of 1934, as amended, including rapid deployment of new technology, increased economic opportunity, enhanced competition, diversity of license holdings, efficient spectrum use, and robust auction revenue,” T-Mobile said (http://bit.ly/1fMQaNi) in a filing posted by the FCC Monday.

Anna Maria Kovacs, visiting scholar at Georgetown University’s Center for Business and Public Policy, recently released a white paper arguing that making more low-band spectrum available won’t really help rural America. “While it is true that low-band spectrum can [allow signals to] travel greater distances than high-band spectrum, the extent to which that results in larger cell-sites, and therefore lower cost, depends on many factors, particularly terrain and the line-of-sight it permits,” she wrote (http://bit.ly/1iVGOsX). “But even assuming cost per square mile could be equalized between rural and urban areas, that would only solve one of the two challenges that face rural wireless carriers. The greater disincentive to rural investment is lack of revenue per square mile.”

A former FCC official, who does not represent wireless carriers, said commissioners have to deal with many “moving pieces” as they consider rules of the incentive auction and a separate item on spectrum aggregation rules. “You have the aggregation limits vis-à-vis the auction,” the industry official said. “You have the spectrum screen limits. You have the potential of a Sprint/T-Mobile deal. You have the potential of an AT&T/DirecTV deal. You have the potential of a DirecTV/Dish deal. It’s very difficult to see where it all goes.”,