[Senate Hearing 114-169]
[From the U.S. Government Publishing Office]
S. Hrg. 114-169
WIRELESS BROADBAND AND THE FUTURE
OF SPECTRUM POLICY
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
JULY 29, 2015
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
JOHN THUNE, South Dakota, Chairman
ROGER F. WICKER, Mississippi BILL NELSON, Florida, Ranking
ROY BLUNT, Missouri MARIA CANTWELL, Washington
MARCO RUBIO, Florida CLAIRE McCASKILL, Missouri
KELLY AYOTTE, New Hampshire AMY KLOBUCHAR, Minnesota
TED CRUZ, Texas RICHARD BLUMENTHAL, Connecticut
DEB FISCHER, Nebraska BRIAN SCHATZ, Hawaii
JERRY MORAN, Kansas EDWARD MARKEY, Massachusetts
DAN SULLIVAN, Alaska CORY BOOKER, New Jersey
RON JOHNSON, Wisconsin TOM UDALL, New Mexico
DEAN HELLER, Nevada JOE MANCHIN III, West Virginia
CORY GARDNER, Colorado GARY PETERS, Michigan
STEVE DAINES, Montana
David Schwietert, Staff Director
Nick Rossi, Deputy Staff Director
Rebecca Seidel, General Counsel
Jason Van Beek, Deputy General Counsel
Kim Lipsky, Democratic Staff Director
Chris Day, Democratic Deputy Staff Director
Clint Odom, Democratic General Counsel and Policy Director
C O N T E N T S
----------
Page
Hearing held on July 29, 2015.................................... 1
Statement of Senator Thune....................................... 1
Statement of Senator Schatz...................................... 3
Statement of Senator Nelson...................................... 60
Statement of Senator Booker...................................... 64
Statement of Senator Daines...................................... 65
Statement of Senator Peters...................................... 69
Statement of Senator Heller...................................... 71
Statement of Senator Markey...................................... 73
Statement of Senator Gardner..................................... 75
Statement of Senator Johnson..................................... 76
Statement of Senator Wicker...................................... 77
Statement of Senator Udall....................................... 79
Witnesses
Hon. Jessica Rosenworcel, Commissioner, Federal Communications
Commission..................................................... 4
Prepared statement........................................... 6
Hon. Meredith Attwell Baker, President and CEO, CTIA--The
Wireless Association.......................................... 7
Prepared statement........................................... 9
Blair Levin, Former Executive Director, National Broadband Plan.. 37
Prepared statement........................................... 38
J. Pierre de Vries, Co-Director of the Spectrum Policy
Initiative, and Senior Adjunct Fellow, Silicon Flatirons Center
For Law, Technology and Entrepreneurship, University of
Colorado at Boulder............................................ 45
Prepared statement........................................... 47
Thomas M. Lenard, Ph.D., President and Senior Fellow, Technology
Policy Institute............................................... 55
Prepared statement........................................... 57
Appendix
Letter dated July 28, 2015 to Hon. John Thune and Hon. Bill
Nelson from David F. Melcher, President and CEO, Aerospace
Industries Association......................................... 83
Letter dated July 29, 2015 to Hon. John Thune and Hon. Bill
Nelson from Steven K. Berry, President and CEO, Competitive
Carriers Association........................................... 86
Response to written questions submitted to Hon. Jessica
Rosenworcel by:
Hon. John Thune.............................................. 88
Hon. Roger F. Wicker......................................... 89
Hon. Steve Daines............................................ 90
Hon. Amy Klobuchar........................................... 92
Hon. Brian Schatz............................................ 92
Response to written questions submitted to Hon. Meredith Attwell
Baker by:
Hon. John Thune.............................................. 93
Hon. Kelly Ayotte............................................ 94
Hon. Ron Johnson............................................. 95
Hon. Dean Heller............................................. 96
Hon. Cory Gardner............................................ 96
Hon. Steve Daines............................................ 96
Hon. Amy Klobuchar........................................... 98
Response to written question submitted by Hon. John Thune to:
J. Pierre de Vries........................................... 100
Thomas M. Lenard, Ph.D....................................... 100
WIRELESS BROADBAND AND THE FUTURE
OF SPECTRUM POLICY
----------
WEDNESDAY, JULY 29, 2015
U.S. Senate,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Committee met, pursuant to notice, at 10:48 a.m., in
room SR-253, Russell Senate Office Building, Hon. John Thune,
Chairman of the Committee, presiding.
Present: Senators Thune [presiding], Johnson, Daines,
Wicker, Heller, Gardner, Nelson, Markey, Udall, Peters, Schatz,
and Booker.
OPENING STATEMENT OF HON. JOHN THUNE,
U.S. SENATOR FROM SOUTH DAKOTA
The Chairman. This hearing will come to order.
My apologies to our panel. We had, as you know, some votes
come up, which often times happens around here, and so that
pushed us back a little bit. But thanks for your patience, and
thank you all for being here today.
We convene today to discuss what Congress and the Federal
Government should be doing to ensure that the United States
remains at the forefront of the mobile revolution. Today's
hearing will be the first in a series to examine the policies
related to spectrum and wireless broadband. The Senate has a
real opportunity over the next several months to pass
meaningful wireless broadband and spectrum reform legislation,
and it is my hope that the Committee will use these hearings to
inform our work on developing such a bill.
By now, everyone is familiar with the immense power of
wireless technologies. From keeping us connected while on the
go, to powering the growing Internet of Things, wireless
devices and services have become commonplace in the everyday
lives of most Americans.
Here in the United States, we also have the benefit of
being the global leader in wireless innovation and investment,
particularly in 4G mobile broadband. But this committee and
Congress as a whole cannot take these developments for granted.
Europe and Asia look at our 4G success with envy and are
working hard to leapfrog the United States and take the lead in
the next generation of wireless, known as 5G. And while the
last two decades of wireless policy have largely been a
success, we cannot be complacent and think that yesterday's
laws are a perfect fit for the future.
After the record-setting AWS-3 auction earlier this year
and on the eve of a spectrum auction that may be even more
important, now is the perfect time for this committee to start
thinking about what is next for American spectrum policy.
Speaking of the upcoming incentive auction, we just saw the
FCC this month delay one of its key rulemakings for that
auction. It is my hope this doesn't end up being a serious
setback, because I would very much like to see the incentive
auction happen next year as planned.
While I am sure many of my colleagues would agree, today's
hearing is not focused on the near-term actions of the
Commission. Instead, we need to be looking further into the
future. Our nation's airwaves are only going to get more
crowded as the Internet of Things brings tens of billions of
wireless devices online. We need more wireless capacity, more
wireless efficiency, and more wireless innovation.
To do this, the Government will need to be more
conscientious about how it manages and uses its own spectrum,
while also proactively breaking down barriers to private-sector
deployment.
As I see it, there are three areas where the Committee
should focus its legislative attention.
First, we need to improve how the Federal Government, which
is the largest spectrum holder in the country, manages and
utilizes its own airwaves. Federal agencies already share some
of their spectrum with the private sector, but much more needs
to be done to encourage them to relinquish or share additional
bands.
This does not need to be an antagonistic effort. With a
challenging fiscal environment, many agencies may see
opportunity in opening up their bands to the public in exchange
for new wireless systems that are more efficient and less
costly to maintain.
Like the private sector, Federal agencies' wireless needs
grow each year. But by aligning incentives and utilizing newer
technologies, we may be able to find win-win solutions that
benefit everyone.
The second area we need to focus on is identifying specific
bands that can be opened up for private use, both licensed and
unlicensed. While creating the right spectrum management
incentives for the Federal Government will help, history shows
that Congress is often the most effective facilitator in
bringing more wireless bands to the marketplace.
Additionally, finding spectrum to be auctioned can help
bring in revenue for the U.S. Treasury that can then be used to
pay down our Nation's fiscal deficit or fund other critical
priorities.
Perhaps more important than those revenues is the impact
that freeing up more spectrum will have on our economy. More
private-sector spectrum has historically led to more jobs and
more economic growth. Just yesterday, former Democratic FCC
Chairman Julius Genachowski and former Republican FCC
Commissioner Rob McDowell wrote a compelling op-ed in The Wall
Street Journal that suggests 750,000 new jobs could be created
by deploying more mobile broadband.
Last, we need to examine ways to reduce the cost of
deploying wireless broadband services. Freeing up more spectrum
is one way to do that, but there may well be other legal and
regulatory barriers that make it more expensive to bring new
services to the public. In particular, we ought to look at the
rules governing the deployment of private-sector wireless
facilities on Federal lands and buildings.
Helping to get government at every level out of the way of
wireless deployment will only accelerate how soon Americans
will benefit from 5G, from the Internet of Things, and the next
exciting wireless development that will enhance people's lives.
I look forward to hearing from today's panel of experts.
Among them, they have a wealth of experience in spectrum
policy, and I expect they will all have interesting and
thought-provoking ideas for the Committee to consider.
I now turn to our Ranking Member. Senator Nelson I think
will be here later on, but, Senator Schatz, an opening
statement.
STATEMENT OF HON. BRIAN SCHATZ,
U.S. SENATOR FROM HAWAII
Senator Schatz. Thank you, Mr. Chairman.
And thank you to the witnesses for being here today.
We spend a lot of time focused in Washington on areas of
disagreement, but spectrum policy is one area where there is a
real opportunity for bipartisan consensus.
As we will hear from our witnesses today and as we can
confirm from our own experience as consumers, wireless and
mobile data use is increasing exponentially. That means that
the demand for the Nation's finite spectrum resources is
greater than ever.
So we have to work together on a spectrum pipeline for the
future. We need to develop an aggressive plan to make different
types of spectrum available. It is the right thing to do for
consumers, the Government, and the private-sector economy.
We share common goals for this pipeline. First, we need to
ensure that the Government agencies, like DOD, FAA, and DOT and
others, can fulfill their mission. Second, we want to make sure
that consumers have access to new competitive services and that
our national spectrum policy empowers entrepreneurs to
innovate. Finally, we have to provide the right incentives for
service providers to deploy state-of-the-art wireless networks.
As part of setting up this spectrum pipeline, Congress will
need to grapple with many issues. For one, we have to think
about how we properly account for competing commercial and
government needs for spectrum and create a path to repurpose
Federal spectrum effectively.
I think there is merit in the idea of providing incentives
for Federal agencies to make spectrum available for commercial
uses--something many of our witnesses will discuss today. We
also need to be creative about ways to speed up the process to
more spectrum availability.
Most importantly, Congress will need to think about how to
balance the need for licensed and unlicensed spectrum. Startups
and entrepreneurs are all counting on the availability of
licensed and unlicensed spectrum to launch their next
innovation. Whether they are working from a coffee shop, a
garage, or borrowed space, the next companies need us to get
this right.
Ensuring the availability of more licensed spectrum is
essential because it provides companies the certainty they need
for investment. Unlicensed spectrum, though, is also critical.
Not only has unlicensed spectrum become an essential part of
the Nation's wireless infrastructure through offloading of
traffic from licensed spectrum, but it also provides the
foundation for permissionless innovation.
Unlicensed spectrum lets innovators deliver millions of new
products, such as hotspots, connected medical equipment or
industrial systems, RFID tags, wearables, and more.
In fact, one driver of spectrum-hungry innovations is the
growing Internet of Things, a development that Senators Booker,
Fischer, Ayotte, and I have been working on. Experts project
that within the next decade the Internet of Things will
encompass billions of connected devices, nearly all of which
will rely on unlicensed spectrum to work. And that is going to
put a lot of pressure on the spectrum that we have available
today.
Thank you, Chairman Thune and Ranking Member Nelson, for
initiating this discussion. And I know we will continue not
just today but throughout the fall on these important issues.
The Chairman. Thank you, Senator Schatz.
We will proceed to our panel. And I want to welcome them
all here today.
We have with us Commissioner Jessica Rosenworcel of the
Federal Communications Commission. Ms. Meredith Attwell Baker.
Ms. Baker is the President and CEO of CTIA--The Wireless
Association. Mr. Blair Levin. Mr. Levin is the former
Executive Director of the FCC's National Broadband Plan. Dr.
Pierre de Vries. Dr. de Vries is the Co-Director of the
Spectrum Policy Initiative with the Silicon Flatirons Center at
the University of Colorado School of Law. And Dr. Thomas
Lenard. Dr. Lenard is the President and Senior Fellow at the
Technology Policy Institute.
Thank you all so much for being here today.
We will proceed, starting on my left and your right, with
Commissioner Rosenworcel.
Welcome to the Committee.
STATEMENT OF HON. JESSICA ROSENWORCEL, COMMISSIONER, FEDERAL
COMMUNICATIONS COMMISSION
Ms. Rosenworcel. Thank you.
Good morning, Senator Thune and members of the Committee.
Thank you for having me here.
Few of us go anywhere today without mobile devices in our
palms, pockets, or purses, but as commonplace as wireless
service feels right now, the truth is we are only getting
started. Because, over the next 5 years, worldwide demand for
mobile service is expected to grow by 10 times. And as the
Internet of Things emerges, wireless functionality will become
a part of nearly everything we do.
But the airwaves that are responsible for our modern
wireless economy are finite, so we need to use what we have
more efficiently. That means we need to rethink how we allocate
our airwaves and, in particular, the airwaves used by the
Federal Government.
Today, Federal authorities have substantial spectrum
assignments, and that makes sense because critical missions
throughout the Government depend on wireless service. Federal
systems that rely on spectrum help protect us from attack,
manage our air traffic, enhance our crop productivity, and
monitor our water supplies.
Now, traditionally, when commercial demands on spectrum
rise, we go to these Federal authorities and we put on the
pressure. We urge, coax, and cajole them, in an effort to free
old government airwaves for new private-sector use. If they
agree, we clear government users out of a portion of their
airwaves, relocate them, and eventually auction the cleared
spectrum for new commercial use.
With the tremendous demands on our airwaves today, we could
go this route again, just as we have in the past. But it is a
creaky system. It is not reliable, and it takes too long. In
short, it is not the steady spectrum pipeline the modern mobile
economy needs.
So the future of spectrum policy requires incentives. We
need a Federal spectrum policy that is based on carrots and not
sticks. If we want a robust and reliable spectrum pipeline, we
need to make sure that Federal authorities see gain, and not
just loss, when their airwaves are reallocated for new mobile
broadband use.
We could begin by expanding incentive auctions to Federal
spectrum users, modeled on the upcoming incentive auctions in
the 600-megahertz band. Now, this is a complex undertaking
because agencies do not operate in a market environment, and
they are subject to annual budget allocations. But,
nonetheless, we should explore it, with discrete spectrum bands
or agencies.
We could also update the Spectrum Relocation Fund so that
it provides incentives for more government sharing by rewarding
Federal users when they share their spectrum with agencies that
are being relocated.
While we are at it, we should review laws that create
perverse incentives, like the Miscellaneous Receipts Act. If we
make changes to this law, we could permit winning auction
bidders to negotiate directly with Federal authorities
remaining in the band and then help meet their wireless needs.
This could speed the repurposing of our airwaves and also help
update Federal systems that are past their prime.
Next, the future of spectrum policy requires looking at
millimeter wave spectrum. Today, the bulk of our wireless
networks are built on spectrum below 3 gigahertz. But, in the
future, we need to bust through this ceiling and look high--
really high. We need to look at spectrum all the way up to 24
gigahertz and maybe even as high as 90 gigahertz. Because if we
combine wide channels from these stratospheric frequencies with
dense networks of small cells, we are going to be able to
overcome propagation challenges and deliver wireless service at
faster speeds than ever before.
This approach is likely to be a major force in the next
generation of wireless services, known as 5G. And the time to
explore greater use of this spectrum is right now.
Finally, the future of spectrum policy requires not just
more licensed spectrum but also more unlicensed spectrum. In
short, we need more Wi-Fi. Unlicensed spectrum, like Wi-Fi,
democratizes Internet access, it encourages permissionless
innovation, and it contributes as much as $140 billion to the
U.S. economy annually.
But, historically, the legislative process has overlooked
the value of unlicensed spectrum because it gets low marks in
the scoring process. But this accounting misses the mark,
because the broader benefits of unlicensed spectrum and Wi-Fi
to our economy are so great. So in any legislative effort that
is upcoming that increases licensed spectrum in our pipeline,
we also need a cut for unlicensed. We could call it the Wi-Fi
dividend.
Thank you. I look forward to any questions you might have.
[The prepared statement of Ms. Rosenworcel follows:]
Prepared Statement of Hon. Jessica Rosenworcel, Commissioner,
Federal Communications Commission
Good morning, Chairman Thune, Ranking Member Nelson, and members of
the Committee. Thank you for the opportunity to appear before you today
and talk about the future of spectrum policy.
Few of us go anywhere today without mobile devices in our palms,
pockets, or purses. But as commonplace as wireless service may feel in
our lives now, the truth is we are just getting started. Over the next
five years, world-wide demand for mobile service is expected to grow by
10 times. As the Internet of Things emerges, wireless functionality
will become a part of nearly everything we do.
Back in the here and now, all of this wireless demand has
consequences for a scarce resource: spectrum. The airwaves around us
that are responsible for our modern wireless economy are finite. The
iron laws of physics being what they are, we are simply not making
more. So the challenge is to use the spectrum we have more efficiently.
There are many things we can and should do to be more efficient
with this scarce resource--from improving network technology to
improving network topology. But we also need to rethink how we allocate
our airwaves--and in particular the airwaves used by the Federal
Government. So that is where I want to begin.
Today, Federal authorities have substantial spectrum assignments.
This makes sense because critical missions throughout the government
are dependent on wireless services. Federal systems that rely on
spectrum help protect us from attack, like early missile warning
systems. They help manage our air traffic, enhance our crop
productivity, and monitor our water supplies.
Traditionally, when commercial spectrum demands rise, we go to
these Federal authorities and put on the pressure. We urge, coax, and
cajole them in an effort to free old government airwaves for new
private sector use. If they agree, we clear government users out of a
portion of their airwaves, relocate them, and eventually auction the
cleared spectrum for commercial use.
With the tremendous demands on our airwaves today we could do this
again, just as we have in the past. But it's a creaky system. It's not
reliable. It's not consistent. It takes too long. In short, it's not
the steady spectrum pipeline the modern mobile economy needs.
The future of spectrum policy requires incentives. We need a
Federal spectrum policy that is based on carrots, not sticks. If we
want a robust and reliable spectrum pipeline, we need to make sure that
Federal authorities see gain--and not just loss--when their airwaves
are reallocated for new mobile broadband use. To do this, we need to
develop a series of incentives to serve as the catalyst for freeing
more spectrum for commercial markets.
We could begin by expanding incentive auctions to Federal spectrum
users. These auctions would be modeled on the broadcast spectrum
incentive auctions that are planned for the 600 MHz band. Participating
Federal authorities would receive a cut of the revenue from the
commercial auction of the airwaves they clear--and could use these
funds to support relocation as well as initiatives lost to
sequestration. This is a complex undertaking, because agencies do not
operate in a market environment and are subject to annual budget
allocations, but we should explore it--with discrete spectrum bands or
agencies.
We could also update the Spectrum Relocation Fund. Today the
Spectrum Relocation Fund assists Federal authorities with relocating
their wireless functions when their spectrum is being repurposed for
commercial use. But this fund could also provide incentives for more
government sharing by rewarding Federal users when they share their
spectrum with agencies that are being relocated.
While we are at it, we should review laws that create perverse
incentives. Consider the Miscellaneous Receipts Act. This law can
prevent negotiations between Federal agencies and winning bidders in
wireless auctions. But if we make changes, we could auction imperfect
rights and permit winning bidders to negotiate directly with Federal
authorities remaining in the band to help meet their wireless needs.
This could speed repurposing of our airwaves and also provide
commercial carriers with incentives to help update Federal systems that
are past their prime.
Finally, we should develop a spectrum currency with assistance of
the Office of Management and Budget. With a uniform system of valuation
for Federal spectrum assignments, we can explore further incentives for
efficiency and better understand the opportunity cost of Federal use.
The future of spectrum policy requires looking at millimeter wave
spectrum. Today, the bulk of our wireless networks are built on
spectrum below 3 GHz. But in the future, we need to bust through this
ceiling and look high--really, really high. We need to look at spectrum
all the way up to 24 GHz and perhaps as far as 90 GHz. If we combine
wide channels from these stratospheric frequencies with dense networks
of small cells we can overcome propagation challenges and deliver
wireless service at faster speeds than ever before. This approach is
likely to be a major force in the next generation of wireless services,
known as 5G. The race to 5G is on and our counterparts in Europe and
Asia are already making way. We may have led the world in 4G, but
laurels are not good resting places. So the time to explore greater use
of this spectrum is right now.
The future of spectrum policy requires not just more licensed
spectrum--but also more unlicensed spectrum. In short, we need more Wi-
Fi. Unlicensed spectrum, like Wi-Fi, democratizes Internet access,
encourages permissionless innovation, and contributes $140 billion in
economic activity annually. But historically the legislative process
has overlooked the value of unlicensed spectrum because it gets low
marks in the scoring process at the Congressional Budget Office. But
this accounting misses the mark--because the broader benefits of
unlicensed spectrum to the economy are so great. So in any legislative
effort to increase the licensed spectrum pipeline, we need a cut for
unlicensed--call it the Wi-Fi dividend.
In sum, if we combine more incentives to facilitate the repurposing
of Federal Government spectrum for new commercial use with more
exploration of the possibilities of millimeter wave spectrum and more
opportunities for Wi-Fi--we can build a spectrum pipeline that is
robust, reliable, and a potent force in our economic future.
Thank you. I look forward to answering any questions you may have.
The Chairman. Thank you, Commissioner Rosenworcel.
We will move now to Ms. Baker.
