Spectrum Sale Could Mean New Opportunities to Meet Digital Demands

The smartphone has become an American staple in recent years. Need to know the time? The once required wristwatch has been replaced by the smartphone. Drawing a sudden blank on someone’s name or new job post? A quick check of a social media app can save one from embarrassment at a moment’s notice.

More importantly, wireless phones are proving to be a critical tool in expanding access to high-speed Internet service to Americans in rural communities. But the expanded reach of smartphones and other wireless devices into millions of hands across the country has met a significant challenge.

The U.S. is facing a wireless spectrum shortage.

Wireless communications such as television broadcasts, radio programming and wireless phone calls travel through the air by radio frequency, also known as spectrum. Each communications operator—from individual radio stations to wireless phone companies—must transmit their signals over a unique frequency to avoid interference with other communications.

As the demand for wireless communications continues to increase, those frequencies are quickly running out. But the federal government is taking initial steps to help prevent a wireless spectrum crisis, which could impact states as they seek to expand broadband access.

The rate of broadband expansion varies widely by state, with connections available for 63 percent of the population in West Virginia and 97 percent in Delaware. Average connection speeds also vary, with Delaware and Virginia’s 18-plus megabits per second more than doubling the speeds in Alaska, Arizona, Kentucky and New Mexico. Building the infrastructure that connects remote rural areas to broadband service is costly, and this challenge has led to a disparity between urban and rural broadband adoption rates. 

The Federal Communications Commission, or FCC, plans to hold auctions that could free up spectrum that would be available to promote broadband expansion in rural states, which could help spur economic growth, improve healthcare delivery, increase educational opportunities and promote civic engagement. 

The FCC is scheduled to hold an “incentive auction” on March 29 to buy wireless spectrum from television stations and later resell it to broadband providers. FCC Chairman Tom Wheeler, in testimony before Congress March 2, said the auction’s “key goal is to repurpose as much spectrum for mobile broadband as the market demands to meet growing consumer needs.”

In 2009, Congress passed legislation mandating the FCC to prepare a report containing a national broadband plan. The impetus behind mandating a national broadband plan is the widely held view that broadband is critical public infrastructure, increasingly important to the nation’s economic development. The report, released in 2010, highlighted the potential demand for broadband service outstripping current spectrum capacity and suggested an auction as a way to make more room for wireless needs. 

The incentive auction is a two-step process beginning on March 29 with the “reverse auction,” in which the FCC will buy the spectrum usage rights from broadcasters. After that phase concludes, a “forward auction” will begin, in which the FCC will sell the spectrum rights to wireless broadband providers. The FCC hopes to conclude the auction by the end of the summer.

There are several issues at stake in the upcoming auction, including whether the FCC can free up enough spectrum from broadcasters to help satisfy current demand. The FCC’s National Broadband Plan set a goal of making an additional 500 megahertz of spectrum available for broadband by 2020. The FCC estimates that the best-case scenario for the upcoming auction would be the reallocation of 126 megahertz of spectrum, a major step toward meeting the plan’s goal. 

Also at issue are the potential complications that may arise during the FCC’s repacking process—the process of condensing all remaining broadcasters into a smaller, more tightly packed spectrum band that will be achieved by assigning stations to specific channels designated by the FCC. The goal of repacking is to free up a continuous portion of broadcast spectrum for wireless carriers. Repacking is the final component of the incentive auction and could impact any station anywhere in the country, regardless of whether or not they participated in the auction. The process will likely result in the need for many, if not most, television stations across the country to change channels, a transition that will require stations to update or replace antennas, transmitters, transmission lines and towers.  
Congress has mandated that $1.75 billion be set aside from auction proceeds to reimburse the service and equipment costs of channel repacking. Stations must submit detailed construction plans and cost estimates to the FCC to be eligible for reimbursement. The National Association of Broadcasters argues, however, that the FCC has adopted repacking rules that will require far more TV stations to move frequencies than Congress envisioned, and the $1.75 billion set aside will not cover the total cost.  

Another concern is whether stations will be forced off the air during the repacking process.  Broadcasters that have channels in spectrum they sell are concerned about the FCC’s 39-month timeline to complete the technical work of repacking. Wheeler has stated that a six-month extension would be granted if broadcasters were not able to move to new channels within the 39 months.

Many questions remain about the process, and The Council of State Governments will continue to monitor the issue.

In addition to the FCC’s actions, Congress is pursuing legislative efforts aimed at freeing up more spectrum for wireless providers. On March 3, the Senate Committee on Commerce, Science, and Transportation approved the “MOBILE NOW Act,” which codifies the National Broadband Plan’s goal of making 500 megahertz of spectrum available for wireless use by 2020. In addition to giving the 500 megahertz target the force of law, the legislation also seeks to expedite deployment of wireless infrastructure on federal property and requires the National Telecommunications and Information Administration to report to Congress on proposals to incentivize federal agencies to relinquish or share their spectrum.

"I am hopeful that, soon after our consideration of the MOBILE NOW Act, the full Senate will take up the measure,” said Senate Commerce, Science and Transportation Chairman John Thune of South Dakota, the bill’s sponsor. “Our nation has always been at the forefront of wireless innovations, and the MOBILE NOW Act will help ensure that we will continue to lead the way.”

The legislative efforts in Congress and the spectrum auction are only the first steps in an effort to prevent a spectrum shortage and ensure communities have the access to high-speed wireless that has become a necessity in the 21st century.