STATEMENT OF HON. MEREDITH ATTWELL BAKER, PRESIDENT AND CEO,
CTIA--THE WIRELESS ASSOCIATION
Ms. Baker. Chairman Thune, Ranking Member Nelson, and
members of the Committee, thank you for your leadership in
developing a forward-looking spectrum policy, one of the key
inputs into our country's economy.
I have worked on spectrum issues at NTIA, as an FCC
commissioner, and today I am lucky enough to represent the
wireless industry, the most dynamic industry in the nation, at
CTIA.
The global stakes for spectrum policy have never been
greater. Countries around the world have seen what our wireless
leadership has meant for jobs, for economic growth, and for
innovation. We need a national recommitment to continue to lead
the world in wireless. I am confident we will. I am encouraged
by the dynamic thought leaders you have brought this morning
here and your bipartisan engagement on this issue. For our
part, the wireless industry is dedicated to investing billions
more in the wireless future.
We forget now, but we were behind other nations in 3G.
Today, the United States is the global leader in 4G. We are
home to one-third of the world's 4G devices. Ninety-eight
percent of Americans have access to 4G, thanks to $150 billion
of industry investment over just the past 5 years.
This 4G foundation supports innovation up and down the
mobile ecosystem, licensed and unlicensed. More than 9 out of
10 smartphones across the globe run a U.S. operating system.
The same U.S. predominance is true for mobile apps. U.S.
companies account for 91 percent of global downloads.
Our wireless leadership has a substantial impact on our
economy--over $400 billion annually. The true impact is far
larger, because wireless is now more than just a service.
Wireless is the platform for innovation in the 21st century.
Mobile is no longer just voice and text. It is health,
education, and connected everything, from cars to appliances.
The Internet of Things will be driven by wireless.
Amazingly, mobile already represents more than half of all
Internet traffic. And, as the platform of choice for
millennials, that figure will only grow. In the next 5 years,
wireless data volumes will increase six-fold.
Mr. Chairman, if South Dakota grew at the same rate, it
would be roughly the same size as Minnesota or Colorado by the
decade's end.
[Laughter.]
Ms. Baker. We can meet almost half of that growth through
billions in wireless infrastructure and technological
improvements. We commit today to do that. But for the rest, we
need more licensed spectrum.
Five years ago, under the leadership of my fellow panelist
Blair Levin, the FCC formed a 10 year spectrum plan. The FCC
identified a 300-megahertz target for licensed spectrum by
2015. They relied on data predictions, and those predictions
have proved remarkably accurate, to within one-fifth of 1
percent--remarkable.
Thanks to this committee's leadership, the administration,
the FCC, and Commissioner Rosenworcel, we have reallocated 135
megahertz toward that target. The successful AWS-3 auction
earlier this year was the key. The remaining deficit
underscores just how hard reallocation can be, as well as the
critical importance of the upcoming broadcast auction to meet
consumers' mobile data needs.
And after the broadcast auction, we don't know what is
next. The pipeline will be empty, and we, the United States, do
not have a plan. As a nation, we need a new long-term spectrum
plan to accommodate future growth. Spectrum reallocations take
an average of 13 years. We need to jump-start our efforts today
if we are to keep up globally. I believe, working together, we
can shrink the timing we need to reallocate.
Using the FCC's own formula, we need to increase our
nation's supply of licensed spectrum by 350 megahertz by the
end of the decade. We are hard at work identifying potential
bands. Reallocating licensed spectrum requires a significant
commitment from all stakeholders. But that is why we lead the
world in wireless. Time and again, it has been proven to be
worth the effort.
As we develop a new pipeline, we also need to ensure our
military and government agencies have adequate spectrum and
technologies to support mission-critical services. We also need
to explore complementary use of spectrum-sharing, unlicensed,
as well as high-band spectrum, because the rest of the world is
not standing on the sidelines. Countries around the globe have
plans to leapfrog us in 5G--Korea in 2018 and Japan in 2020.
Fortunately, a cross-section of this committee has already
taken a leadership role on spectrum. Members have introduced
key legislative proposals that would unlock more spectrum,
improve Federal agency incentives, and facilitate rural 4G
deployment. We now have our new 350-megahertz goal, and we are
ready to work with each of you to develop a new 10-year
spectrum plan to advance America's wireless future.
Thank you for the opportunity to be part of today's
hearing.
[The prepared statement of Ms. Baker follows:]
Prepared Statement of Meredith Attwell Baker, President and CEO,
CTIA--The Wireless Association
Chairman Thune, Ranking Member Nelson, and members of the
Committee, thank you for inviting me to share CTIA's perspective on the
future of spectrum policy. We appreciate your leadership on developing
a forward-looking approach to one of the key inputs into America's
long-term global competitiveness.
Today's topic is of critical importance to the health of America's
wireless industry, and our entire economy. It is something we all have
a vested interest in getting right. So as the Committee considers
what's next in spectrum policy, I hope CTIA can help inform your work.
The United States is the Global Leader in 4G Mobility
I am proud to report that the United States is the global leader in
4G wireless. This has not always been the case. We were markedly behind
Europe and others in the deployment of 3G technologies only a decade
ago. But with a combination of sound spectrum policy, a light-touch
approach to regulation, and pro-investment tax policy, America now
leads.
Today, despite having only 5 percent of all wireless connections in
the world, the United States has 33 percent of 4G LTE connections. 98
percent of Americans have access to 4G LTE networks, and, even more
impressively, over 93 percent of Americans can choose from three or
more mobile broadband options.
Vibrant market competition has driven the widespread adoption of 4G
solutions. You likely choose between 4 national carriers--as well as
regional operators and resellers--offering you unparalleled choice in
wireless solutions. This has led directly to differentiation and new
service offerings. It has also supported over $150 billion in private
capital in the past five years alone to bring 4G capabilities to
American consumers. That investment was greater than that of the truck,
rail, and air transportation industries, and it means that every year,
wireless networks get faster and better, devices have more capabilities
and features, and the Internet of Things around us gets more and more
advanced. Speeds are increasing, prices are decreasing, and usage is
skyrocketing.
That 4G foundation helps support innovation and investment up and
down the mobile ecosystem. Indeed, our global lead is pervasive. Over 9
out of 10 smartphones across the world run an operating system
developed by a U.S. company. The same U.S. predominance is true for
mobile apps, as 91 percent of mobile app downloads come from U.S.
companies. We are also leaders in leveraging unlicensed spectrum to
benefit U.S. consumers.
Spectrum Is a Powerful Economic and Social Catalyst
Our global 4G lead has a direct and substantial impact on consumers
and our economy. We recently released a Brattle Group study that
provides a powerful reminder of what's at stake in spectrum policy,
finding that licensed spectrum in the hands of wireless carriers
generates over $400 billion in economic activity every year.\1\ That's
a powerful figure. But it doesn't tell the whole story, which is that
for every dollar spent on licensed wireless services, $2.32 is spent
throughout the broader economy. When combined with the additional $62
billion that unlicensed spectrum contributes,\2\ it's clear that
wireless services and technologies are an economic powerhouse.
---------------------------------------------------------------------------
\1\ Coleman Bazelon and Guila McHenry, ``Mobile Broadband Spectrum:
A Vital Resource for the U.S. Economy'' (May 2015). See http://
www.brattle.com/system/publications/pdfs/000/
005/168/original/Mobile_Broadband_Spectrum_-
_A_Valuable_Resource_for_the_Ameri
can_Economy_Bazelon_McHenry_051115.pdf?1431372403.
\2\ ``Unlicensed Spectrum and the American Economy: Quantifying the
Market Size and Diversity of Unlicensed Devices,'' (June 2014). See
http://www.ce.org/CorporateSite/media/gla/
CEAUnlicensedSpectrumWhitePaper-FINAL-052814.pdf.
---------------------------------------------------------------------------
The Brattle Group also found that licensed wireless is a tremendous
job creator. In 2013, wireless supported over 1.3 million jobs in this
country. With every hundred people employed in the wireless industry,
another 650 people find jobs. And wireless jobs are good paying jobs,
paying 45 percent higher than the national average.
Just as importantly, licensed spectrum enables network operators to
boost speeds and capacity, device manufacturers to develop new
products, and app and content creators to craft new offerings. It fuels
new investment, innovation and American leadership, reinforcing why
spectrum policy is central to our future economic policy.
The wireless industry's full contribution to the economy far
eclipses the $400 billion figure. Because wireless is more than just a
service. Wireless is the platform, the basic building block, for
innovation in the 21st century--in the commercial space as well as the
government space.
Mobile is no longer just voice and text, but also video, health,
retail, education, energy and connected everything--from cars and
appliances to healthcare devices and drones. The Internet of Things is
driven by mobility and spectrum. Right now, the connected car market is
growing ten times faster than the traditional automobile market. By
2020, an incredible 97 percent of all vehicles shipped in the United
States will be able to connect to the Internet. In four years, 1.8
billion connected home devices, smart appliances, home security
systems, and energy equipment, will ship, 12 times what shipped just
last year. In the same time period, the market for mHealth will nearly
top $50 billion, up from $2 billion in 2012. Our connected future and
the economic and social benefits that flow from it ride on wireless
networks. These networks depend on investment and innovation.
Mobility is also the communications platform of millennials--for 87
percent of millennials, their phone never leaves their side. Over 45
percent of American households do not have a wireline telephone today,
and the reliance on mobility is highest among the young, low-income,
and minority communities across the Nation. Mobile is the next
generation's tool for empowerment and entrepreneurship, and the mobile
device is increasingly the gateway to employment, health, and education
opportunities.
A Bridge to 5G: Meeting Skyrocketing Consumer Demand for Mobile
Broadband
Not surprisingly, mobile broadband continues to grow at record
levels as consumers embrace mobility more and more each year. Mobile
data traffic grew over 35-fold from 2009 to 2014, and today, more than
half of Internet traffic is mobile. The average user consumed 450
megabits a month in 2012. Today, 1.8 gigabits a month. That's just 3G/
4G and other licensed data, not unlicensed. Now envision a future where
3G/4G data averages 6, 8, or 10 gigabits a month.
That future is closer than many think and just wait until the
remaining third of Americans start using smartphones, and 4G networks
and uses become more sophisticated. These growth projections can be a
little daunting, just like they were in 2010 when we last had a
conversation about the spectrum deficit. In 2014, more than 500
petabytes (that's 500 followed by 15 zeros, the equivalent of 500
million gigabytes) of traffic flowed across wireless networks each
month. In 2019, mobile data traffic is projected to be six times that
amount. But we won't have six times the spectrum, no matter what we do.
To meet the rapidly evolving needs of U.S. consumers, there is
significant amount of work and investment to be done by the mobile
industry. Work we stand ready to do.
First, the wireless industry will continue to invest tens of
billions of dollars in our Nation's infrastructure, which means more
jobs and opportunity across the country as the wireless industry
deploys thousands of new cell sites and small cells to densify and
extend our networks that already support approximately 300,000 sites.
We also will roll out new 4G LTE functionalities. We tend to speak
about wireless generations as singular events like the jump from 3G to
4G or 4G to 5G. The reality is that today's LTE networks are far better
than the ones initially deployed just five years ago. And we are
committed to continuing to improve those networks year in and year out.
We will aggregate spectrum bands into wider channels, introduce the
ability to broadcast video content, better leverage unlicensed
spectrum, and roll out device-to-device solutions. We will see HD
Voice, VoLTE, LTE Broadcast, and remarkable new apps and offerings that
leverage these new opportunities.
We will use existing spectrum resources more efficiently. Beyond
rolling out these substantially more efficient 4G technologies,
carriers are re-farming existing mobile bands from voice to data.
Verizon is refarming its 1900 MHz PCS spectrum and AT&T is actively
refarming Leap's spectrum. T-Mobile has already refarmed MetroPCS' CDMA
spectrum for 4G and shut down that legacy network this summer.
And lastly, we need to start a conversation about what the United
States needs to support next-generation or 5G networks. We need to work
together to identify the use cases, spectrum needs, and economic
opportunity presented by 5G, as well as the investment and research
needed for us to retain a global lead. In the interim, the most
important steps we can take are to solidify our first mover advantage
in 4G. Our ability to leverage 5G will be enhanced by making our 4G
foundation as strong and dynamic as possible.
A Renewed Focus on Spectrum
While industry can--and will--take steps on its own to address the
challenge of a six-fold increase in wireless data, infrastructure
investment and engineering enhancements alone cannot meet the future
wireless demand. These industry-driven efforts will address
approximately 40 percent of the expected growth volumes, but they do
not obviate the need for more spectrum.
As smartphone penetration continues and the Internet of Things and
our connected life take off, wireless will need hundreds of megahertz
of additional licensed spectrum. All of our connected life aspirations
will ultimately succeed or fail based on our underlying mobile
infrastructure.
In 2010, with no spectrum in the pipeline, the Federal Government
called for 300 MHz of new licensed spectrum by 2015, and 500 MHz of
total spectrum by 2020. Those targets were established based on
projections of mobile data growth that were dismissed at the time as
unrealistic. In fact, the FCC and the National Broadband Plan estimates
were remarkably accurate. In 2010, the FCC's growth estimates forecast
mobile data traffic of 562 petabytes per month in 2014. The actual
amount last year? 563 petabytes per month. The FCC was off by one-fifth
of one percent.\3\
---------------------------------------------------------------------------
\3\ Thomas Swanabori and Robert Roche, ``Mobile Data Demand: Growth
Forecasts Met--Significant Growth Projections Continue to Drive the
Need for More Spectrum (June 2015). See http://www.ctia.org/docs/
default-source/default-document-library/062115mobile-data-demands
-white-paper.pdf.
---------------------------------------------------------------------------
The Administration has committed significant resources to
identifying additional spectrum for mobile broadband, and successfully
re-allocated 135 MHz towards the 300 MHz goal. The successful AWS-3
auction earlier this year was the largest step to date, and this
remaining deficit underscores the critical importance of the upcoming
broadcast incentive auction.
The practical reality is that five years ago, the Administration
formed a ten-year spectrum plan. While we're making progress toward the
Administration's target, we have much more to do to prepare for the
exponential growth that's coming. As a country, we have no plan beyond
2020 to accommodate mobile growth, and the closer we get, the more
daunting the timeline looks. Existing systems need to be relocated or
retuned, and that alone takes years and billions of dollars. History is
our guide: the average time to reallocate spectrum is 13 years.\4\ You
could raise a teenager in the time it took to bring the 700 MHz band
from identification to use. The AWS-3 process seemed to go quickly, but
only if you forget that we were talking about access to that band for
more than a decade before the 2012 Spectrum Act jumpstarted the process
by scheduling the 2155-2180 MHz band for auction. Because spectrum
policy is a long game, we need to start planning today to meet future
consumer needs.
---------------------------------------------------------------------------
\4\ Thomas Swanabori and Robert Roche, ``From Proposal to
Deployment: The History of Spectrum Allocation Timelines,'' (July
2015). See http://www.ctia.org/docs/default-source/default-document-
library/072015-spectrum-timelines-white-paper.pdf.
---------------------------------------------------------------------------
The backbone of our national spectrum policy should remain licensed
and exclusive use spectrum. It is our collective commitment to licensed
spectrum that has made the United States the global leader in 4G.
Auctions in 2006 and 2008 paved the way to our current winning
position. And it is that commitment to licensed spectrum that has given
carriers the confidence and certainty necessary to invest billions in
spectrum and infrastructure.
We also feel strongly that the military and government agencies
need adequate spectrum to support mission critical services, and
mobility is just as central to Federal users' future as it is to
commercial subscribers. We believe working collaboratively we can find
win-win solutions to allow more efficient use of all spectrum and help
support important government spectrum initiatives.
CTIA also absolutely supports making additional unlicensed spectrum
available. The availability of unlicensed spectrum offers carriers a
key tool for off-loading traffic and we know it is imperative to open
additional bands to unlicensed use. We also are excited by the promise
of incorporating LTE technology into unlicensed bands for a more
efficient and robust experience for all users, while co-existing with
other unlicensed technologies.
We support experimentation with new spectrum sharing regimes as
well. We appreciate that new technologies may allow for more flexible
sharing arrangements than the historic geographic and temporal sharing
techniques that have long served as staples of spectrum management. And
we should, as a country, explore these new tools. To that end, we
support the FCC's efforts at 3.5 GHz and hope they will prove
successful.
As a country, however, the U.S. cannot settle too quickly into
sharing regimes that rely on nascent or untested technologies or on an
as yet undefined but likely complex government role. I have yet to meet
a carrier CEO or CTO who believes we are ready to make that transition
and until these approaches have been tested and scaled at commercially
significant volumes, we cannot ask carriers to depend upon undefined or
limited access to the spectrum they need to serve millions of users
every day.
Refueling the Spectrum Pipeline
America needs a renewed discussion about where the next bands of
airwaves will come from to ensure our future connected life is
realized. Because after next year's broadcast incentive auction, we
don't know what's next. We--the United States--do not have a plan.
Just last month, CTIA released a second Brattle paper, Substantial
Licensed Spectrum Deficit (2015-2019): Updating the FCC's Mobile Data
Demand Projections (see attachment), to evaluate how much additional
spectrum needs to be allocated for commercial use if we are to keep
abreast of demand projections. Using the same formula and approach the
Commission used to formulate the National Broadband Plan in 2010 and
taking into account technical efficiencies and infrastructure
investment, Brattle estimates that we need to increase our existing
supply of licensed spectrum by over 350 MHz by the end of this decade.
Having seen this process from all sides--as acting head of NTIA, as
an FCC commissioner, and now in my capacity at CTIA--I recognize that
meeting the goal we have set will not be easy. But our global
leadership depends on beginning this process. Countries around the
world are looking to the next generation of mobile--5G--not merely as a
wireless technology, but as a key input for economic growth. We must do
the same or we risk losing what today is a competitive advantage for
our economy. Getting this right should be a national economic
imperative.
We are committed to working with Congress and the Administration to
identify future bands to meet the new 350 MHz target. We disagree that
we should abandon the licensed spectrum model because it is too
difficult to clear additional bands. We heard many of those same
objections in the process that led to the recent AWS-3 auction. Just
five years ago, industry was told that the 1755-1780 MHz band supported
too many government assets to allow its reallocation any time soon, and
even if it could be made available, reallocation would take too long
and cost so much as to be impractical. The Congressional Budget Office
did not think reallocation of the band was possible. Just two years
ago, it was unclear whether the FCC would move forward with an AWS-3
auction. But with Congress' leadership, Administration focus and an
unprecedented amount of collaboration, not only did it turn out that
the auction was possible, it turned out to be the most financially
successful auction the FCC has ever conducted, fully funding FirstNet
and providing billions of dollars for deficit reduction. Yes, making
additional licensed spectrum available is hard--but it's worth it.
Fortunately, there is already a broad cross-section of this
Committee that has taken a leadership role on spectrum. Bills like the
Wireless Innovation Act (S. 1618), the Federal Spectrum Incentive Act
(S. 887), the Rural Spectrum Accessibility Act (S. 417), and the Wi-Fi
Innovation Act (S. 424) demonstrate the broad and bi-partisan interest
in advancing America's wireless future. We support these efforts to
unlock more licensed and unlicensed spectrum, improve Federal agency
incentives, foster greater long-term spectrum planning, and facilitate
rural 4G deployment.
We are ready to engage and look forward to working with each of you
to help America's wireless industry maintain its position as the
world's leader. Thank you for the opportunity to be a part of today's
hearing.
Attachment
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Ms. Baker.
And we will turn now to Mr. Levin. And I apologize for
pronouncing that wrongly the first time.
Mr. Levin. Quite alright.
The Chairman. That is a member mistake, not staff, just so
you know.
STATEMENT OF BLAIR LEVIN, FORMER EXECUTIVE DIRECTOR, NATIONAL
BROADBAND PLAN
Mr. Levin. Thank you very much, Chairman Thune and members
of the Committee.
I am a nonresident fellow at the Brookings Institute, but
today I am speaking solely in a personal capacity, reflecting
on lessons learned directing the National Broadband Plan.
Two lessons are at the heart of this hearing: spectrum
demand continues to explode, and it takes a significant time to
repurpose spectrum from existing to future uses.
The plan set ambitious goals. Fortunately, I think the
Government has been meeting them. But we cannot, however, rest
on our laurels, and we must look to the future.
Government faces two critical tasks: allocating and
repurposing spectrum. On the allocation question, the
Government is on the right track, allocating spectrum to a
diversified portfolio of licensed, unlicensed, and shared
spectrum, but we do not want a spectrum monoculture.
But we can't allocate what we have not repurposed. So I
will focus on repurposing spectrum.
There are four approaches to the task. First, assume the
original allocation represents a form of Edenic perfection.
Second, allow licensees to freely sell to the highest bidder.
Third, have the Government exercise its power to repurpose any
band. And, fourth, adopt tools that use market signals and
mechanisms to repurpose.
For reasons detailed in my written testimony, the plan
focused on the fourth, resulting in, among others, the
recommendation that Congress authorize the FCC to conduct
incentive auctions.
But the plan was not the originator of the incentive
auction. Public policy is not a solo performance; it is a relay
race. We took the baton from earlier thought pieces by the FCC
staff and others, put them in the context of a plan, handed the
baton back to this committee, including my co-panelist,
Commissioner Rosenworcel, who was working with you all. You, in
turn, handed the baton to the FCC, who, thanks to what I think
is great staff work and leadership from Chairman Wheeler, has
positioned us for an auction next year.
And herein lies a critical lesson. While repurposing
spectrum takes time, the past few years, particularly with AWS-
3 and incentive auction, proves we can shrink the time it has
taken in the past. The question is whether we take the steps
necessary to do so.
But most important involve repurposing government spectrum.
I believe embedding more market signals into the decision
process for spectrum use is the right place to start.
Some have proposed applying the incentive auction structure
to government spectrum. I applaud the spirit and am delighted
that the plan's proposal was subject to the sincerest form of
flattery. Nonetheless, I have concerns that differences between
private and public actors are such that a government incentive
auction may not succeed.
As detailed in my written testimony, these concerns
include: government spectrum has multiple users; while all
transactions have a potential for a principal agency problem,
the problem is much worse in government; the budget process
creates a snapback option; government service over-indexes for
risk and under-indexes for reward; and it will be difficult to
thread the very small needle between providing enough money to
incent repurposing spectrum and too much so that either the
amount or the use does not cause a political backlash.
I am not saying the option should be taken off the table,
but I urge further study of all options. And, again, as
detailed in my written testimony, I think more promising
options include: administrative pricing; further amendments to
the Commercial Spectrum Enhancement Act--and I would note that
such amendments would be in the spirit of a letter a number of
you signed on August 28 to OMB; third, providing incentives for
private-sector bounty hunters; and, fourth, a GSA for spectrum.
None of these ideas are exclusive. Each has trade-offs.
Nonetheless, all should be on the menu of options you consider.
In addition, Congress should understand the emerging hybrid
relationship of broadband networks. The more robust wireline
networks, the more Wi-Fi offload can relieve pressure on scarce
spectrum assets. The goal is not spectrum abundance so much as
bandwidth capacity abundance. I hope you will hold a hearing
exploring, as the House did last week, a wireline deployment
agenda.
In closing, I would like to thank the Congress for
directing the writing of the National Broadband Plan. It was a
rare and wonderful gift to work with a dedicated and talented
group of Americans on behalf of all Americans and on a short-
term basis with a mandate to think long-term.
I urge you to consider using a similar short-focused
analysis that quickly leads to a plan for making sure we have
the spectrum we all agree we need for bandwidth abundance and
leadership in the 21st-century information economy.
Thank you very much.
[The prepared statement of Mr. Levin follows:]
Prepared Statement of Blair Levin, Former Executive Director,
National Broadband Plan
Thank you Chairman Thune, Ranking Member Nelson and members of the
Committee for the opportunity to speak with you today about issues
related to our Nation's long-term spectrum policy.
I am Blair Levin, a non-resident Fellow at the Brookings Institute
Metropolitan Policy Program. Today, I am speaking solely in my personal
capacity, reflecting on lessons I learned as Chief of Staff for FCC
Chairman Reed Hundt (1993-1997), as a Wall Street analyst following the
telecommunications and media sectors (2001-2008), and directing the
writing of the National Broadband Plan (2009-2010.)
Two lessons from the Plan are at the heart of today's hearings: the
growing demand for spectrum and the significant time it takes to
repurpose spectrum from existing to future uses. This hearing will
reveal different points of view on several topics but I am sure we all
agree the failure to adopt policies that repurpose spectrum efficiently
will have negative consequences on our economy and society. With the
``Apps Economy'' already responsible for over a half million jobs \1\
and new markets like the Internet of Things soon to create trillion
dollar market opportunities,\2\ the Chairman of the Council of Economic
Advisors and the Chief Technology Officer were no doubt correct to
observe in the Wall Street Journal that avoiding a spectrum crunch by
``making more spectrum available (is) one of the most critical
infrastructure projects of the 21st century.'' \3\
---------------------------------------------------------------------------
\1\ http://files.ctia.org/pdf/The_Geography_of_the_App_Economy.pdf
\2\ http://www.mckinsey.com/insights/business_technology/
the_internet_of_things_the_
value_of_digitizing_the_physical_world
\3\ http://www.wsj.com/articles/jason-furman-and-megan-smith-how-
to-avoid-spectrum-crunch-1421970841
---------------------------------------------------------------------------
Early in the process of developing the Plan, we decided to include
a chapter on spectrum. The connection between spectrum and broadband
may today seem obvious but at the time this was actually a novel
decision. We recognized that broadband use was migrating to mobile. At
the same time, there was almost no new spectrum in the pipeline
suitable for mobile use. We noted that the process of revisiting or
revising spectrum allocations historically had taken 6 to 13 years.\4\
The essence of many of our spectrum recommendations was to speed up
that process, trying a number of new approaches to align stakeholder
incentives and reduce friction to spectrum repurposing.
---------------------------------------------------------------------------
\4\ Exhibit 5-C: Time Historically Required To Reallocate Spectrum
at http://www.broad
band.gov/plan/5-spectrum/
---------------------------------------------------------------------------
We established the ambitious (but now-familiar) goal of repurposing
300 megahertz between 225 and 3700 MHz for mobile use in five years and
500 megahertz for broadband use in ten years.\5\ In connection with the
five-year goal we released a spectrum demand study.\6\ Some suggested
we were exaggerating the need. It now appears that we were close, but
if anything, underestimated the need.\7\ Our quantitative goals, and
the supporting analysis, helped to clarify the public interest in
spectrum repurposing at a time when there, frankly, had not been much
interest in planning for the future.
---------------------------------------------------------------------------
\5\ Recommendation 5.8: The FCC should make 500 megahertz newly
available for broadband use within the next 10 years, of which 300
megahertz between 225 MHz and 3.7 GHz should be made newly available
for mobile use within five years. The President, of course, made a
similar 10-year commitment. See https://www.whitehouse.gov/the-press-
office/presidential-memorandum-unleashing-wireless-broadband-
revolution.
\6\ https://transition.fcc.gov/national-broadband-plan/mobile-
broadband-paper.pdf
\7\ http://www.ctia.org/docs/default-source/default-document-
library/bazelon_mchenry_spectrum-deficit_2015-06-23.pdf. Further, it
could well be, given needs that we cannot accurately assess, such as
the Internet of Things, connected cars, drones, and business
applications for high-resolution two way video, among others, that even
today's estimates will be too low.
---------------------------------------------------------------------------
I am pleased to say that the government has been quite successful
in tracking the spectrum goals established in the plan. Five years
later, we have, according to NTIA, repurposed 245 megahertz.\8\ I think
it is not unreasonable to expect, given considerable broadcaster
interest in the incentive auction, that that repurposing metric may be
above 300 megahertz when that auction concludes, about six years after
the publication of the Plan.\9\
---------------------------------------------------------------------------
\8\ http://www.ntia.doc.gov/blog/2015/nearly-halfway-meeting-
spectrum-target
\9\ It is, admittedly, a year late. But only one year late, given
the history and magnitude of the problem is not too shabby. It
demonstrates what is possible when there is a focused effort. See
footnote 16, below.
---------------------------------------------------------------------------
Nevertheless, we cannot rest on our laurels and must always look to
the future. We still have not gotten all the way to 500 megahertz, but
I understand work continues on several fronts including the 5 GHz
unlicensed band, which may move us toward this benchmark. Looking even
farther into the future, I think we need to move beyond simple
megahertz targets and focus more on the underlying economic and
bureaucratic incentives that will lead to ``self-healing'' policies
where spectrum supply can, over time, evolve to match ever-changing
technological demands.
To this end, the government has two critical tasks: allocating
spectrum and repurposing spectrum. On the allocation question, I
believe the government is on the right track in allocating spectrum to
a diversified portfolio of licensed, unlicensed and shared uses.\10\ We
also need to preserve room for growing numbers of sensors, radars,
RFIDs, beacons, and other technologies--miniaturized to fit inside your
phone, car, and other devices--that will come to define the Internet of
Things. The last two decades have taught us that we don't want a
spectrum monoculture.
---------------------------------------------------------------------------
\10\ The President's Council of Advisors on Science and Technology
made an enormous contribution to our understanding on the opportunities
for sharing in its 2012 report, offering insights far beyond what we
were able to do with the Plan in 2010. https://www.whitehouse.gov/
sites/default/files/microsites/ostp/
pcast_spectrum_report_final_july_20_2012.pdf. Further, the President
has also followed up on that report with a second spectrum related
executive memorandum. https://www.whitehouse.gov/the-press-office/2013/
06/14/presidential-memorandum-expanding-americas-leadership-wireless-
innovatio.
---------------------------------------------------------------------------
I also believe we cannot assume that future network architecture
will be the same as today's architecture and the only recourse to
future demand is to ``pour on more spectrum.'' Spectrum is too precious
a resource not to be used in ever more intensive and creative ways. The
generational march of technology (from 3G to 4G and, soon, 5G) is only
part of this story. Inevitably, our networks will have to migrate
toward greater and greater density (i.e., small cells), more productive
re-use (i.e., sharing), and new and different deployment models (i.e.,
software defined networks).\11\ The Commission's recent 3.5 GHz rules
provide an important nudge toward this kind of innovation, which could
yield capacity gains many times greater than the mere addition of a new
spectrum band.
---------------------------------------------------------------------------
\11\ Chairman Wheeler discussed some of the implications of
software defined networking in a recent speech at Brookings. https://
www.fcc.gov/document/remarks-fcc-chairman-tom-wheeler-brookings-
institution
---------------------------------------------------------------------------
But, we can't allocate what we have not freed up. As we have
basically already allocated all spectrum, I will focus my comments on
the other principal task going forward--repurposing spectrum.
Approaches to Repurposing. When we arrived to work on the Plan, for
the first time since before I served as Chief of Staff nearly two
decades earlier, there was no spectrum designated for auction. In light
of the evidence in the demand studies, the Plan team focused on
repurposing. The team immediately recognized there were four ways to
approach the task:
Status Quo. Assume the original allocation represented some
form of Edenic perfection. Given changing markets and
technology, this was obviously the wrong policy.\12\
---------------------------------------------------------------------------
\12\ While wrong, the assumption that a past allocation creates
permanent rights is at the root of a number of policy arguments.
Liberalization. Allow all licensees to freely sell any
spectrum to the highest bidder. In the case of highly
fragmented bands (such as the TV bands), for reasons summarized
in what is referred to as the ``Letter from 112 Economists,''
that approach entails enormous risks and costs.\13\ In other
bands (e.g., AWS-4), this approach could be a viable option.
---------------------------------------------------------------------------
\13\ http://www.politico.com/static/
PPM41_april6_economists_letter_to_obama_regarding
_incentive_auctions.html
Command-and-Control. Have the FCC exercise its power as the
licensor to repurpose a band anytime it believes reallocation
is needed. This approach, which can work in discrete areas,
represented the then-current approach. It also has many
problems, including the time caused by litigation and other
problems inherent in the command-and-control approach.\14\
---------------------------------------------------------------------------
\14\ Since Ronald Coase's seminal paper in 1959, there has been a
general view moving away from command-and-control and towards more
flexible use. See, for example, the Federal Communications Commission
Spectrum Policy Task Force, Report of the Spectrum Efficiency Working
Group, November 15, 2002.
Market-Mechanisms. Develop tools that use market signals and
mechanisms to move spectrum to higher and better uses. This had
numerous problems, including lack of legal authority and prior
examples. Nonetheless it appeared more promising than the
---------------------------------------------------------------------------
others, so we focused our efforts on that opportunity.
That work ultimately resulted in, among other recommendations,
Recommendation 5.4 of the Plan, that Congress should authorize the FCC
to conduct incentive auctions. Congress did so in the 2012.\15\
---------------------------------------------------------------------------
\15\ http://www.gpo.gov/fdsys/pkg/PLAW-112publ96/pdf/PLAW-
112publ96.pdf. See Title VI, Subtitle D.
---------------------------------------------------------------------------
But I want to be clear that the Plan was not the originator of the
incentive auction. It came from various ideas developed by Commission
Staff, such as Evan Kwerel and John Williams \16\, and various papers,
particularly one specifically about broadcast spectrum authored for the
Brookings Institute by University of Colorado Law School Dean Phillip
Weiser,\17\ that proposed versions of an incentive auction to repurpose
spectrum.
---------------------------------------------------------------------------
\16\ http://wireless.fcc.gov/auctions/conferences/combin2003/
papers/masterevanjohn.pdf
\17\ http://www.brookings.edu/ /media/research/files/papers/2008/7/
wireless-weiser/07_
wireless_weiser.pdf
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Policy progress is never a solo performance; it's always a relay
race. As we focused on market mechanisms, we were fortunate to be able
to take the baton from those earlier thought pieces, race through our
lap, and then hand the baton off to the Congress and the members and
staff of this Committee, including Commissioner Rosenworcel, who was
then serving as Staff for then Committee Chair Senator Rockefeller, who
led in crafting legislation by which Congress in turn handed the baton
back to the FCC who, thanks to great staff work and tremendous
leadership of Chairman Tom Wheeler, has put our country in the position
being able to hold an auction early next year. It is has been a
complicated and difficult task and they are getting a lot right. In
particular, I should commend them for keeping to three big priorities:
maximizing for the return of licensed spectrum, accommodating
unlicensed use on a non-interfering basis, and understanding that we
need to hold the auction as soon as possible. Delay imposes large costs
on the economy.\18\
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\18\ As Doug Brake of the Information Technology and Innovation
Foundation has written, ``Spectrum is a peculiar resource, if it can
even be called a resource at all.25 It is infinitely renewable,
divisible in 6 to 8 dimensions, 26 and unused spectrum is wasted
opportunity that can never be recaptured.'' http://www2.itif.org/2015-
coase-wifi.pdf?_ga=1.167425398.95312237.14
37826419. In that light, every day of delay in repurposing spectrum is
an economic drag on our economy.
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Herein lies a critical lesson for this Committee about time. CTIA
just released a study about the time it takes to repurpose spectrum. I
could quibble with some of the factual assessments \19\ in the study,
but most important, I agree with its bottom line, there is ``reason for
optimism that we can work collaboratively to shrink that timeline.''
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\19\ For example, while it is not wrong to write that the AWS-3
spectrum process began in 2002, the focused efforts began after
Congress demanded an auction in its 2012 legislation. The 15 years to
deployment suggested in the study is, in my book, more accurately
described as 5 years of work. Similarly, in AWS-4, the concentrated
work began in 2010, not 2002. I also slightly disagree with the
assertion in the study that after ``the broadcast incentive auction,
the traditional licensed pipeline is empty.'' There are still some
proceedings pending through which the FCC can facilitate making more
licensed spectrum available to carriers, though admittedly, the number
of such proceedings is small.
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My optimism is based on history, which shows that when government
decides to repurpose spectrum, it can do so in a reasonably quick
manner. Yes, there are some negative stories but during some of the
periods of more than a decade cited in the study, it was the government
itself that, frankly, was not moving quickly. On the other hand, as
demonstrated with such efforts as AWS-3 and the incentive auction relay
team, a focused, targeted effort can repurpose spectrum in a timely
manner. After all, it took 35 years from Ronald Coase's proposal \20\
for the FCC to hold an auction. In contrast, it will take only 8 to
move from Dean Weiser's paper to an actual auction. And it only took
two years from the Congressional mandate for an AWS auction to the
actual auction.
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\20\ 1959. The Federal Communications Commission. Journal of Law
and Economics 2:1-40.
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While on the second anniversary of the Plan, I was pessimistic
about our spectrum prospects,\21\ I have to say that the last few years
has been a good-news story. As discussed above, the government, on a
bi-partisan basis, involving the good work of both the executive and
legislative branches, has acted to repurpose significant amounts of
spectrum. The question is whether the good news continues or it stops.
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\21\ http://broadbandandsocialjustice.org/2012/03/when-an-roi-500-
times-better-than-goldman-isn%E2%80%99t-enough-reallocating-our-focus-
on-reallocating-spectrum/
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Repurposing Government Spectrum. For the good news to continue, we
have to find ways to more effectively repurpose government spectrum. As
discussed above, I start from the premise that embedding more market
signals into the decision process for spectrum use is the right place
to start.
Potential Concerns with a Government Incentive Auction. One way to
do so would be to simply take the incentive auction design and apply it
to government spectrum. This has in fact been proposed by a number of
parties.\22\
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\22\ http://www.markey.senate.gov/imo/media/doc/2015-03-26-
Federal%20Spectrum%20Incen
tive%20Act-billtext.pdf
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I applaud the spirit and purpose of such proposals. I obviously
agree with the principle of incentives and am delighted that the Plan's
proposal is subject to the sincerest form of flattery. Nonetheless, I
have to note a number of concerns that such a plan will not produce the
results we all seek. Briefly, I think such a plan faces the following
barriers:
1. Government spectrum has multiple users. In the broadcast
incentive auction, a single licensee controls the decision of
whether or not to participate.\23\ With government spectrum,
there are generally multiple users, creating additional
transaction costs, holdout problems and other difficulties in
determining who will receive the incentive payment, which also
diminishes the motivating power of the incentives.
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\23\ Of course, the success of the broadcast incentive auction
depends on a sufficient amount of broadcasters per market deciding to
sell at a price that buyers are willing to pay. But the decision to
participate is done at the individual licensee level, which is not
analogous to the situation with spectrum used by the Federal
Government.
2. While all transactions have the potential for a principal-agency
problem, the problem is much worse for government actors than
private sector actors. Many decisions throughout the economy
involve what is known as the ``principal-agent problem'', in
which the agent, acting on behalf of the principal but with
different motives and significantly more information, may not
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act in the principal's best interest.
To some extent, I saw this when I first started discussing the
incentive auction with broadcasters. Economic theory would have
suggested nothing but support for creating option value for the
firm owners in an asset that otherwise could not be monetized.
Instead I got significant pushback from some who expressed
concerns about the impact on their jobs. That opposition has
been quieted, to some extent, by the FCC's wise decision to
make public the potential economic opportunity for the
principals.\24\
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\24\ http://wireless.fcc.gov/incentiveauctions/learn-program/docs/
ia-opportunities-book.pdf
The principal-agent problem is significantly more problematic in
a government setting. This is not a criticism of any government
employees who I deeply respect. It is simply to acknowledge
that the impact of market signals and financial incentives on
the decisions of broadcast licensees as to whether to
participate in an auction will be substantially greater than on
Federal Government employees who will neither see the same
signals or benefit financially.\25\
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\25\ For a contrary view, that Federal employees will be
appropriately motivated by the opportunity to retain financial assets
from the sale of government property, see http://www.brookings.edu/ /
media/research/files/papers/2014/09/23_buildings_bandwidth_spec
trum_property/23_buildings_bandwidth_spectrum_property.pdf
3. The budget process creates a snap back option. In addition to the
principal-agent problem, the incentive for government officials
to recommend their agencies participate would be diminished
further by the understandable fear that any gain in one year
with auction proceeds would be offset with congressional budget
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cuts in subsequent years.
4. The asymmetry of government service risk/reward. I have done two
stints in the Federal Government but have spent most of my
professional career in the private sector. In every institution
in which I have worked, different employees have a different
view of their risk/reward ratio for any particular decision. In
the aggregate, however, in my experience, government employees
are far more concerned about the risk of a wrong decision than
the rewards for the right one. This is not surprising and it is
also not bad.\26\ In the context of this proposed auction
however, we should understand that agency decision makers are
likely to over-index for the risk of not having the spectrum
they need to perform critical functions and under-index the
reward for repurposing spectrum.
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\26\ Consider, for example, how many hearings Congress has held to
examine allegations of problems caused by the actions of government
employees relative to how many hearings it has held to praise
government employees. Given the oversight responsibility, the ratio is
appropriate. But we have to understand the impact on employees in their
decision-making.
5. It will be difficult to thread the needle between providing
enough money to incent repurposing of spectrum and too much so
that either the amount or the use does not cause a political
backlash. In the broadcast incentive auction, broadcasters will
effectively be competing to determine the clearing price and
therefore, market forces will set the price for their licenses.
For a government incentive auction, proponents have suggested
that the price paid to existing agency users will be set as a
percentage of the wireless action proceeds. If the percentage
is too low, the agencies will not sell.\27\ If it is set too
high, some agencies will receive what the public perceives as a
windfall and both the money and the subsequent use of the money
is likely to be heavily scrutinized by the public, dampening
any agency's enthusiasm for participating in a future auction.
That is, in the wake of the broadcast incentive auction, the
public is unlikely to notice or complain how the selling
broadcasters use the dividends of their capital asset
restructuring. That will not be true for Federal employees
using what some will characterize as a windfall outside the
normal budget process, so the process of repurposing government
spectrum, over time, may not be sustainable.\28\
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\27\ The proposed legislation sets the fee at 1 percent, not
because an economic analysis determined that was the right price but
rather based on budget rules. See. Page 40 of ``Making Waves:
Alternative Paths to Flexible Spectrum Use. http://
www.aspeninstitute.org/sites/default/files/content/docs/pubs/Making-
Waves.pdf. It strikes me that 1 percent is too low but of course, no
one has any idea.
\28\ This is similar to the issue of setting the right incentives
for Designated Entities (DEs) in auctions. If the incentives are not
sufficient, no DEs participate. If the incentives are too rich, there
is a political backlash. Overtime, the cycle of one followed by the
other makes it difficult for the FCC to design a sustainable,
successful program.
6. Creating property rights for individual agencies may create
perverse hoarding incentives. If the Congress were to announce
the possibility of different agencies benefitting at some ill-
defined time in the future by returning spectrum, that could
lead to a spectrum gold rush within Federal agencies who want
the option value (either in terms of money or negotiating
leverage) of such a benefit. Given the asymmetry of information
that leads to difficulty in evaluating the real needs of
spectrum for an agency's mission, the law of unintended
consequences may kick in and NTIA could find that its job of
spectrum manager is more difficult and the process could result
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in less spectrum repurposed.
To be clear, I am not saying to take the option of a government
incentive auction off the table. The experience of the Base Closing
Commission is instructive for how to incent Federal employees to
support repurposing assets and there is some evidence from that
experience that my concerns are overstated.\29\ My own experience,
however, suggests that Federal employees consider spectrum as a
strategic asset in a way that real estate is not, so my skepticism
about the ability of a government incentive auction remains. But I urge
further study and consideration of all options.
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\29\ http://www.brookings.edu/ /media/research/files/papers/2014/
09/23_buildings_band
width_spectrum_property/23_buildings_bandwidth_spectrum_property.pdf
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Other Alternatives to Repurposing. In that light, as Congress
considers the question of how to accelerate repurposing of government
spectrum, it ought to consider the concerns I have noted as well as
other options for inserting market signals into government spectrum
decisions. These other options include the following:
1. Administrative pricing. Administrative pricing is the idea that
each government agency that utilizes spectrum is charged in the
budget some amount that reflects a broad measure of opportunity
costs, thus creating a market signals among government users
and others in the government, such as Congress, about the cost
of spectrum and encourages agencies that are not using spectrum
to move the spectrum off its books. As discussed in the
National Broadband Plan, England has been successfully using
this technique to more efficiently plan for and use spectrum in
government operations.\30\ Work on this has already taken place
through a Presidential memorandum \31\ and an OMB Directive
\32\ but I believe a clear Congressional directive could
strengthen the impact of such a policy.
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\30\ The National Broadband Plan, page 83, Box 5-1.
\31\ https://www.whitehouse.gov/the-press-office/2013/06/14/
presidential-memorandum-expan
ding-americas-leadership-wireless-innovatio
\32\ OMB Circular A-11 Office of Management and Budget (OMB)
Circular No. A-11 (OMB 2013)
2. Further amendments to the Commercial Spectrum Enhancement Act
(CSEA). The CSEA \33\ encourages Federal incumbents to clear
spectrum not being put to its most productive use by
establishing a Spectrum Relocation Fund (SRF) to reimburse
Federal agencies operating on certain frequencies that have
been reallocated to non-federal use. With certain revisions,
CSEA could become an even more effective tool for relocating
Federal incumbents from reallocated spectrum and for developing
technological advances that will enable future repurposing of
Federal spectrum.
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\33\ Title II of H.R. 5419, Pub. L. No. 108-494, 118 Stat. 3986,
3991 (codified at 47 U.S.C. Sec. Sec. 151, 301,302. 303.)
The CSEA funding mechanism was first utilized in connection with
the auction of former Federal spectrum in the AWS-1 auction,
which concluded in September 2006. The auction proceeds
attributable to the former Federal spectrum amounted to $6.85
billion, while, the relocation costs totaled approximately $1
billion, a return on investment the most successful investors
on Wall Street would envy. Further, Federal incumbents received
modernized systems in other frequency bands, demonstrating that
relocation can be a win-win-win: for incumbents, for the U.S.
Treasury, and, most importantly, for the American public, which
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benefits from increased access to the airwaves.
Congress should improve the CSEA to ensure that the full range of
costs is covered to provide Federal agencies incentives and
assistance, including up-front planning, technology development
and staffing to support the relocation effort. Agencies should
be compensated for using commercial services and non-spectrum-
based operations, in addition to dedicated spectrum-based
system deployments. The SRF should be available to reimburse
incumbent Federal users who have to upgrade equipment to
accommodate other Federal users moving onto the incumbents'
band. Most importantly, Congress should allow funds to be used
to ``prove out'' new deployment concepts that have a high
likelihood of resulting in a major auction. Agencies will not
commit to major technology transitions unless they believe
their mission capability will be significantly upgraded. The
law, as currently written, makes it difficult for OMB to
authorize the release of SRF money to spectrum repurposing
projects unless the agency commits to the auction, presupposing
the outcome that the money is needed to test. This creates a
Catch-22, boxing in Federal agencies and leading to inaction
instead of providing a clear path forward to repurposing when
the economics justify the repurposing.
3. Providing Incentives for private sector bounty hunters. Taking
the CSEA idea one step further, we should incent the private
sector to come up with creative solutions for repurposing
government spectrum to create the kind of win-win-win options
that the CSEA enables. One way to do so, as suggested by my co-
panelist Commissioner Rosenworcel, is to create a prize for the
first person to use spectrum more efficiently.\34\ Another way,
more focused on repurposing government spectrum, is to give
private sector actors incentives to free up government spectrum
by giving the private actors the right to use and sell the
spectrum if they can provide the government agency with an
equivalent service. This could be accomplished in a number of
ways but one would be to auction to private enterprises the
right to negotiate with a particular government agency. While
such an auction would not likely raise much money, it could
give private sector actors incentives to develop creative ways
to more efficiently use equipment and other technological
developments to free up spectrum.
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\34\ http://www.mercurynews.com/opinion/ci_26597034/marty-cooper-
and-jessica-rosenworcel-heres-how-expand
4. A GSA for spectrum. Another approach is to treat spectrum the way
the Federal Government treats most of it real estate needs, by
centralizing the spectrum management function. Instead of each
agency handling its own real estate, the Government Services
Administration controls the overall portfolio. Similarly, the
Federal Government could put all government-used spectrum under
the control of a single administrator. That agency,
particularly if it is part of the Office of Management and
Budget, will ensure that the spectrum is used efficiently and
would be able to balance the needs of the government agencies
for spectrum and the possibility of raising revenues by leasing
spectrum to private parties.\35\ As this idea was first
proposed by my co-panelist, Tom Lehnard \36\, I will let him
explain it, but I think it is an excellent idea \37\ and urge
its adoption.
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\35\ Some might believe that NTIA is already authorized to perform
this function. Unfortunately, in my view, NTIA is structurally
hamstrung. It is a coordinator, rather than a manager, without budget
authority, of spectrum resources. I think NTIA in recent years has done
an extraordinary job of repurposing spectrum, even more extraordinary
when one understands its limited tools. One option Congress should also
consider would be to give NTIA the tools to be a strong central manager
of Federal spectrum.
\36\ https://www.techpolicyinstitute.org/files/
lenard_white_ostp_gsoc.pdf
\37\ I recognize that some have suggested the analogy with GSA has
it limits, particularly as spectrum issues go to the core mission of an
agency, which is not true of real estate decisions. See http://
fedscoop.com/federal-spectrum-reform. Still, I believe that having a
dedicated team, expert in spectrum and networks, serving the broader
Federal needs would go a long way to providing a balance of information
about options that is essential for the Federal Government to use
spectrum more efficiently.
None of these ideas are exclusive and each carries their own trade-
offs, in terms of time and execution risk. Nonetheless, all should be
on the menu of options Congress should consider in addressing the
country's long-term spectrum needs.
Wired Broadband Deployment Agenda. In addition, Congress should
understand the emerging hybrid relationship of our broadband networks.
It is a mistake to think of two distinct broadband networks, fixed and
mobile. The different network architectures interact and Wi-Fi, which
largely connects over fixed, wireline infrastructure, carries more
increasingly carries more of what we think of as ``mobile'' data
traffic.\38\ That is relevant to this hearing because the more robust
our wireline network is, the more Wi-Fi off-load can relieve the
pressure on our scarce spectrum assets.
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\38\ Juniper recently predicted that Wi-Fi networks will carry
almost 60 percent of smartphone and tablet data traffic by 2019. http:/
/www.juniperresearch.com/press/press-releases/wifi-to-carry-60pc-of-
mobile-data-traffic-by-2019?utm_source=gorkanapr&utm_medium=e-mail&utm_
campaign=dataoffload15pr2
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Last week the House Communications and Technology Subcommittee held
a hearing on ``Promoting Broadband Infrastructure Investment'' \39\ to
explore how to incent investments to increase bandwidth abundance on
the wireline side. In truth, we are not really looking for a path to
spectrum abundance; we are looking for capacity abundance, which
requires multiple strategies using multiple assets. As was clear from
that hearing, there are a number of private,\40\ federal,\41\ and local
\42\ developments accelerating next generation wireline network
deployments. Just as I hope the House Committee holds hold a hearing on
repurposing spectrum,\43\ I hope you explore the topic they addressed,
as there is an important relationship between developments on both the
wireline and wireless sides.
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\39\ http://energycommerce.house.gov/hearing/promoting-broadband-
infrastructure-investment
\40\ http://docs.house.gov/meetings/IF/IF16/20150722/103745/HHRG-
114-IF16-Wstate-Slin
gerM-20150722.pdf
\41\ The FCC approval of the AT&T/DirecTV deal includes a
significant commitment to build-out Fiber to the Premises networks.
\42\ http://www.gig-u.org/cms/assets/uploads/2012/12/Val-
NexGen_design_7.9_v2.pdf
\43\ That hearing wisely included testimony on wireless
infrastructure but did not focus on spectrum.
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Plan Beats No Plan. In closing, I would like to take this
opportunity to thank Congress for directing the writing of the National
Broadband Plan, which I was privileged to lead. It was a great and rare
gift to work with an incredibly dedicated and talented group of
Americans on a short-term basis with a mandate to think long-term. As
we look back over five years we can see a number of benefits of that
kind of process in terms of accelerating clarity about the long-terms
obstacles and opportunities we have. In looking at this critical
question of repurposing government spectrum, I urge you to consider
using a similar, though appropriately modified, process of a short,
focused, analysis that quickly leads to plan for repurposing the
government spectrum we need for bandwidth abundance and economic
leadership in the 21st Century Information Economy.
The Chairman. Thank you, Mr. Levin.
Dr. de Vries?
STATEMENT OF J. PIERRE de Vries, CO-DIRECTOR OF THE
SPECTRUM POLICY INITIATIVE, AND SENIOR ADJUNCT
FELLOW, SILICON FLATIRONS CENTER FOR LAW,
TECHNOLOGY AND ENTREPRENEURSHIP,
UNIVERSITY OF COLORADO AT BOULDER
Mr. de Vries. Chairman Thune, members of the Committee,
thank you very much for inviting me. It is an honor. It is a
pleasure to be here today.
There is no need to rehearse for this committee the boom in
wireless services and technologies and the opportunities and
the challenges we face. We have just heard some of that. And
this very hearing, if nothing else, demonstrates that you fully
grasp the scope of the situation.
I have come to believe that the promised spectrum bonanza
is at risk if government does not create the tools to respond
to the unprecedented diversity and crowding that we are seeing
in spectrum. The more we squeeze services together in
frequency, in space, and in time, the greater the cost of
unwise spectrum allocation, and the greater the risk of service
failures due to harmful interference.
The problem is not unlike that of a booming city where you
must make room for more and more kinds of traffic--pedestrians,
cars, trucks, motorbikes, buses--and, at the same time, real
estate values are booming and space is at a premium.
So this growing variety, intensity, and dynamism of
spectrum use requires that regulators make initial rules wisely
and that we find ways to shift routine spectrum management
decisions, like rule adjustments and dispute resolution, from
regulators to spectrum users.
I have recommended in my written testimony three steps to
help deliver on the promise of spectrum, and I think they
address the three stages of the spectrum lifecycle.
First, when planning new allocations, the FCC and NTIA
should move away from worst-case interference analysis and
instead use risk-informed methods that consider not only the
consequences but also the likelihood of harmful interference.
Second, when issuing operating rights, regulators should be
clearer about operators' interference rights and obligations,
and they should use harm claim thresholds to do so. The FCC
typically doesn't define rights and obligations very clearly.
And this made sense when spectrum rights were not in such great
demand, but it is not tenable, given the crowded spectrum
bazaar we now face. Harm claim thresholds are good fences, and
they will make for good neighbors.
And, third, when in the middle of spectrum disputes, any
spectrum user should have the option of taking action against
any other, either in front of an FCC judge or in a to-be-
created Federal court of spectrum claims.
A Federal court is essential because there is currently no
venue where intractable disputes between the FCC and the NTIA
can be resolved. And, ultimately, fact-based, transparent, and
timely adjudication is going to help make for efficient
spectrum management.
Now, while I am convinced that each of these three
recommendations on its own brings great benefits, I think there
are great synergies between them. To start with, bargaining and
contracting, based on harm claim thresholds, is facilitated by
a well-functioning system of adjudication. In turn,
adjudication is facilitated by clear statements of rights and
obligations, as enshrined in harm claim thresholds.
And, finally, a risk-informed rather than a worst-case
interference assessment makes for wise rights allocation, and
it makes for efficient enforcement. It gives you a quantitative
way to balance the rights and interests of interfered-with
services and interfering services.
So let me wrap up by saying that I believe Congress, as you
know, plays a vital role here, and here are three things you
might consider doing.
The first is to take a risk-informed view yourselves when
you are presented with questions of harmful interference and
avoid the temptation of lapsing into the worst-case analysis.
Second, you can encourage the FCC and the NTIA to use risk-
informed interference assessment themselves and to be more
explicit about interference rights and obligations.
And, last, you can create a court of spectrum claims as
part of the U.S. Court of Federal Claims.
Mr. Chairman, that concludes my testimony. Thank you again
for inviting me, and I look forward to your questions.
[The prepared statement of Mr. de Vries follows:]
Prepared Statement of J. Pierre de Vries, Co-Director of the Spectrum
Policy Initiative, and Senior Adjunct Fellow, Silicon Flatirons Center
for Law, Technology and Entrepreneurship, University of Colorado at
Boulder
Chairman Thune, Ranking Member Nelson and members of the Committee,
I am very pleased and honored to appear before you today to testify
about spectrum policy. My name is Pierre de Vries and I am Co-Director
of the Spectrum Policy Initiative at the Silicon Flatirons Center for
Law, Technology and Entrepreneurship at the University of Colorado in
Boulder.
I am a physicist by training and I have been working on spectrum
policy for about fifteen years, first as an executive in a software
company and a consultant, and now as a policy researcher. I am
currently a member of the FCC Technological Advisory Council.
My testimony today is based on my experience and my current
academic research interests. It reflects my views alone, and no
opinions or recommendations that I offer should be ascribed to any of
the institutions with which I am affiliated. I am testifying today
entirely on my own behalf as a private citizen.
My testimony makes the following points:
Realizing the promise of spectrum--improved public safety
and national defense, new services for citizens, profits for
companies, and revenue for the government--entails squeezing
radio services ever more closely together and shifting as much
spectrum management as is prudent from regulators to spectrum
users and the marketplace. This in turn requires new approaches
to planning, issuing and enforcing spectrum rights. I strongly
recommend the following three:
First, when making judgments about the trade-offs between
the benefit of a new service and its impact on incumbents,
spectrum managers like the FCC and NTIA should move away from
worst case interference analysis and use risk-informed
interference assessment that considers not only the
consequences but also the likelihood of harmful interference.
This will improve the analysis of harmful interference, and
lead to wiser trade-offs.
Second, when defining allocations, spectrum regulators
should provide more clarity about interference rights and
obligations, e.g., by providing harm claim thresholds--explicit
statements of the interference that systems have to tolerate
without being able to claim harmful interference. This will
help parties to optimize spectrum boundaries and resolve
disputes without relying on the government.
Third, for cases where interference disputes cannot be
resolved, parties should have the option of acting against each
other directly in front of an FCC judge, and/or in a Federal
Court of Spectrum Claims. Fact-based, transparent, and timely
adjudication will facilitate decentralized spectrum management.
Congress can help by itself taking a risk-informed view when
presented with questions of harmful interference, and not
fixating on the worst case; encouraging the FCC and NTIA to be
more explicit about interference rights and obligations; and
creating a Court of Spectrum Claims.
1 Squeezing ever more radio services together requires new regulatory
tools the planning, issuing and enforcement of rights to use
spectrum
There is no need to rehearse for this Committee the explosive
growth in wireless services and technologies like cellular data, Wi-Fi,
airborne communications, satellite broadcasting, and radar of all
sorts; the boom in the wireless economy; and the increasingly tight
packing of services in spectrum bands that has resulted. The very fact
that you are holding this hearing is testament to your recognition of
the value of spectrum to growth and prosperity, and the imperative to
rethink the spectrum policy tools we need going forward.
We are in a period of great promise as spectrum-based services
offer unprecedented new value to citizens, companies and government. We
are inventing new ways to put spectrum to its best use, including--
notably--rethinking the division of spectrum between Federal and non-
federal uses.
The promise of a spectrum bonanza is at risk, however, if the
government does not put in place the appropriate institutional tools to
respond to the unprecedented diversity and crowding in spectrum.
The demand for the benefits that radio services can bring to both
private and public operators, and to the government through auction
revenues, means squeezing together more and more applications and
devices--of increasing variety, that require ever more spectrum
capacity--into ever-more crowded spectrum. This means ever closer
packing in time, space, and frequency. To give one example along each
dimension: a cellular service operating near a NOAA earth station
during times when a weather satellite is below the horizon and not
visible; geographic exclusion zones that grow or shrink depending on
whether a mobile radar is present or absent; and eliminating frequency
guard bands between allocations by using receivers that can reject
interference from adjacent channels. Even though the accessible
frequency range for radios keeps growing, demand is growing too.
Greater proximity increases the cost of getting it wrong by flaws in
allocation (the spectrum equivalent of land use zoning) or the
assignment of spectrum use rights (like auctioned licenses, license
exemptions, and Federal frequency assignments), and increases the risk
of service breakdowns due to harmful interference.
The problem is not unlike that of a booming city that must make
room for more and more traffic of all shapes and sizes--pedestrians,
bicycles, motorbikes, cars, trucks, buses, etc.--at the same time that
real estate values are exploding and space is at a premium.
The growing variety, intensity and dynamism of spectrum use demands
that we find ways to shift the adjustment of rule changes from
regulators to operators in more cases. We need to enable private
ordering and remove the FCC from a gatekeeping role.
The challenge is particularly acute when it comes to getting the
maximum value from Federal spectrum, since these services are vital to
that national interest, are competing for access with private uses and,
in many cases, jurisdiction over spectrum bands is shared with the
Federal Communications Commission (FCC). If we want to reap the full
benefits from Federal and other spectrum, we need to create an
environment of good governance, and anticipate the problems that
success will bring.
These constraints apply regardless of whether one favors spectrum
sharing, clearing and reallocation, or some hybrid (like the AWS-3
blocks where cellular licensees have to protect weather satellite earth
stations); and regardless of whether one prefers licensed or unlicensed
allocation, or some hybrid (such as the 3.5 GHz band where unlicensed
devices will be controlled by a Spectrum Access System). These choices
are important, but do not change the underlying physics.
The challenges I've described must be addressed at all stages of
the spectrum lifecycle: planning new allocations, issuing operating
rights, and resolving interference disputes.
The three actions I recommend today correspond to these three
stages:
When planning new allocations, spectrum regulators should
move away from worst case interference analysis and adopt risk-
informed interference assessment that considers not only the
consequences but also the likelihood of harmful interference.
When issuing operating rights, regulators should provide
more clarity about interference rights and obligations by
specifying harm claim thresholds.
When resolving interference disputes, parties should have
the option of taking action against each other directly, either
in front of an FCC judge or (particularly in the case of
disputes between Federal and non-federal entities) in a Court
of Spectrum Claims.
2 When making the trade-off between the potential benefit of a new
service and its cost to incumbents, spectrum managers like the
FCC and NTIA should move away from worst case analysis and
adopt risk-informed
interference assessment
Should a spectrum manager like the FCC or the National
Telecommunications and Information Administration (NTIA) allow a new
radio service if it might diminish the value of an existing service by
introducing harmful interference? This question is at the heart of
spectrum regulation. It has traditionally been answered by engineering
analysis focused on the worst case, followed by qualitative rather than
quantitative judgments of risk. There is an alternative, however:
quantitative risk-informed
interference assessment.
Risk assessment sets out to answer three questions: What can go
wrong? How likely is it? What are the consequences? For example, when
considering whether to install a burglar alarm system one might
consider the various circumstances under which unwanted people might
enter your house; how likely each possibility might be; and what harm
might befall in each case, from pranks and petty larceny to assault.
The purpose of risk assessment is to provide quantitative evidence
to inform decisions on how to avoid and manage risks, and choose
between options. In spectrum management, the risk is that of harmful
interference, and the choice is between various possible operating
parameter values--such as values for maximum transmit power, the amount
of energy leaking into adjacent bands, and antenna directivity--
including the option of not allowing a new service at all. Applying
quantitative risk assessment to spectrum yields risk-informed
interference assessment.
Quantitative risk assessment has been used in other regulated
industries for decades but has not yet been applied to spectrum
management. A working group of the FCC's Technological Advisory Council
(TAC) examined the potential of risk-informed interference assessment
last year, and recently published a paper recommending that the FCC
begin to use this technique.\1\
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\1\ The Spectrum and Receiver Performance Working Group of the FCC
Technological Advisory Council, A Quick Introduction to Risk-Informed
Interference Assessment (April 1, 2015), http://transition.fcc.gov/
bureaus/oet/tac/tacdocs/meeting4115/Intro-to-RIA-v100.pdf. For a
summary, see J. Pierre de Vries, Risk Informed Interference Assessment
(May 12, 2015), http://www.ntia.doc.gov/files/ntia/publications/15-05-
12_csmac_risk_hand-out.pdf.
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2.1 Worst case analysis is inherently conservative, leading to over-
protection of
existing services and under-provision of new services
A worst case analysis considers the single scenario with the most
severe consequence, regardless of its likelihood. However, there are
many kinds of radio interference, and their impacts vary; for example,
a weak interfering signal leaked into an operating channel may cause
more or less harm than a strong signal in an adjacent band, depending
on the circumstances. Fixating on a single interference scenario--
typically a worst case--does not accurately represent reality and can
lead to false confidence that the resulting rules will avert harm. The
worst case may be so rare that it can be safely ignored; and a more
common but less extreme effect may be more problematic in practice than
the worst case.
A worst case approach is inherently conservative and usually
inappropriate. For example, when deciding on the amount of domestic
protection to buy, most consumers do not plan for a worst case like
home invasion. Rather, they take a view--based on the particular
threats in their neighborhood, their need for security, and costs--of
various options like deadbolts, burglar bars, intrusion alarms and
steel doors.
In the case of spectrum, worst case analysis all too easily leads
to rules that severely limit the benefits of new services while giving
incumbents more protection than they need. This approach arguably made
sense when spectrum rights were not in such great demand. It is not
tenable when high value services have to be squeezed ever-more tightly
together.\2\
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\2\ There are exceptions where a conservative approach remains
appropriate, such as services where interruption is absolutely
unacceptable and spectrum protection is the only way to guarantee it.
Even when doing a worst case analysis in such cases, however, one still
needs put various hazards in context by comparing interference risks
with non-spectrum risks like operator error, power outages, device
misconfiguration, intentional jamming, etc.
---------------------------------------------------------------------------
In engineering practice, risk is typically evaluated by considering
the combination of likelihood and consequence for multiple hazards. By
contrast, a worst case analysis focuses on a single scenario with very
severe consequences, regardless of its likelihood.
2.2 Quantitative risk assessment is used in many regulated industries
For decades, quantitative risk assessment has been used in
regulated industries from finance to food safety, including cases where
safety of life is paramount:
The U.S. Nuclear Regulatory Commission adopted quantitative
risk assessment in the Seventies. Its 1995 policy statement on
probabilistic risk assessment (PRA) encouraged greater use of
this technique to improve safety decision-making and regulatory
efficiency. In 2009 it published guidance on the use of PRA to
support licensee requests for changes to plant licenses.
The U.S. Environmental Protection Agency (EPA) uses risk
assessment to characterize the nature and magnitude of health
risks from chemical contaminants and other environmental
stressors. The EPA first issued a cancer risk assessment in
1976. A series of guidelines followed, based on a 1983 risk
assessment paradigm developed by the U.S. National Academy of
Sciences. Risk assessment practices are now well established at
the agency and are widely used for public and environmental
health protection.
The U.S. Food and Drug Administration uses risk analysis to
ensure that regulatory decisions about foods are science-based
and transparent. It has developed FDA-iRisk, a publicly
accessible online tool to estimate the health burden of
microbial and chemical hazards in food.
Risk assessment methods are also used by other U.S. Government
agencies and departments including the Office of Science and Technology
Policy and the Office of Management and Budget; the Departments of
Homeland Security, Health and Human Services, and Transport; and the
Federal Aviation Administration, NASA, and Occupational Safety & Health
Administration.
2.3 Using risk assessment in spectrum policy
The FCC TAC has proposed a three step method for analyzing radio
interference hazards: (1) make an inventory of all significant harmful
interference hazard modes; (2) define a consequence metric to
characterize the severity of hazards; (3) assess the likelihood and
consequence of each hazard mode, and aggregate them to inform decision
making.\3\
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\3\ Spectrum and Receiver Performance Working Group, supra note 1.
---------------------------------------------------------------------------
Continuing the home safety analogy, householders would first to
consider all the hazards they are exposed to, like fire, theft,
windstorms and earthquake. Second, they would put them all on same
footing with a common consequence metric such as dollars: how much it
would cost to recover from a particular eventuality. Third, they would
consider the likelihood and severity of each of these hazards, which
would depend among other things on where they lived and their desire
for personal security. Householders assess the likelihoods and
consequences intuitively when deciding whether to buy a smoke alarm or
install burglar bars; insurance companies do a quantitative analysis to
calculate the insurance premiums for various risks. In the final
aggregation step, the householder considers all these risks together
when deciding how to allocate their limited resources on insurance
policies and protective measures.
The benefits of risk-informed interference assessment include:
Providing quantitative information to policy decision-makers
who are balancing the benefits of a new service against its
adverse technical impact on incumbents, including services that
are essential to life safety and national security;
Providing a single framework for comparing different
interference scenarios and assessments, in other words,
enabling apples-to-apples comparisons of different kinds of
interference; and
Enhancing the completeness of analysis and increasing the
chances of identifying unexpected harmful interference
mechanisms.
Achieving widespread use of risk-informed interference analysis
will take time, not only to work through spectrum-specific technical
issues but also to shift the management culture from a worst case to a
risk-informed worldview. However, the sooner we start applying these
methods, the sooner citizens, industry, and the Treasury will reap the
benefits of squeezing services more tightly together. In other words:
Start small, but start soon.
Congress should encourage spectrum managers like the FCC and NTIA
to start using quantitative risk assessment in their own work; to
publish the analyses and results so that others can learn from them;
and to pilot risk-informed interference assessment in limited-impact
cases. There is no need to start with headline-grabbing initiatives; an
incremental approach will build expertise and confidence. Congress can
also set a good example by itself taking a risk-informed view when
faced with arguments about harmful interference, and not fixating on
the worst case.
3 When defining operating rules, spectrum managers should provide harm
claim thresholds--explicit limits on the interference that
systems have to tolerate without being able to claim harmful
interference
Users operate their radios within the constraints set by
regulators. These constraints are codified in operating rules--maximum
transmit power, allowed out-of-band emissions, antenna directivity, and
so on--made by the FCC and NTIA. These arrangements aim to strike a
balance between the interests of incumbents, whose operations should be
protected against harmful interference, and entering services that
could deliver significant new value such as wireless broadband, home
healthcare, and the much-vaunted Internet of Things.
Given the imperfect information available to the regulators, the
balance they strike is likely to be sub-optimal, that is, it is
unlikely to minimize costs and maximize benefits. Even if it is
perfect, the chosen balance is likely to become obsolete as
technologies, businesses and missions evolve. For example, there might
be a net social gain if the benefit of faster data services, enabled by
increased transmit power, outweighed the cost of increased interference
to an adjacent service or the cost of improving receivers to be more
impervious to such interference. Adjustments to the rules are therefore
inevitable and desirable.
At the moment, adjusting the rules requires action by the
regulators in almost all cases. This is slow and inefficient, since
regulators have limited resources and imperfect knowledge, and the
variety, intensity and dynamism of spectrum use keeps increasing. We
need to enable as much spectrum management as possible by spectrum
users themselves, individually and collectively, and minimize the FCC's
gatekeeping role.
There are a few cases where parties do successfully renegotiate
spectrum boundaries--that is, the operating parameter values such as
license area boundaries, frequency band edges, time of operation, or
limits on transmitted power that demarcate spectrum rights--typically
in situations where there is a small number of parties, ideally all in
the same business; the adjustment of cellular service boundaries is an
oft-cited example.
Sufficient clarity helps parties to an interference negotiation or
dispute to know what their rights and obligations actually are. This is
essential when parties have limited information about each other's
technology and business, as is usually the case at spectrum boundaries
or in bands shared among very different services, and/or when they do
not negotiate repeatedly.\4\ Harm claim thresholds--the explicit
statement in the operating rules that govern a service of the
interfering signal levels that it needs to tolerate without being able
to bring a harmful interference claim--provide the required clarity.\5\
They are good fences that will make for good neighbors.
---------------------------------------------------------------------------
\4\ These constraints usually do not apply to negotiations between
cellular operators--perhaps the reason why they can bargain
successfully about adjusting spectrum boundaries.
\5\ J. Pierre de Vries, Optimizing Receiver Performance Using Harm
Claim Thresholds, 37 Telecomm. Pol'y (2013), http://dx.doi.org/10.1016/
j.telpol.2013.04.008.
---------------------------------------------------------------------------
Harm claim thresholds give manufacturers and operators the
information they need to determine the best way to tolerate potentially
interfering signals in adjacent bands without the government placing
requirements on their designs. For example, vulnerable operators can
invest in high performance receivers that tolerate interference in
adjacent bands even when their own desired signals are weak; or they
can deploy more basic receivers and invest in increasing the desired
signal level by deploying more transmitters. Conversely, harm claim
thresholds allow potentially interfering operators to plan their
transmissions so that they are not vulnerable to claims of harmful
interference.
In cases where the initially assigned harm claim threshold is not
(or is no longer) economically optimal, it can be adjusted by
negotiation among affected neighbors. If a service can generate
additional value by operating above a set threshold, it will have to
share some of that value with the affected service--which is entitled
to protection against interference above the threshold--to be allowed
to breach the threshold. This is like a utility paying a property owner
for an easement that allows their pipeline or cables to cross a piece
of land; the land owner is willing to allow some encroachment on their
rights in return for a payment.
Making analogies between spectrum and property is a tricky business
since all metaphors have their limits.\6\ However, it is worth
recalling that real estate transactions depend on clear definitions of
property boundaries, and the associated rights and obligations.
Transactions will only flourish if purchasers know what they are
buying, whether it's an easement or the property itself. It is also
essential that they can be confident that their rights will be
enforced--a topic tackled later in the recommendations on adjudication.
---------------------------------------------------------------------------
\6\ J. Pierre de Vries, De-Situating spectrum: Rethinking radio
policy using non-spatial metaphors, 3rd IEEE Symposium on New Frontiers
in Dynamic Spectrum Access Networks (2008), http://dx.doi.org/10.1109/
dyspan.2008.63.
---------------------------------------------------------------------------
Setting a harm claim threshold thus has a variety of benefits:
It reduces uncertainty about the rights and obligations
regarding interference for both interfering and affected
parties, allowing them to plan and invest with more confidence.
It shifts decisions about system design, including receiver
performance, away from government to where it belongs: with
manufacturers and operators.
It allows parties to adjust operating rights and spectrum
boundaries among themselves, which reduces rent seeking and the
load on regulators; it facilitates such negotiations by
providing an unequivocal starting point, unlike the current
obligation not to cause harmful interference--which lacks a
quantitative definition.
The implementation details of a harm claim threshold approach have
been discussed elsewhere.\7\ I will note just a few key points here.
---------------------------------------------------------------------------
\7\ Receiver & Spectrum Working Group, FCC Tech. Advisory Couns.,
Inference Limits Policy: The use of Harm Claim Thresholds to improve
the interface tolerance of wireless systems (2013), http://
transition.fcc.gov/bureaus/oet/tac/tacdocs/
WhitePaperTACInterferenceLimitsv1.0.pdf.
Different allocations can have different thresholds; the
approach is not one-size-fits-all. An allocation's harm claim
threshold can be customized--for example, lower interference
thresholds to provide more protection for life-safety services.
It can also be used to allocate costs in ways that best serve
the public interest, for example by imposing interference
mitigation requirements on the party that can most easily meet
---------------------------------------------------------------------------
them.
A harm claim threshold is not a receiver performance
specification. It merely describes the interference conditions
an affected system needs to tolerate without claiming harm. It
does not prescribe how a receiver should perform in the
presence of such signal levels, but relies on the marketplace
to find the best solution.
Harm claim thresholds may not be sufficient in cases where
receivers are not controlled by a license holder (such as
television or GPS), for life-safety systems like aviation, or
for unlicensed devices. Additional measures may be required to
ensure that receivers operate adequately.
The use of harm claim thresholds will also facilitate the
enforcement of spectrum rights, the subject of the next recommendation.
4 More adjudication options are required for cases when interference
disputes cannot be resolved, including the option for parties
to act against each other directly in front of an FCC judge,
and/or in a Court of Spectrum Claims
The current regime for resolving interference disputes limits the
value of spectrum use because it is too often not fact-based,
transparent, or timely. The problem is particularly pressing where
Federal and private systems are squeezed tightly together because it is
not clear where intractable disputes between the parties will be
resolved.\8\
---------------------------------------------------------------------------
\8\ Close coexistence will not just occur in so-called shared
bands, but also as a result of clearing and reallocating Federal bands.
Given the universal need to squeeze services more tightly together, the
result in both cases will be narrow frequency guard bands and small
exclusion zones.
---------------------------------------------------------------------------
Conflict between neighbors about spectrum use is inevitable, and
will become more prevalent as more users and uses are squeezed
together. While increasing numbers of disputes will be resolved by
negotiation--especially so if my first two recommendations are
adopted--adjudication is a necessary backstop; it provides a framework
and incentive for negotiation, and a means of resolving intractable
disagreements. As is often the case in civil disputes, the mere threat
of litigation and opportunity for document discovery can aid the
parties in moving to a settlement.
The FCC's adjudication process is ad hoc and unpredictable. Many
interference disputes--since records are generally not public, I do not
know how many--are resolved by field agents of the Enforcement Bureau.
However, the agency's capabilities, both in terms of personnel and
equipment, are limited. When a conflict cannot be resolved in the
field, FCC enforcement is often delayed or addressed through notice-
and-comment rulemaking when adjudication would have been more
appropriate and efficient.
The shared jurisdiction between the FCC and NTIA means that there
is currently no venue where intractable disputes between them can be
resolved; the FCC is responsible for managing non-federal, including
commercial licensees, and the NTIA is responsible for managing Federal
authorizations.\9\ Since a substantial collection of frequency bands is
already shared between Federal and civil users, jurisdictional
disagreements occasionally arise between FCC and NTIA.\10\ It is an
open question how intractable disputes between Federal and non-federal
users will be resolved. Coordination between the NTIA and FCC is the
only currently available mechanism; this will fail when they themselves
disagree.
---------------------------------------------------------------------------
\9\ The NTIA is part of the Executive branch, while the FCC is an
independent regulatory authority whose mandate and authority derives
from Congress and the Communications Act of 1934.
\10\ Executive Office of the President, President's Counsel of
Advisors on Science and Technology, Report to the President Realizing
the Full Potential of Government-Held Spectrum to Spur Economic Growth
(July 2012), http://www.whitehouse.gov/sites/default/files/microsites/
ostp/pcast_spectrum_report_final_july_20_2012.pdf2.
---------------------------------------------------------------------------
In collaboration with Dean Weiser of the University of Colorado Law
School, I have proposed an adjudication regime that moves from the
current ad hoc, politically charged, and notice-and-comment driven
process to a more-fact-based process of hearings before specialized
judges.\11\ I will now describe the two components: more intensive use
of judges by the FCC, and the establishment of a Federal Court of
Spectrum Claims. The measures we recommend address non-urgent harmful
interference cases, and not those that pose an immediate threat to the
safety of life or property.
---------------------------------------------------------------------------
\11\ J. Pierre de Vries & Phillip J. Weiser, The Hamilton Project,
Unlocking Spectrum Value through Improved Allocation, Assignment, and
Adjudication of Spectrum Rights, (March 2014), http://
www.hamiltonproject.org/files/downloads_and_links/THP_DeVries-
WeiserDiscPaper
.pdf. For a full set of related resources see, Hamilton Project, http:/
/www.hamiltonproject.org/papers/
unlocking_spectrum_value_through_improved_allocation_assignment/ (last
visited July 20, 2015).
---------------------------------------------------------------------------
4.1 Using FCC judges to resolve disputes between parties under FCC
jurisdiction
First, regarding the FCC, the development of a specialized
interference adjudication function would involve building or co-opting
a capacity it does not currently have. One solution would be to second
technical advisers to the existing Office of Administrative Law Judges
(ALJs) from other parts of the agency; another is to appoint
Administrative Judges.\12\
---------------------------------------------------------------------------
\12\ The key difference is that Administrative Judges are not a
formal part of the Federal Government-wide system for selecting such
officials. Since the FCC does not have many ALJs on staff (only one, at
present) and those in place may lack the specialized knowledge that
would enable more effective adjudication in this area, using
Administrative Judges may be an appealing alternative.
---------------------------------------------------------------------------
In order to advance this proposal, the Samuelson-Glushko Technology
Law & Policy Clinic at the University of Colorado Law School and I
requested that the Commission initiate a rulemaking to provide a fact-
based, transparent, and timely adjudication process for spectrum
interference disputes.\13\ We proposed that the Commission should:
---------------------------------------------------------------------------
\13\ Petition: Samuelson-Glushko Tech. Law & Pol'y Clinic and J.
Pierre de Vries, Petition for Rulemaking: Spectrum Interference Dispute
Resolution (May 8, 2015), http://apps.fcc.gov/ecfs/comment/
view;ECFSSESSION=qTgSVtcPYBypk93Q6ryZQXghc2sKTVJ5NQnRLzGHLQV216sF
nT8Q!-1954627099!-774309124?id=60001031161. Notice: Fed. Commc'n
Comm'n, Consumer and Gov't Aff. Bureau Reference Info. Center Petition
for Rulemaking Filed, Proceeding RM-11750, Report No. 3023 (June 11,
2015), http://apps.fcc.gov/ecfs/comment/view;ECFSSESSION=
qTgSVtcPYBypk93Q6ryZQXghc2sKTVJ5NQnRLzGHLQV216sFnT8Q!-1954627099!-
774309124?
id=60001060847.
Permit a private party to file a spectrum interference
complaint against another private party directly with the
Office of Administrative Law Judges, thereby providing
operators with fact-based, transparent, and timely process to
---------------------------------------------------------------------------
resolve harmful interference disputes;
Modify existing rules to add deadlines to the adjudication
process; and
Make resources available as and where needed to ensure the
adjudication process is fact-based and timely; for example, by
providing support staff, hiring or loaning additional ALJs, and
obtaining spectrum engineering advice from inside or outside
the agency.
FCC adjudication would not be appropriate in all cases. Cases that
fall within its scope are those where appropriate FCC rules already
exist; where both parties are under the FCC's jurisdiction; and where
one private party claims that another private party is causing harmful
interference. The ALJ option would be ideal for small bilateral
disputes, while rulemaking by the Commission would be more appropriate
for multi-party disputes, and single-party cases that highlight broader
problems.
The ALJ option would not be appropriate for disputes between the
government and private parties--the situation I turn to next.
4.2 Creating a Court of Spectrum Claims to resolve disputes between
Federal and non-federal users
Even with the FCC acting as an expert adjudicator, Dean Weiser and
I proposed that Congress establish a Court of Spectrum Claims that
could hear cases in this field. Such a body would be housed within the
existing United States Court of Federal Claims, the court that hears
cases involving claims against the U.S. Government. It would consist of
specialized decision makers who could hear cases regarding spectrum
matters.
Such a venue is essential if Congress wants to see more delegated,
dynamic negotiation and reassignment of spectrum rights between Federal
and private users. Federal and non-federal users will be operating in
ever-closer proximity regardless of the spectrum management regime:
both band sharing and band reallocation will lead to ever-tighter
packing of radio services in time, space and frequency. Consequently,
spectrum disputes between Federal on non-federal users become ever more
likely.
Mutually beneficial arrangements between parties are most likely if
both sides know their rights and are confident claims will be enforced.
A government agency or department would be loath to give up control and
allow sharing if it cannot depend on reliable enforcement--and that
might be doubly true of a company buying spectrum access from the
government in an auction, or by contract with a Federal entity. Most
contract disputes do not go to court, but the backstop of judicial
recourse gives parties the confidence they need to enter into a
contract. The Court of Federal Claims provides this backstop for
entities contracting with the Federal Government; a division for
spectrum claims would fulfill that function in the specialized case of
federal/non-federal spectrum cooperation.
The CSMAC Enforcement Subcommittee addressed the question of how
spectrum sharing arrangements between Federal and non-federal operators
could be enforced, and by whom.\14\ Even if implemented, this industry
recommendation--that the NTIA and FCC enact parallel dispute resolution
tools, and that a joint NTIA/FCC coordination committee would oversee
federal/non-federal sharing--is not sufficient.\15\ It promises to be a
good mechanism for avoiding disputes and facilitating their resolution,
assuming good will on all sides. However, it is not clear that the NTIA
has the ability to order a recalcitrant agency or department to turn
off an interfering device or system, and the CSMAC recommendation does
not address how a disagreement between the NTIA and FCC themselves
would be resolved.\16\ For this, a backstop adjudicator with authority
over both Federal and non-federal operation--such as a Court of
Spectrum Claims--is required.
---------------------------------------------------------------------------
\14\ Commerce Spectrum Management Advisory Committee, NTIA,
Enforcement Subcommittee Report (May 12, 2015), http://
www.ntia.doc.gov/files/ntia/publications/csmac-enforcement_
sc_responses_050415.pdf.
\15\ The parallel dispute resolution approach contemplates that
Federal users could rely on the FCC's authority over non-federal
spectrum users to enforce sharing arrangements, and non-federal
entities could rely on the NTIA to take necessary actions against
Federal users.
\16\ Neither the CSMAC recommendation nor this proposal addresses
interference events that are immediate threat to life and property.
---------------------------------------------------------------------------
Thus, even if the FCC were operating effectively as an adjudicator
(and the establishment of such a Federal body would greatly enhance
that likelihood), the FCC is not set up to handle disputes involving
the Federal Government as a party. The establishment of a specialized
court outside of the FCC would enable the U.S. Government to sue or be
sued when appropriate.
Dean Weiser and I also recommend that the Court of Spectrum Claims
be allowed to hear disputes between two private parties, ending the
FCC's monopoly on hearing such claims and providing a choice of forum.
This Court would provide an alternative and a check against the FCC's
possible failure to operate effectively in this area. In all events,
appeals from either the FCC or the Court of Spectrum Claims would
proceed to the Court of Appeals for the District of Columbia to promote
uniformity of decisions in both forums.
In summary, courts with expertise in spectrum policy, either in the
FCC and/or in a newly created Court of Spectrum Claims, can transform
adjudication from the current ad hoc and sometimes politically charged
process to a more fact-based, transparent, and timely procedure that
could resolve spectrum-related disputes more expeditiously.
5 The three initiatives complement each other
While each of the three proposals outlined here--using risk-
informed interference assessment, defining harm claim thresholds, and
allowing parties to resolve interference disputes before a judge--will
bring noteworthy benefits on their own, there are significant synergies
between them.
Harm claim thresholds realize their full promise when parties can
use them to (re)negotiate spectrum boundaries that are closer to the
optimum without the cost and delay associated with relying upon
spectrum regulators.
Such bargaining and contracting is facilitated by a well-
functioning system of dispute resolution that includes the backstop of
adjudication. If a dispute arose--for example, about whether and how
entitlements were breached--the parties could resolve the matter
through negotiation, mediation, or formal adjudication either at the
FCC or in the Court of Spectrum Claims.
In its turn, adjudication will be facilitated by objective criteria
for establishing whether harmful interference has occurred. This will
be aided by clear statements of the rights and obligations regarding
interference protection, e.g., through harm claim thresholds.
For its part, risk-informed interference assessment supports both
efficient allocation (including the setting of harm claim thresholds)
and efficient rights enforcement (including inter-party adjudication)
by providing an objective, flexible tool for balancing the interests of
interfering and affected services.
6 Action by Congress can lay the foundation for continued growth in
spectrum use
If the Nation is to reap the full value of Federal and other
spectrum, Congress needs to create the tools of good governance and
anticipate the problems that success will bring.
Action by Congress can unlock the potential of Federal and non-
federal spectrum and lay the groundwork for continued growth in all
three stages of the spectrum lifecycle: planning new allocations,
issuing operating rights, and resolving interference disputes.
Regarding the planning of new allocations, Congress should
avoid the temptation of worst case analysis and nightmare
scenarios, and instead itself make--and encourage the FCC and
NTIA to use--risk-informed interference assessments that
consider both the likelihood and consequences of interference
harms.
Regarding the issuing of operating rights, Congress should
support and encourage the FCC and NTIA to bring greater clarity
to interference rights and obligations, such as through the use
of harm claim thresholds.
Regarding the resolution of interference disputes, Congress
should put in place any instruments that are needed to allow
parties, both Federal and non-federal, to take action against
each other directly in front of a judge, including by the
creation of a Court of Spectrum Claims within the existing
United States Court of Federal Claims.
Mr. Chairman that concludes my testimony. Once again, I want to
express my appreciation for being invited to testify here today on this
important topic. I would be happy to respond to any questions that you
might have.
The Chairman. Thank you, Dr. de Vries.
Mr. Lenard--Dr. Lenard, I should say.
STATEMENT OF THOMAS M. LENARD, Ph.D., PRESIDENT AND SENIOR
FELLOW, TECHNOLOGY POLICY INSTITUTE
Mr. Lenard. Thank you, Chairman Thune, Ranking Member
Nelson, and members of the Committee. I appreciate the
opportunity to testify before you today.
I would like to stress two points today in my testimony.
First, while the broadcast auction is of course extremely
important, I think attention should also be paid to another
category of spectrum: the mobile satellite service, or MSS,
spectrum. And, second, the all-important long-run task of
freeing up more government spectrum should be addressed with a
combination of administrative, budgetary, and market
mechanisms.
The MSS spectrum, because it is already licensed and
doesn't need to be auctioned, could be deployed for mobile
broadband more quickly than other spectrum blocks. The
inability to efficiently utilize the MSS spectrum results from
a history of regulatory failures, mostly recently involving the
LightSquared spectrum. Not approving the LightSquared spectrum
for mobile broadband would effectively transfer a large block
of spectrum from the commercial sector back to the Government--
exactly the opposite of what we are trying to achieve.
The issue of government spectrum has been a challenging one
for policymakers for some time now. Most inputs used by
government agencies are subject to annual budgetary allocations
and must be purchased in a market. In contrast, spectrum was
awarded by the Department of Commerce and now is effectively
owned by those agencies. From the agencies' perspective, the
spectrum is free. Moreover, even if government agencies could
sell their spectrum, any benefit might be offset by budget
reallocations that would net out the agencies' gain.
From an agency's perspective, a better strategy might well
be to make some use of the spectrum even if that use is of low
value or even to let the resource lie idle and wait for some
future use, since doing so is costless.
A TPI study I co-authored with Professor Lawrence White of
the NYU Stern School of Business recommends a combination of
administrative, budgetary, and market mechanisms to free up
government spectrum.
On the administrative/budgetary side, the NTIA should
prepare an annual report that reports data on the government
spectrum inventory, the opportunity costs of the various bands,
and the likely sources of surplus spectrum.
Most importantly, OMB should become a skeptical auditor of
government-held spectrum--its use and its opportunity costs. As
part of its annual budget process, OMB should require
government agencies to provide an accounting of their spectrum.
OMB should have a heightened awareness of spectrum as a
scarce resource. The NTIA estimates of opportunity costs would
be helpful in this regard and should routinely search for
underutilized spectrum that could be auctioned by the FCC.
Over the long run, the Federal Government should pursue
incentive pricing mechanisms that force government agencies to
internalize the costs of the spectrum they use. We recommend
considering a model based on the GSA, which leases office space
to government agencies at market-based rents. These rental
payments provide an incentive for government agencies to
economize on space.
Following the GSA model, the Federal Government should
create what we call a government spectrum ownership
corporation, or GSOC. The GSOC would lease spectrum to user
agencies at rental rates based on estimates of the relevant
opportunity costs, with the net proceeds going to the Treasury.
In the first year, OMB would add to each agency's budget a
sum just equal to the rental payment, so the first year's
financial transactions would be a wash for all agencies as well
as for the Treasury. In subsequent years, spectrum would be
treated the same as any other budget item. Thus, the normal
budgetary negotiation process would recognize the opportunity
costs of spectrum in the same ways that the opportunity costs
of an agency's use of other resources are recognized.
The goal would be that such a system would, like the GSA
framework, provide sensible incentives for agencies to
economize on spectrum use. The GSOC might then have a surplus
of spectrum that could be sold or leased to the private sector.
The GSOC could also accumulate a fund, again, similar to the
GSA, that could be used to purchase additional spectrum if
needed for leasing to government agencies.
Thank you again for the opportunity to present my views,
and I look forward to answering your questions.
[The prepared statement of Mr. Lenard follows:]
Prepared Statement of Thomas M. Lenard, Ph.D., President and Senior
Fellow, Technology Policy Institute
Chairman Thune, Ranking Member Nelson and Members of the Committee.
My name is Thomas Lenard, and I am President and Senior Fellow at the
Technology Policy Institute, a non-profit, non-partisan think tank that
focuses on the economics of innovation, technological change, and
related regulation in the United States and around the world. I
appreciate the opportunity to testify before you today on wireless
broadband and the future of spectrum policy.
The growth of wireless broadband is a bright spot in the U.S.
economy, but it depends on the availability of spectrum and in
particular flexibly licensed spectrum rights. Freeing up spectrum from
other uses would allow greater expansion of wireless broadband,
bringing substantial gains for U.S. consumers, businesses, and the
Federal treasury. A recent study by the Brattle Group, using the
Federal Communications Commission's methodology, estimates that by 2019
the U.S. will need more than 350 additional MHz of licensed spectrum to
support projected commercial mobile wireless demand--50 percent more
than is currently available.\1\
---------------------------------------------------------------------------
\1\ Coleman Bazelon and Giula McHenry, ``Substantial Licensed
Spectrum Deficit (2015-2019): Updating the FCC's Data Demand
Projections,'' the Brattle Group, prepared for CTIA--the Wireless
Association, June 23, 2015.
---------------------------------------------------------------------------
Despite significant progress toward a more market-based approach to
the allocation of spectrum, much of the most valuable spectrum remains
unavailable to the private sector or locked into inefficient uses under
FCC license terms. The latter group includes allocations to broadcast
TV and mobile satellite services (MSS). Even more spectrum is
unavailable to the market because it is occupied by the Federal
Government.
In the short run, the largest block of available spectrum--indeed,
the only significant block of spectrum that is already licensed but not
deployed--is the Mobile Satellite Service (MSS) spectrum. Beginning in
1986, the FCC allocated over 150 MHz of prime spectrum to MSS--mobile
``satellite phone'' service--for which demand has been extremely
limited. Because it is already licensed and doesn't need to be
auctioned, the MSS spectrum could be deployed for mobile broadband more
quickly than other spectrum blocks. The National Broadband Plan
initially counted 90 MHz of MSS spectrum, mostly controlled by Dish and
LightSquared, toward its 2015 goal of an additional 300 MHz for
wireless broadband; but this estimate has been cut by more than half
due to exclusion of the LightSquared spectrum. The failure to utilize
the LightSquared spectrum represents a costly regulatory failure.
Interference disputes between LightSquared and users of adjacent
spectrum are a complex issue, but ultimately the inability to resolve
them stems from the absence of a flexibly licensed regime--in essence,
the lack of clearly defined quasi-property rights and the absence of a
market mechanism for buying and selling those rights. This has made it
difficult for the occupants of adjacent bands to strike a mutually
beneficial deal that would have enhanced the value of the spectrum and
benefited consumers. The FCC should do what is needed to rapidly return
as much as possible of the LightSquared spectrum to the spectrum
pipeline.\2\
---------------------------------------------------------------------------
\2\ For a discussion of this issue, see Thomas M. Lenard and
Lawrence J. White, '' The Spectrum Crunch, MSS Spectrum and
LightSquared,'' Technology Policy Institute, April 2013; and Thomas
Lenard and Lawrence White, ``Broadcast Spectrum is not the only
Spectrum Available, The Hill, July 23, 2013.
---------------------------------------------------------------------------
The broadcast TV spectrum is the other major private-sector
category that under current FCC license terms can't be used for
wireless broadband. At the conclusion of the DTV transition in 2009,
294 MHz of prime spectrum remained allocated to broadcast TV. The FCC
projects the upcoming incentive auction will release 120 MHz of this
broadcast spectrum for mobile broadband uses, but many consider this
projection optimistic. Moreover, U.S. experience indicates that large-
scale reallocations of spectrum such as the proposed incentive auction
have taken 6-13 years to complete. Indeed, it has already been five
years since the National Broadband Plan proposed the incentive auction
and three years since Congress authorized the FCC to do it.
Potentially the largest source of additional spectrum is the
Federal Government, which has ``sole or primary use of between 60-70
percent of the spectrum suitable for wireless broadband.'' \3\ My
testimony recommends both administrative/budgetary and market
mechanisms for freeing spectrum from these bands based on a TPI study I
co-authored with Professor Lawrence White of the NYU Stern School of
Business.\4\
---------------------------------------------------------------------------
\3\ CTIA, ``From Proposal to Deployment: The History of Spectrum
Allocation Timelines,'' p. 3, available at http://www.ctia.org/docs/
default-source/default-document-library/072015-spectrum-timelines-
white-paper.pdf.
\4\ Much of this testimony is drawn from Thomas M. Lenard, Lawrence
J. White, and James L. Riso, ``Increasing Spectrum for Broadband: What
Are the Options?'' Technology Policy Institute, February 2010.
---------------------------------------------------------------------------
Government Spectrum Use and Opportunity Costs
There is a widespread consensus that spectrum in government hands
is likely not being used efficiently and that some--perhaps a
significant amount--could be reallocated to more efficient private
uses.\5\ However, efforts to determine the extent of this ``surplus''
and then to devise a method of freeing it from government hands
confront a dilemma: the absence of a market mechanism, or even a
budgetary mechanism, that could encourage this reallocation.
---------------------------------------------------------------------------
\5\ This is implied by the broadly popular Radio Spectrum Inventory
Act, which is premised on the ability to ``promote the efficient use''
of spectrum. In 1996 former Senator Larry Pressler recommended that the
Federal Government reallocate 25 percent of its holdings below 5 GHz
(see https://www.policyarchive.org/bitstream/handle/10207/8335/bg-
1085.pdf, p. 8). For additional references on why government users
might be expected to use spectrum inefficiently see Mark M. Bykowsky
and Michael J. Marcus, ``Facilitating Spectrum Management Reform via
Callable/Interruptible Spectrum,'' presented at TPRC 2002, available at
http://intel.si
.umich.edu/tprc/papers/2002/147/SpectrumMgmtReform.pdf; Kenneth R.
Carter and J. Scott Marcus, ``Improving the Effectiveness and
Efficiency of Spectrum Use by the Public Sector: Lessons from Europe,''
presented at TPRC 2009, available at http://papers.ssrn.com/sol3/
papers.cfm?abstract_id=1488852; and Martin Cave and Adele Morris,
``Getting the Best out of Public Sector Spectrum,'' presented at TPRC
2005, available at http://web.si.umich.edu/tprc/papers/2005/497/
Morris%20Cave%20public%20sector%20spectrum%209%209%202005.pdf
---------------------------------------------------------------------------
First, government agencies do not operate in a market context, and
their goal is not to maximize profits. Consequently, the ``opportunity
cost'' paradigm that naturally applies in a market-oriented context is
often neglected within government agencies.
Second, unlike most of the inputs that are used by a government
agency--e.g., personnel, materials, vehicles and equipment, real
estate--which are subject to annual budgetary allocations and must be
purchased in a market, spectrum under a government agency's control was
awarded by the Department of Commerce and now is effectively ``owned''
by those agencies. From a government agency's perspective (i.e., the
perspective of the agency's senior management), the spectrum is a free
resource, for which it pays no rent or upkeep costs. The perceived
opportunity costs of spectrum are small at best, since there is no
market for this spectrum because the agencies are not allowed to sell
it.
Further, even if there were an active market for government-held
spectrum (and hence readily apparent opportunity costs), and even if a
government agency were interested in exchanging spectrum for revenues
that could be used to achieve agency objectives, the agency could
nevertheless be largely indifferent to those opportunity costs for the
following reason: If an agency were to sell its spectrum, the agency's
net gain might be far smaller than the selling price--or even zero.
That result could occur due to budget reallocations that would net out
the agency's gain. From an agency's perspective, a better strategy
might well be to make some use of the spectrum under its control (even
if that use is of low value, as judged by opportunity costs), or even
to let the resource lie idle and wait for some future use, since doing
so is costless.
As an analogy, one might think of real estate that, at some time in
the past, had come under a government agency's ownership and control.
If that real estate has little or no upkeep costs, then from the
agency's perspective it is a free resource. The opportunity costs of
the real estate may be of little interest to the agency, for the
budgetary recoupment reasons mentioned above. The agency may put the
real estate to low-value uses, or even keep it idle. When challenged by
higher governmental authority, an agency's narrow interests will be
best served by claiming that the real estate is vital to the agency's
current and future functions.
There are limits, of course, to the real estate analogy. As
compared with spectrum, the opportunity costs of an agency's real
estate holdings are likely to be much clearer. Physical inspection of
the property to determine whether the agency is making reasonable use
of it (in light of its opportunity costs) is surely easier as well.
Accordingly, the task of determining the extent of surplus spectrum
in government hands and reallocating it to wireless broadband use is
more difficult than if the resource were real estate. Further, implicit
in this discussion is the inability to bring the power of markets as a
force for assisting in the reallocation. As a consequence, the
effectiveness of market or quasi-market mechanisms in identifying and
freeing up government spectrum might be limited--at least in the short
run.
Spectrum Sharing
Spectrum sharing has become the preferred means of freeing up
government spectrum. The 2012 report by the President's Council of
Advisors on Science and Technology (PCAST) concluded that ``the
traditional practice of clearing government-held spectrum of Federal
users and auctioning it for commercial use is not sustainable'' and
recommended a policy of ``share[ing] underutilized spectrum to the
maximum extent consistent with the Federal mission.'' \6\ But this task
is also hindered by the lack of market forces.
---------------------------------------------------------------------------
\6\ ``Realizing the Full Potential of Government-Held Spectrum to
Spur Economic Growth,'' President's Council of Advisors on Science and
Technology, July 2012.
---------------------------------------------------------------------------
Establishing a system in which Federal agencies face the
opportunity costs of the spectrum they use would greatly facilitate
efficient sharing of government spectrum. When faced with the
opportunity costs, the government user may decide to make investments
or otherwise alter the way it uses the spectrum so as to increase
spectrum availability and/or permit less restrictive conditions for
private-sector users. This increases the combined social value (to
government and private users) of the spectrum. Thus, it is important
that Federal users internalize the costs of their spectrum use.
For government agencies that have only an occasional need for
spectrum--e.g., for emergencies--consideration should be given to
purchasing an ``option'' to over-ride/displace some private spectrum
users at such times (rather than owning the spectrum and letting it sit
idle or severely underused most of the time). This would be an
innovative way of ``sharing'' spectrum. The government agency could
hold a procurement auction. Potential sellers of this (call) option for
``when needed'' spectrum would presumably be those who could economize
or dispense with their spectrum usage during such emergency periods
(rather than, for example, wireless broadband providers whose networks
likely would also be severely stressed during such emergencies).
Administrative/Budgetary Mechanisms
Strengthening administrative and budgetary mechanisms holds the
greatest promise for freeing up government-held spectrum for the short
run and would complement the market mechanism discussed subsequently. I
recommend the following:
1. The National Telecommunications and Information Administration
(NTIA) should prepare an annual report that presents data on
the government's spectrum inventory, the opportunity costs of
the various bands, and the likely sources of surplus spectrum.
The data on surplus positions should take into account changes
in usage and technology.
2. The Office of Management and Budget (OMB), as part of its annual
budget process, should require any U.S. Government agency that
has a spectrum allocation to provide an annual accounting of
that agency's use of that spectrum.\7\ OMB should have a
heightened awareness of spectrum as a scarce resource (the NTIA
estimations of opportunity costs would help in this awareness)
and should routinely search for under-utilized spectrum that
could be auctioned by the FCC.\8\ In essence, OMB should become
a skeptical auditor of government-held spectrum, its use, and
its opportunity costs.
---------------------------------------------------------------------------
\7\ A partial step in this direction is included in OMB Circular A-
11, which provides guidance on the preparation of the budget. Section
31.12 instructs agencies to consider the value of radio spectrum
required for telecommunications, radars, and related systems, to the
extent practical, in economic analyses of alternative systems/
solutions. https://www.whitehouse.gov/sites/default/files/omb/assets/
a11_current_year/s31.pdf
\8\ OMB should also be encouraging agencies to share the use of
under-utilized spectrum, again encouraging greater efficiency.
3. OMB should encourage (and provide the funding for) agencies to
create employee incentive plans that would provide rewards
(including cash awards) to agency employees for devising ways
for their agency to economize on its use of spectrum. The
spirit of these awards would be consistent with other
government awards that encourage employees to take special
efforts to utilize resources efficiently and to provide
outstanding performance.
Market Mechanisms: A Government Spectrum Ownership Corporation (GSOC)
Over the longer run, the Federal Government should pursue incentive
pricing mechanisms that force government agencies to internalize the
costs of the spectrum they use.
One model to consider is based on the market-oriented rental rates
that agencies are charged when they lease space in buildings that are
owned (or leased) by the General Services Administration (GSA). The
GSA's Federal Buildings Fund (FBF) provides recognition of the
opportunity costs of those buildings.\9\ The government agencies make
rental payments to GSA, which can use the money to acquire additional
property if necessary. These rental payments provide an incentive for
government agencies to economize on space.
---------------------------------------------------------------------------
\9\ As another analogy, government agencies pay postal rates to the
U.S. Postal Service (USPS) when the agencies make hard-copy mailings
through the USPS.
---------------------------------------------------------------------------
Suppose, then, that all U.S. Government-used spectrum was ``owned''
by a central government agency and leased to government users. In this
case, the idea that the spectrum-using agencies should pay rental fees
to the central agency--and that those rental fees should represent
something approximating the opportunity costs of the spectrum
holdings--would not be much different from the practice that government
agencies pay rent for their use of the GSA's buildings.
Accordingly, the Federal Government should create a ``Government
Spectrum Ownership Corporation,'' or GSOC. The GSOC would take
possession of all government-held spectrum, with the existing user
agencies granted annual leases (that are perpetually renewable at the
option of the agency) at annual rental rates that are determined by the
GSOC, based on its estimates of the relevant opportunity costs. The
GSOC would forward its net proceeds to the Treasury. In the first year
OMB would add to each using agency's budget a sum that is just equal to
the rental payment, so the first year's financial transactions would be
a ``wash'' for all agencies (and for the Treasury).
In subsequent years the agencies' budgets would start from the base
that included the initial assignments and rental charges; but the GSOC
would change the rental rates in light of updated information about
opportunity costs. The agencies and OMB would then negotiate (as they
do now) over resource usage and budget allocations; but, although the
agency's budget would take into account its spectrum rental costs,
there need not (and should not) be a one-to-one adjustment in an
agency's budget allocation in relation to any changes in its spectrum
rental costs. Instead, the agency's budget allocation should reflect
its overall resource needs in light of its overall mission and
operations. Thus, this ``normal'' budgetary negotiation process would
recognize the opportunity costs of spectrum in the same ways that the
opportunity costs of an agency's use of other resources are recognized.
The goal would be that such a system would (like the GSA framework)
provide sensible incentives for agencies to economize on spectrum use.
The GSOC might then have a surplus of spectrum that it could sell or
lease to the private sector (or turn over to the FCC for auctions). The
GSOC could also accumulate a fund (again, similar to GSA) that could be
used to purchase additional spectrum if needed for leasing to
government agencies.
Conclusion
There is a significant opportunity for large economic gains for the
U.S. economy from expanding wireless broadband by freeing up under-used
government spectrum and reallocating broadcast and MSS spectrum. Public
policy should take advantage of that opportunity.
Thank you for the opportunity to present my views and I look
forward to answering your questions.
The Chairman. Thank you, Dr. Lenard.
And we now have been joined by the Ranking Member, the
Senator from Florida, Senator Nelson. I want to recognize him
for a statement, and then we will get into some questions.
STATEMENT OF HON. BILL NELSON,
U.S. SENATOR FROM FLORIDA
Senator Nelson. Mr. Chairman, before I make the statement,
I want you to know and the members of the Committee how much I
appreciate the well wishes and support in the course of the
last couple of weeks. For that kind of outpouring, indeed it is
humbling to me.
And I want to thank you for having this hearing on this
important topic of spectrum.
It is true there are more wireless devices in this country
than there are people, and the number is going to continue to
grow. And as this demand for these wireless devices continues
to increase, so, too, is going to be the necessity of
dedicating more spectrum to help power this technology. And,
while businesses are clamoring for more and more spectrum, of
course we have our government reliance on a certain amount of
spectrum, and that is going to become even greater.
So, as we begin looking to the future of spectrum policy, I
believe that we have to approach this from a balanced position
between licensed spectrum--the frequencies used to transmit
radio, TV, and broadband signals--and the unlicensed spectrum,
which supports technologies such as Wi-Fi.
And since spectrum is a finite public resource, we must
also ask the commercial and government spectrum holders to
become more efficient users. We should reallocate spectrum when
we can, and we should fully embrace spectrum-sharing when we
cannot allocate the spectrum.
We have the ability to meet future spectrum demands for
both private-sector and government users. However, it is
critical that the Department of Defense, NASA, the FAA, and
other agencies have access to the necessary spectrum and
updated technologies to meet their future critical mission
needs.
And so, as we look to the future, it is important to
recognize that spectrum legislation is not only necessary but
it has traditionally been bipartisan. And there is no better
evidence of that than the 2012 Act, which was generated in this
committee with the leadership of Senator Rockefellers and
Hutchison. And this committee should exert that same degree of
leadership and consensus in addressing this future spectrum
policy.
And I want to say how pleased I am that FCC Commissioner
Rosenworcel is here today. And I want to thank her for her
leadership on spectrum policy.
And we are the beneficiaries of your thoughtful approach to
this.
Mr. Chairman, I know that the Commissioner's re-nomination
is before this committee, and I would simply request that we
consider it without any significant delay.
And thank you for the opportunity.
The Chairman. Thank you, Senator Nelson. And welcome back.
We are delighted to have you back, even fitter and better-
looking than before, and appreciate the progress you have made.
When you are not here, we have a significant deficit in the
knowledge of oceans and space, the things that this committee
covers that we don't have a lot of in South Dakota. So we need
your good Florida representation and voice. Great to have you
back.
As we get into questions here, I want to just mention one
thing. The FCC is currently considering a large number of
wireless and spectrum-related items, several of which are on
its open meeting agenda for next week. And so I want to ask my
colleagues to please keep that in mind, as Commissioner
Rosenworcel will have limited ability to comment on active
items that are on circulation currently at the commission.
I am going to start. Mr. Levin, in your recent filing with
the Broadband Opportunity Council, you discussed a number of
ways to lower the cost of deploying broadband networks. And I
want to know, are there any specific proposals regarding
wireless infrastructure that you recommend Congress should
consider?
Mr. Levin. Certainly. Thank you. There were a number which
were discussed at the hearing at the House, and I think you
mentioned some of them, in terms of greater access to Federal
property. This has been an ongoing thing. When I was Chief of
Staff at the FCC in the early 1990s, we dealt with those
issues. But I think that there is an increasing focus on them
because we need to create bandwidth abundance. So I would
certainly encourage you to take a look at the broad range of
things that a number of government agencies can do.
And, by the way, I think the Broadband Opportunity Council
is a terrific initiative and very much look forward to their
report later this month. Hopefully they will adopt a number of
recommendations that I and others made that will facilitate the
lowering of the costs of deployment on Federal property.
The Chairman. Good.
Ms. Baker, you have voiced concern in the past that the
U.S. risks falling behind other countries in deployment of
fifth-generation mobile technologies, or what we refer to as
5G, without access to more wireless spectrum. Some companies
have begun considering whether they can feasibly deploy mobile
services in high-band spectrum, including what is referred to
as millimeter wave bands.
What steps can we as policymakers take to encourage the
continued deployment of 5G technologies?
Ms. Baker. So I appreciate the question, and I think that
we need to look at everything. I think Commissioner Rosenworcel
is quite right in looking up, but we need to look--for now, it
took 6 years to roll out from when it was proposed to when it
was deployed. And so I think we were not the leaders in 3G; we
were the leaders in the 4G. And how did we get there?
We got there through conversations like this, forward-
thinking. We got there through aggressive auctions. So I think
we really need to look at the base of 350 more megahertz of
licensed spectrum by 2020 for our industry, for the wireless
industry. We got there through a light-touch regulatory
environment. And we got there through sound tax policy.
So if that got us to where we were winning in 4G, I think
that will get us to where we are winning in 5G.
If you look at Europe, for instance, during the same period
of time when we started to win in 4G, we deployed 73 percent
more cap-ex than they did. I think that is largely due to their
regulatory environment. Our speeds are now 30 times faster than
they are in Europe, and we have three times more LTE
subscribers.
So I think we have the winning equation right now, and we
need to keep it up and start with 350 megahertz more for
licensed spectrum.
The Chairman. OK.
Commissioner Rosenworcel, how do we move beyond the current
adversarial process, whereby the private sector identifies a
desirable band of spectrum, the Government users resist, and
then both sides spend significant time and resources fighting
over the costs of relocation?
Commissioner Rosenworcel. Thank you for the question,
Senator.
This is a movie we have seen before. We tend to do this
over and over again, where we knock on the door of Federal
authorities like the Department of Defense and the Federal
Aviation Administration, and we beg and plead for some
spectrum, and, over time, we secure some scraps and slowly,
slowly relocate them and then auction off those airwaves.
That system is just too slow for the modern wireless
economy. It is absolutely essential that Federal authorities,
which control as much as 60 percent of our vital airwaves, that
those Federal authorities start seeing some incentives to be
efficient with those airwaves so that when reallocation comes
they see gain and not just loss.
The Chairman. Does anybody else want to address that
question?
Ms. Baker?
Ms. Baker. Thanks. I would love to.
I think that this committee is really on to--I appreciate
all the hard work this committee has done. And there are a
number of bills out there and there are a number of ideas that
I think have merit. I think for our spectrum need, we need to
look at all of them, but I would say you, Senator, were
completely right when you said it can't be antagonistic; it has
to be a win-win situation for everyone.
The top three items, to my mind, that will make a material
difference in the short term, as well as many of these ideas
that are going to make a difference in the long term, are
updating the Spectrum Relocation Fund--and I think what I mean
by that is there needs to be money for the agencies to do
technical deployment.
If we are going to move them into another band, we ought to
let them study whether they can share, whether they can use a
different technology. There is not money for that right now, as
well as for long-term spectrum. We don't want to move somebody
into a band and then move them again.
So I think updating the Relocation Fund so that it will
fund those projects would be great help.
I also think that incentive auctions for Federal agencies
is a very good idea--that is the Markey-Fischer bill--making
sure that they get some money out of giving up their spectrum.
And, last, I think as Commissioner Rosenworcel has talked
about, more commercial-government partnerships, the
Miscellaneous Receipts Act in particular.
When I was actually at NTIA during AWS-1 and we were
relocating, there was a wireless company that wanted to move
the Department of Justice faster than the Department of Justice
had money to and was planning to move. That wireless company
wanted to pay for updated equipment for the Department of
Justice, but they couldn't. Every way we looked at it, it was
going to be a gift to the Department of Justice that would have
been illegal from a private company.
So I think that just makes sense, that is just good
government, to try and have a commercial entity pay to move
faster. Things like that that we consider all make good sense.
The Chairman. Good. Thank you.
Senator Nelson?
Senator Nelson. Mr. Chairman, Senator Booker has another
commitment. I want to defer my time to him.
The Chairman. Senator Booker?
STATEMENT OF HON. CORY BOOKER,
U.S. SENATOR FROM NEW JERSEY
Senator Booker. I appreciate the graciousness of the chair.
I only really have one question. But I do want to thank both
the Chairman and the Ranking Member for working so closely with
Senator Rubio and I on legislation.
And I really want to direct my one question to Commissioner
Rosenworcel.
You know that Senator Rubio and I have this legislation
that is directing the FCC to just take a look, just to examine
the spectrum in the 5-gigahertz band to see whether or not
spectrum-sharing is possible.
This bill clearly, plainly states in it, that this is not a
taking of spectrum at all. I have had conversations with folks
in the auto industry. It is just asking you to examine it, to
see if spectrum-sharing is possible. I have never seen such an
overreaction and a reaction that has nothing to do with what
the text of the bill says. It is just asking for you to examine
it.
And so you have spoken and written at length about this,
the importance of using this spectrum in the upper 5-gigahertz
band effectively and efficiently in order to reap the vast
benefits that may exist if--and, again, our bill says ``if''--
we find the spectrum-sharing is safe, first and foremost, and
possible.
The longer we wait to examine it just to know the facts,
this important and valuable real estate could possibly risk
losing out on new innovations and capabilities that could be
unleashed.
So my simple question is, can you just describe for the
Committee the importance of this examination and why this is
such an important band as a bastion for future innovation? And
what is your response to this common sense legislation that is
just asking to examine that band? And what do you see as some
of the greatest challenges in moving forward?
Commissioner Rosenworcel. Thank you, Senator.
I very much like your legislation, as you know, and I am
optimistic we can find a way forward that both brings us more
Wi-Fi and continues to allow the auto industry to proceed with
its safety efforts associated with dedicated short-range
communications systems.
As you probably know, it was 1999 when we assigned this
spectrum to the auto industry, and, since that time, they have
been working on roadside safety and vehicle-to-vehicle safety
efforts. But back in 1999, I had a phone that was the size of a
brick, and I paid a princely sum to use it. And since that
time, we now have lots of new wireless technologies that help
with automatic braking and lane changes and other safety
measures.
So I feel like what we need to do is figure out how to take
all those advances in technology, what we know now about
interference, and test to see if we can combine Wi-Fi use with
auto safety efforts in this band. I am optimistic we can do
that.
I appreciate that the auto industry is, in fact, testing
with one manufacturer a listen-before-talk system. I think
there are other kinds of tests we can run, because I think
there is a way forward here that both delivers vehicle safety
and more Wi-Fi.
Senator Booker. And the bill does not in any way threaten
safety at all.
Commissioner Rosenworcel. It encourages testing, and I
think that is a smart and prudent course.
Senator Booker. Mr. Chairman, thank you very much.
The Chairman. All right. Thank you, Senator Booker.
Senator Schatz?
Senator Schatz. Should you go to the other side?
The Chairman. Well, we do it in order of appearance, and
you were actually here first. But if you would like to defer, I
am sure my colleagues on this side would be happy.
[Laughter.]
Senator Schatz. Well, having said that, I would be pleased
to defer, and then I will go next.
The Chairman. All right. We will then recognize Senator
Daines.
STATEMENT OF HON. STEVE DAINES,
U.S. SENATOR FROM MONTANA
Senator Daines. Thank you, Mr. Chairman.
I want to talk a little bit about rural America. You have
several members here who represent rural states. The question
is for Ms. Baker and Ms. Rosenworcel regarding spectrum
warehousing.
Industry and regulators continue to talk about the shortage
of spectrum and the need to make more spectrum available for
commercial use, but really this is only half the problem.
I am concerned, in a state like Montana--for example, there
are two nationwide wireless carriers, providers, and they
collectively own over 100 megahertz of spectrum in some of my
counties but provide zero coverage. There are many places in
Montana that we still don't get any coverage, particularly in
tribal areas of my state.
So my question to Ms. Baker and Ms. Rosenworcel is, what
can industry and government do, working together, to make sure
that spectrum held in rural communities is actually put to use?
Ms. Rosenworcel. All right. Good question. We have got to
find ways to make sure that rural America is not left behind in
the wireless revolution. And I take your point that we have
spectrum and it does not always get deployed in our most remote
communities. So here are some things that we can do.
First, we can make sure that when we auction off spectrum
we auction off licenses that are small enough that small rural
providers can easily purchase those licenses and participate.
Because those small providers are more likely to deploy in
their rural communities.
We have also set up a new designated entity program that
helps small rural providers by giving them bidding credits in
our auction, so they can buy spectrum and get a slight discount
because we know it is harder and more expensive to deploy in
rural America.
We also have a tribal bidding credit to help with
deployment on tribal lands.
And, going forward, we are going to enhance our Mobility
Fund to make sure we support small wireless providers serving
in rural areas.
That is a lot of different things. I think together they
can be effective over time. And I think it is important that we
actually pick up the pace and make all of them happen as soon
as possible.
Senator Daines. OK.
Ms. Baker?
Ms. Baker. Thanks for the question. And I think there were
actually two questions within there. And the first one, I think
that there are two answers as to how do we incite--well, there
are obviously more than that, but you have two good available
options right now. The, how do we get more citing to more rural
areas--and I do want to compliment the Fischer-Klobuchar bill,
the Rural Spectrum Availability Act. I think that that will
bring about more citing in rural lands.
As former Senator Burns used to say, Montana is so
beautiful, but there is a lot of dirt between streetlamps.
Senator Daines. There is.
Ms. Baker. So I think that that is a pretty important act.
I think that that is going to allow rural areas to pick off the
licenses of the larger spectrum----
Senator Daines. Yes. And, importantly, because of the
beauty of a state like Montana, with the trout streams, the
backpacking, the camping, the hunting and so forth, we are now
attracting a workforce, that they want to be right next to the
stream as well as being able to access their wireless device
and be part of this global economy. We are seeing some amazing
things going on in the technology business in places like
Montana, building world-class companies.
Ms. Baker. So the FCC also has promised a Mobility Fund,
and the Mobility Fund was I guess promised 5 years ago. And
that will--we have LTE built out to 98 percent of the people in
this country, but the 2 percent that aren't part of that 98
percent cover a large bit of territory. And so where it is not
economically feasible for the carriers to deploy, this Mobility
Fund really needs to get enacted so that they can----
Senator Daines. Yes, and I think that is something to look
at in terms of where we are going to be in the next 10 or 20
years. Millennials, they want to be able to have a fly rod in
one hand and their mobile device in the other, and they don't
want to trade off quality of life for quality of career. And
this is why it is going to be so important in some of these
areas that aren't--they don't want to be sitting in traffic
jams, having to worry about an hour back and forth to work,
when they could be in a trout stream within 5 minutes from
where they work.
That is literally happening right now in Montana. It is
very exciting. So we appreciate your help on that.
I want to just finish up with a question regarding some of
the concerns we are hearing from the broadcasters as it relates
to translators.
I am a strong proponent of innovation technology. I was
part of a cloud-computing company for 12 years in Montana. We
took the company public, a global company based in Montana. So
I am a strong advocate for technology.
But one idea being discussed in next year's incentive
auction plan would be to take channels that our local Montana
broadcasters use in these places where we have high mountains
and valleys and set them aside for unlicensed uses. Because of
our topography, translators is how the signals reach the far
ends of a state like Montana.
I am a huge proponent of Wi-Fi, the Internet of Things, and
other potential unlicensed apps. But I also want to ensure that
Montanans can continue to receive our local news, our local
programs over the air.
So it is my last question; I am out of time. But has the
FCC done any modeling or studies relating to the translators
and potential impact?
Commissioner Rosenworcel. Thank you.
I definitely understand that translators are particularly
important for broadcasting out west in states like Montana.
That is how people get their television signals. And I know, as
we try to crowd more devices into our airwaves and in the 600-
megahertz band, they are going to be competing for space.
Now, in a state as rural as Montana, I don't think that
competition will be quite the same as it is in New York City.
So I have some confidence they are going to continue to be able
to remain on the air.
But with respect to modeling, I would like to get back to
you. I am sure our auction team has done some, but I am not
familiar with it, and I would be happy to provide that for you.
Senator Daines. I would appreciate that, to look at it
exactly, make sure I understand what is going on there in the
details of this competition. I appreciate it.
Commissioner Rosenworcel. Absolutely.
Senator Daines. OK. Thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Daines.
Senator Schatz?
Senator Schatz. Thank you.
Ms. Baker, you mentioned in your testimony that it can take
as much as 13 years to reallocate spectrum for wireless
broadband use from start to finish. Can you just very briefly
tell me, what do you think are the key things we can do to
improve that?
Because, you know, we are making policy here, but even if
we make the most brilliant policy in the world, 13 years is not
going to cut it in order to make our broadband infrastructure
work. So give me your thoughts on that, please.
Ms. Baker. Great question. And I think some of the ideas
that you have seen on this panel are important.
I think the shortest time it has been has been 6 years; the
longest has been 13. It is getting better, and I would say that
is because of the cooperative stance and the win-win that we
are starting, the rapport that we have developed with the
agencies.
But I think improving the incentives for agencies to move,
such as, you know, in the Relocation Fund; improving citing on
Federal lands--all of that is going to help shorten the period
of time.
And so I think that we, working together, can shrink it to
more of 6 years than 13.
Senator Schatz. So it seems to me that the things you are
talking about, in terms of the Relocation Fund and the other
kind of mechanical fixes, have to do with shrinking it, say,
from 13 years to the 5-to-7-year range.
But there is this other question about the kind of
misalignment of incentives that the commissioner talked about,
which is that DOD doesn't get anything for having given up
their spectrum. And to make it easier for them to give up their
spectrum through the Relocation Fund is probably not enough of
a pot-sweetener to get them to actually let go of this.
And if we are going to get this to happen, we are going to
be contending with the Armed Services Committee, Defense
Appropriations, and others. And so, to me, you know, we are
going to have to go beyond just improving the execution side.
Because, in the end, that will compress the 13 years to 6, but
we may still get a ``no'' unless they know, look, that billions
of dollars in revenue are on the table, and it is not
unreasonable for them to say, if this is our spectrum, maybe it
should be substantially our revenue.
Commissioner, do you want to comment on that?
Ms. Rosenworcel. Yes. Thank you, Senator. I think those are
terrific points.
The bottom line is we need our Federal authorities to
internalize the cost of the spectrum they use. They don't do
that right now. It is just a resource they have. So when we try
to take it away, we are trying to take something from them.
If we can come up with incentives so that they see gain
when we do that, we can both make them more efficient and have
more spectrum for the pipeline that we are talking about here
today.
Senator Schatz. Right.
And I will just--by way of a comment, and then, Mr. Levin,
I would be anxious to hear your thoughts on this.
There are kind of two paths here. One would be to sort of
adjust the next budget and adjust the way CBO scores it and all
that, and I understand that that is one path. But that will
also take a very long time. And so it may be that the
legislative branch actually has to orchestrate an agreement in
the short run to kind of make sure that this happens in a
reasonable timeframe.
Because if we decide that we are going to change the way
that CBO scores it, then we need language in the budget, so
that we are, again, talking about 5 to 10 years, in my opinion.
I think we all understand the misalignment of incentives is
the basic problem, and we can solve that, you know,
appropriators and authorizers. It won't be uncomplicated, but
it won't be any more complicated than if we tried to do it sort
of through the regular order. And given our looming
sequestration problem, there is some urgency and some incentive
for us to just get after this.
Mr. Levin?
Ms. Levin. Yes. A couple of comments.
First of all, when Congress passed the 1996 Act, it put
deadlines on every one of the proceedings. As Chief of Staff at
the FCC at the time, I hated those, but they were great. They
basically enabled me to be able to manage the process,
obviously with the Chairman, in a way where there were no
excuses for not meeting the deadlines. We met the deadlines. So
I certainly urge you to create deadlines, even if, fortunately,
other people will have to implement them.
Second, I think we have to understand the asymmetry-of-
information problem. And Dr. Lenard, I think, has done a good
job articulating this. But part of the problem that I saw at
the FCC in both of my stints there was that there are always
experts in spectrum at the agencies who have greater
knowledge--and this is not NTIA's fault; they don't have the
resources, they are hamstrung--or at OMB. I think there needs
to be, as Dr. Lenard said, some kind of information.
Because the principal-agency problem is where the agent has
both different incentives than the principal--and the principal
here is the American public--as well as greater information,
asymmetric information. So I think we need to address that
problem, as well, and I think there are a number of different
things.
Finally, I agree with the Commissioner's comment about
incentivizing or internalizing the costs. I think there are a
number of different ways, but, again, administrative pricing
and also amendments to the Commercial Spectrum Enhancement Act
I think go a long way to doing that, can be done more quickly,
and I think, actually, the last few years, have proven--for
example, when Congress said in the 2012 legislation we want
AWS-3 quick, that gave the political mandate to the forces in
the Executive Branch to be able to do that.
Senator Schatz. Thank you very much.
The Chairman. Thank you, Senator Schatz.
Senator Peters?
STATEMENT OF HON. GARY PETERS,
U.S. SENATOR FROM MICHIGAN
Senator Peters. Thank you, Mr. Chairman.
And thank you to the panelists here today to talk about
this important issue.
And I just want to take a moment to kind of piggyback on
comments made by my colleague Senator Booker regarding opening
up the 5.9-gigahertz spectrum. And I certainly appreciate his
desire to open up that band, but I also want to thank the
Committee for slowing down that process.
We have some significant interests that are very concerned
about what that means, particularly in the area of safety.
There are and will be incredible advances in safety, as
vehicle-to-vehicle communications, vehicle-to-infrastructure
communications advance.
In fact, I had the opportunity just a couple weeks ago to
be at the ribbon-cutting for a new test track at the University
of Michigan for advanced vehicle technology, a 35-acre track
that will test these incredible technologies. And I have to
say, it is an incredible public-private partnership with a wide
range of companies, from auto suppliers to insurance companies
to telecommunications companies, everybody coming together
because of the exciting potential that this technology has to
save lives.
I mean, we can talk about new apps and new creative ways to
communicate. This is about saving lives. It has been estimated
that up to 80 percent of all auto crashes could be eliminated.
And at a time when 30,000-plus people die on our highways every
year, that is a big deal. As a father to young daughters who
are driving, it is a really big deal to me, as I am sure every
mom and dad in the audience, as well, as to how important it
is.
And so we have to get this right. And I think that is the
concern with folks, is just to make sure that before we open it
up we are getting it right and we are not interfering with this
potential.
So, on that note, Ms. Baker, you said in your written
testimony that the wireless industry supports experimentation
with new spectrum-sharing regimes. But you also warned in that
testimony against settling into shared regimes that may rely on
some untested technologies. And I certainly share that concern,
and I think that is where most of the intelligent
transportation community is right now, just concerned about
whether or not these are tested.
And I know the parties who are eager to open up this
spectrum to unlicensed use make the argument that these
advanced vehicle technologies won't be interfered with because
there are untested technologies that will protect them. But for
groups who have invested millions and millions of dollars into
these technologies over the last decade and are on the very
verge of starting to see the return of those investments in
unprecedented ways, that is not real comforting, that there may
be untested technologies out there that will protect them,
don't worry. We need to have more than that.
So I wanted to ask you, what sort of testing of these
shared technologies and what scale would wireless carriers need
to see completed in order to be convinced of their viability?
Ms. Baker. So I think this is one of those questions--and
thank you for the question. But I think this is one of those
issues where we in Washington see it as a policy issue and our
companies see it as a business issue. The verticals for the
wireless industry are the most important part of the future
growth, and certainly in the automobile and the automobile
industry is at the very top of that list.
So I think that we have the policy questions and the
jurisdictional questions, which--we at CTIA have joined in
partnership with the automobile industry to form the
Intelligent Car Coalition to really address some of these
policy issues. But the technical issues are real, and these
really shouldn't be policy questions; they should be technical
issues. And I think we now have a new CTO so that we can
actually look at these questions.
We are all for sharing. With the Internet of Things that is
coming our way, we have to be for everything. We are for
sharing, we are for unlicensed, we are for licensed. But it has
to work. And so I think that you raise very important points,
that we are for unlicensed, we are for experimentation, but it
can't interfere with the underlying critical use.
Senator Peters. So what is the role for private industry?
How do you see private industry dealing with that?
Ms. Baker. Well, every single one of our major carriers has
deals with the automobile industries, and they are all--it is
in their future use to work together. And I see AT&T has Drive
Lab in Atlanta, as well as you have, you know, in Michigan. So
I think that these are working together probably outside of our
Washington space faster than we are working together here.
Senator Peters. Yes. And so we have to let that process
move forward as it is happening now. We don't need additional
legislation at this point; we just need to let things continue
to move forward.
Ms. Baker. I think the commercial world is working really
well.
Senator Peters. Great. Thank you so much.
The Chairman. Thank you, Senator Peters.
Senator Heller?
STATEMENT OF HON. DEAN HELLER,
U.S. SENATOR FROM NEVADA
Senator Heller. Mr. Chairman, thank you, and thanks for
holding this hearing as we continue to work in this committee
and try to bring more spectrum to the market.
I was lobbied out in the hallway on my way in, and I was
requested to ask one of our witnesses if any of them know where
Tom Brady's cell phone is.
[Laughter.]
Senator Heller. But I think I will--maybe that is a hearing
for another day.
But, anyway, thanks for holding this hearing.
Senator Markey. Mr. Chairman, when you have a hearing on
that, could I have equal----
[Laughter.]
Senator Heller. Controversy. Controversy.
But, anyway, we all know that spectrum provides Internet
access in places that wireless won't reach and provide Internet
competition where it does reach. This is about innovation and
ensuring competition in the marketplace so that it exists to
empower consumers in dictating price, speed, and efficiency in
the data plants.
As we continue our work, it is my opinion that these are
the beacons we should continue to reach for. I know it is not
easy, and that is why I appreciate the chairman staying focused
on clearing more spectrum and holding this hearing today. And I
believe that after the scheduled 2016 broadcast incentive
auction is up, we probably will not have anything in the
pipeline to follow.
Now, we cannot close the digital divide and provide an
environment in which services will get better and prices lower
if we don't have more spectrum coming to the market. The
digital divide is something that severely impacts my home state
of Nevada.
As Politico wrote extensively on this this week and many of
us have known for a long time, the money provided to RUS
through the stimulus has been an unmitigated disaster. I was
adamantly opposed to the stimulus, and I am not about to go
into all that, but we have to admit that the inability of RUS
to get these projects going should not be a surprise.
It is the same argument that was raised, of course, in
2008. It is not realistic to expect any company to lay wireless
across rugged terrains like Nevada to bring broadband to rural
areas. Instead, we need to think critically on how we bring
faster Internet to these areas. And I know the discussion today
can provide and has provided some answers to that.
And while today is about the long-term need for spectrum, a
lot of questions remain about how spectrum auctions are
conducted and how to enhance the benefit of these auctions. So
I hope that we have the opportunity, as a follow up hearing, to
learn more about that and how to address some concerns that
will remain.
I want to give a couple of examples--and, Ms. Baker, I am
going to direct them toward you, if I may--just a couple of
examples of the problems that exist. And this is in line with
what Mr. Daines had to say earlier about a rural state.
People don't realize, when you think of Nevada, you
probably think of Las Vegas or Lake Tahoe, but it is a vast
state--110,000 square miles. Las Vegas is in about 5,000 square
miles of it; Reno, a couple thousand square miles. But 110,000
square miles is a lot of space.
Recently--and I say ``recently''--a few years ago, I was in
a motor home, with four children in the motor home, and it
broke down. Now, I am a pretty good mechanic, but that day I
wasn't good enough. Fortunately, we were pulling a vehicle
behind it. Got in the vehicle, drove down the road for 2 hours
before we could get a signal on the cell phone. I would suggest
that if someone were to do that today and break down in the
same spot, they would still have to drive 2 hours to find a
cell phone signal in order to get the help that they need.
Another example is I have a son and his wife who have 1.5
million followers on Vine. Now, if I was driving through
Nevada, I probably couldn't get the weather, I probably
couldn't get the news, and I probably couldn't see their latest
Vine, because there just isn't the access to that information.
So I think the key to it, is what I am trying to say, is
that we can talk about spectrum, we can talk about all these
issues, but the problem, foremost, is the ability to actually
have the access to it. And so I guess in line with what Mr.
Daines said, we have 85 percent of the property in the state of
Nevada is Federal lands. And that is the problem.
What can we do, Ms. Baker, what can we do, with the vast
holdings that the Federal Government has, in the ability to get
wireless service to rural portions of the state?
Ms. Baker. That is a great question.
And I do know that Nevada is disproportionate, at 85
percent of Federal lands. I think the country average is 30
percent, so you are greatly over there. So I think you should
turn to your colleague Senator Johnson and thank him, because
he did question the GSA nominee on Federal lands.
I understand you got an answer back from her last night
about making citing on Federal lands a priority.
Senator Heller. I will stick around for his questions.
Ms. Baker. This committee did a great job in directing the
FCC in the Spectrum Act to expedite citing on non-Federal land.
And we need to finish the job and get GSA to actually enact
their promise. I know that Klobuchar and McCaskill have a bill.
Senator Johnson, you have been on this.
Expediting the citing on Federal lands, so it should take
months instead of years, would be a great big help, I think, to
states like Nevada.
Senator Heller. OK.
You had a comment?
Ms. Rosenworcel. I agree. How about that?
Federal lands are about 30 percent of the lands in this
country, obviously a lot more in Nevada. And if we want to get
deployment there, we are going to have to bring the cost
equation to a new place. Because if you don't have a lot of
people, it is really hard to spend the money to deploy because
there aren't a lot of people who are going to be able to use
that service.
So one of the things we can and should do is make sure that
the Federal Government manages those lands in a way that
accelerates deployment and doesn't impede it.
Senator Heller. Commissioner, thank you for understanding
the problem.
Ms. Baker. Can I just say that this has been a problem
since I was at CTIA 17 years ago.
And I think, Senator Markey, you are going to remember
trying to get citing in Rock Creek Park.
So, while we have some commitments from the GSA, this is
something that I think we should probably stay on.
Senator Heller. Ms. Baker, thank you.
Mr. Chairman.
The Chairman. Thank you, Senator Heller.
Senator Markey?
STATEMENT OF HON. EDWARD MARKEY,
U.S. SENATOR FROM MASSACHUSETTS
Senator Markey. Thank you very much.
And Ms. Baker is correct. It was driving me crazy. We had
deployed all this spectrum, and every day I was riding in
through Rock Creek Park, and every day I was losing the
connection at the same place. And 1 year went by, 2 years went
by, 3 years went by. It is kind of a National Park kind of a
thing, but it is not in the middle of Nevada. How come we can't
figure it out here in the middle of Washington, D.C.? So we had
to act in a bipartisan fashion to kind of work with the
telephone companies to try to figure--let's solve this problem.
And I agree with you, Senator Heller, that it is critical,
because I have heard your family sing, and there is a good
reason why they have 1.5 million followers on Vine.
Senator Heller. They don't get it from me.
Senator Markey. It is not a genetically transmitted skill?
Senator Heller. It is from their mother. From their mother.
Senator Markey. From their mother.
So it is very, very important that we have them listened to
everywhere in America.
And so that is why, ultimately, spectrum is the oxygen of
the wireless world, and we have to make sure that we continue
to accelerate the pace at which we accomplish these goals.
And, again, back in 1993, I worked with Mike Oxley and
others, and we moved over 200 megahertz of spectrum to create
the third, fourth, fifth, and sixth cell phone companies. The
first two companies were analog and 50 cents a minute, but once
we moved over that spectrum, we had a revolution by 1996. And
everyone all of a sudden had a cell phone in their pocket
because it was under 10 cents a minute and it was digital.
And that was bipartisan. And the revenues went to the
Federal Government. It was great. It was an auction. We did a
good job.
But the Government didn't really want to give up the
spectrum at the time. They were very much--generals sat here
and said, you don't know what you are going to do to our
national security and you can't move over that spectrum. But we
did it.
So that is why, you know, Senator Fischer and I have
introduced our legislation. We say, OK, we are going to work
with you to move over the spectrum, but you will be
incentivized because a certain percentage of the auction will
go back into the Government, into these agencies.
Can you talk a little bit about that, Ms. Baker and Ms.
Rosenworcel? If you could, both of you, make brief comments on
that.
Ms. Baker. I think we both have praised that bill. We both
think it is a very good idea. I think an agency is going to be
much more incentivized if they are able to keep some of the
profits when they are moved. And it creates not only a win-win
but a win-win-win, because they get profit from the auction,
they get updated, more efficient equipment and newer equipment,
and then, of course, we have the mobile industry can move in
and innovate in that spectrum.
Senator Markey. Commissioner Rosenworcel?
Ms. Rosenworcel. Yes. Thank you.
I think your bill with Senator Fischer is a terrific idea.
Again, we need to internalize the cost of spectrum that our
Federal agencies use. They need to be rewarded when they are
efficient and help us get more spectrum into the mobile
economy, because right now all they see is loss.
Senator Markey. Mr. Levin, you were there back in
prehistoric telecommunications time.
Mr. Levin. Yes.
Senator Markey. Can you give us your perspective on it?
Mr. Levin. Yes. Two things I would just say.
First, as to your history, it is exactly right, though I
would note that one of the things we did pursuant to the 1996
Act was to equalize the terminating access charges between
wireless and wired. And I think that is an important lesson
about certain bottlenecks and barriers. And it was really, once
we did that, then AT&T Wireless created the one plan, and that
really turned mobile from being a luxury product to being a
mass market product.
Senator Markey. Thank you.
Mr. Levin. Can I just say real quickly, on the incentive
auction, I am a big believer in incentive auctions, and I am
delighted that you wrote the bill. I do have some concerns, as
I have indicated in the written testimony, simply about whether
it will work. My experience in the Federal Government--and I
have had two stints there--suggests a number of concerns that I
would have. And so I think whenever the Congress considers a
number of paths, you have to consider, you know, the likely
outcome. And reasonable people can estimate things
differently----
Senator Markey. And you know what I think? I think we are
going to work it out. Once you say ``work it out,'' that is
what happened back then, and----
Mr. Levin. No, I agree with that.
Senator Markey.--all of a sudden, the Defense Department
was working it out. And they got benefits, and the public got
benefits, and I think the same thing is going to happen here.
And, Ms. Rosenworcel, could you talk a little bit about
this constant understating by the Federal Government of the
value of unlicensed spectrum? Can you talk a little bit about
that, how historically that has always happened and it has
almost invariably been wrong?
Ms. Rosenworcel. Oh, do you mean when the Congressional
Budget Office estimates just how much our airwaves are going to
bring in?
Senator Markey. Can you talk about that?
Ms. Rosenworcel. I can. I can talk not just as a
Commissioner but as a former congressional staffer.
It is----
Senator Markey. On this committee.
Ms. Rosenworcel. On this committee, on these issues.
So here just for starters. We recently held an auction of
spectrum we call AWS-3. It raised over $40 billion. That is an
extraordinary sum by any measure, and it is a testament to how
valuable our airwaves are.
The Congressional Budget Office, when reviewing the auction
of 65 megahertz of AWS spectrum, suggested that as a result of
the cost of relocation that auction would net out to zero
dollars.
Now, there is a pretty big delta between 40-plus billion
and zero dollars, and I think it is instructive. Our airwaves
are extraordinarily valuable, but our accounting systems for
measuring them in the legislative process don't appear to be
fully up to date.
Senator Markey. And I agree with you 100 percent. And it is
just something that I think we have to continue to monitor,
because there are tremendous benefits, even reducing the
Federal deficit, of having the proper accounting standard. And
sometimes the agencies get behind in terms of what these
technologies can produce in terms of general benefits for the
economy.
And I thank all of you for all your work.
Thank you, Mr. Chairman.
The Chairman. Yes, sir. Thank you, Senator Markey. And it
wouldn't be the first time they missed an estimate or two.
Senator Johnson?
Senator Johnson. Mr. Chairman, Senator Gardner asked for 10
seconds, so I will yield him 10 seconds.
STATEMENT OF HON. CORY GARDNER,
U.S. SENATOR FROM COLORADO
Senator Gardner. Thank you, Senator Johnson.
Every committee that could meet now is meeting now, and so
I apologize for not being able to attend.
But, Dr. de Vries, before I have to go vote in the Energy
Committee, I wanted to welcome you to the Committee. I owe my
law degree and my student loan to the University of Colorado,
so welcome to the Committee.
Thank you.
STATEMENT OF HON. RON JOHNSON,
U.S. SENATOR FROM WISCONSIN
Senator Johnson. That actually was 10 seconds.
[Laughter.]
Senator Johnson. I thought it was going to be Senate time.
The Chairman. He hasn't figured the Senate out yet, has he?
[Laughter.]
Senator Johnson. Thanks, Senator Gardner.
Ms. Baker, I just want to go back to what Senator Heller
and Senator Markey were talking about, the challenges that your
members have faced trying to, you know, locate broadband
infrastructure on not only Federal land but also Federal
buildings.
Can you give us some even better examples or just talk
about how significant a challenge this really is?
Ms. Baker. Well, I mean, as we mentioned, across the board,
the Government owns 30 percent of the land in the United
States. That is a third, so that is a lot. And in a place like
Nevada, that is even--you know, as we talked, that is 85
percent.
It literally takes years. You know, there are some stories
of 5 years. And, shockingly, some of the Department of Defense
bases are some of the worst. And historic buildings are bad.
These places where people are now expecting broadband to be
ubiquitous and to be in contact constantly are now taking
years, with multiple different reviews of environmental and
animal--all sorts of different studies that have to be done.
So it is extremely costly; it takes years. Anything that
would be streamlined, whether it be the forms, whether it be
the reviews, whether it be the timelines, all of that would be
helpful to us in deploying on those Federal lands.
Senator Johnson. And who pays for that, that time delay and
that cost?
Ms. Baker. Well, ultimately, consumers, but obviously the
companies pay for all of the studies that go into the citing on
Federal lands.
Senator Johnson. But, bottom line, it is consumers. You
know, we drop calls, we can't get access to the data, and, in
the end, it is our bills that really reflect those costs.
Can you just speak--obviously, we have been encouraging the
GSA to actually complete its mandate under the Spectrum Act of
2012. Can you just talk--first of all, I would like your
evaluation. If you are in contact with GSA, are they moving
forward? Are they going to meet their commitment to complete
their work by the end of this fiscal year?
Ms. Baker. Well, I mean, we were making light of the citing
on Rock Creek Park, but when I worked for CTIA 17 years ago
this was a priority, of trying to get citing on Federal lands.
So then I actually went into the Government and thought, well,
I will fix this.
And so we were at NTIA and we had a Federal working task
group to cite on Federal lands and create a portal and make it
easier for industry to be able to cite on Federal lands. And
here I am 17 years later, and it is one of the top priorities
of CTIA, to be able to cite on Federal lands in a more
streamlined process.
So I think that, you know, ``trust but verify'' is probably
a good warning here.
Senator Johnson. Any suggestions you can provide GSA in
terms of actually completing its mandate and, you know, again,
information you can offer them to encourage their activity?
Ms. Baker. I think having Senate oversight is a really
important--it obviously worked for the FCC for non-Federal
lands.
Senator Johnson. OK. Well, thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Johnson.
Senator Wicker?
STATEMENT OF HON. ROGER F. WICKER,
U.S. SENATOR FROM MISSISSIPPI
Senator Wicker. Thank you very much.
Ms. Baker, Ms. Rosenworcel and Senator Markey have learned
one lesson from the AWS-3 auction, and that is that it could be
scored incorrectly by billions of dollars. I think we will
acknowledge that that auction was a huge success. What other
lessons learned are there, other than this scoring snafu that
was talked about?
Ms. Baker?
Ms. Baker. So, you know, it is interesting, because I guess
I have been at this for so long, but every time we have one of
these auctions the lessons learned really are lessons learned.
And so I think AWS-3 was tremendously easier in the relocation
and the lead-up to the auction and in the actual auction than
AWS-1 was.
We learned that cooperation really works. So if you can be
not antagonistic and work together to cooperate beforehand as
well as once the auction happens, you can actually relocate
faster.
I really think that there needs to be funding for
technological research for the agencies so that they can figure
out how they can make better plans and they can have longer-
term plans. I think that is a really important priority going
forward for the Relocation Fund to apply to.
Senator Wicker. That wouldn't need to come out of the
appropriations, would it?
Ms. Baker. It could come out of the $45 billion proceeds of
the last auction.
Senator Wicker. Ms. Rosenworcel, what other lessons
learned, other than the obvious accounting snafu?
Ms. Rosenworcel. First lesson: Spectrum is incredibly
valuable. That goes without saying, but I think that that
dollar figure makes it really apparent.
The second lesson is we were able to clear some of the
airwaves of our Federal authorities a lot faster because of the
kind of cooperation that Ms. Baker just described. Developing
cooperative relationships with our Federal spectrum users is
important because it will speed the process.
And then, finally, I don't want to talk too much about it,
but it has also become clear that we have to update our
designated entity process to make sure that big companies do
not abuse bidding credits designed for very small businesses.
Senator Wicker. What do you mean by that?
Ms. Rosenworcel. We have a situation before us right now
where a very large company was able to avail itself of some
bidding credits that were designed for small businesses, and we
are making active efforts to make sure that that situation is
remedied and doesn't happen again.
Senator Wicker. Ms. Baker, do you agree with that?
Ms. Baker. Designated entities are pretty much completely
in the FCC's jurisdiction to decide how to--we at CTIA really
work for more spectrum so that the industry--as mentioned, 350
megahertz is what we need to continue our global lead in
wireless. How it gets divided up is really Commissioner
Rosenworcel's job.
[Laughter.]
Senator Wicker. Well, thank you for that punt. And it went
very, very high.
[Laughter.]
Senator Wicker. Just to end up, Mr. Chairman----
Mr. Levin. If I----
Senator Wicker. Yes. Please.
Mr. Levin.--might just interrupt. I apologize.
But in terms of scoring, I do want to just note--I was
Chief of Staff when we did the first auctions, and I followed
on Wall Street pretty much every auction after that--the
private sector also gets it wrong. And the reason is, you don't
know until you hold the auction; that is why you hold the
auction.
And I think that part of the challenge for policy is when
there is--and, by the way, these things go up and they go down.
There are certain auctions that--a lot depends on market
conditions and new uses. So it actually is a difficult
challenge.
I think that particular one--again, I agree with
Commissioner Rosenworcel--it shows the incredible value of the
spectrum. And that is only going to increase, in my view.
But I do think that we have to try to find mechanisms and
tactics that are not dependent on being 100 percent right and
that kind of over time send signals so that we kind of create
that pipeline. And that is what I think the real challenge for
this committee and the Congress is.
Senator Wicker. Thank you very much.
And let me just ask this final line of questioning. I am
very interested in telehealth, and I think members of this
committee are. We are trying to be innovators and actually lead
the transformation in my home state of Mississippi.
As we begin to benefit from the intersection of wireless
and health care, do we have adequate and available spectrum we
need to foster growth and innovation in this industry and to
fully enable members to deliver more patient-centric treatment
solutions using wireless?
Ms. Baker. I will take it first.
No, we don't. We have just really finished a very
thoughtful series of papers to look at what our need is going
to be. And as we move forward, as wireless is the platform for
connected life, for the Internet of Things, we need more
spectrum. We need more licensed spectrum. We need 350 more
megahertz by 2020.
I agree with you that telehealth is an incredible platform
that is going to affect all Americans. And for us to get it
right and for us to be able to continue to innovate, we are
going to need more spectrum.
Ms. Rosenworcel. I agree.
Senator Wicker. Wonderful.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Wicker.
Senator Udall?
STATEMENT OF HON. TOM UDALL,
U.S. SENATOR FROM NEW MEXICO
Senator Udall. Thank you very much, Mr. Chairman. Really
appreciate this hearing today.
Commissioner Rosenworcel, let me direct my first question
to you.
With so many wireless devices connecting to the Internet,
we are facing what I would call a spectrum crunch that could
hinder the next Internet revolution. And I am exploring some
spectrum policy ideas in a bipartisan way with Senator Moran.
But I think American ingenuity could solve this. We just need
to get more innovators and researchers to focus on it.
And that is why I really like the idea that you and your
cell phone pioneer, Marty Cooper, proposed. And, in fact, I
plan to push for a Spectrum Challenge prize. This contest would
provide a significant monetary award to the first person who
finds a way to make spectrum use vastly more efficient.
Could you share your thoughts on how a Spectrum Challenge
prize could spur American innovation and competitiveness?
Ms. Rosenworcel. Sure. Thank you so much for the question.
There are really three things we can do to make sure that
we clear space in our skies for all of these wireless uses that
are coming into our economy. We can clear more spectrum; we are
talking about that here. We can deploy more towers, and we have
been talking about that, particularly with respect to Federal
lands. But, finally, we can get more innovative with
technology.
And so I worked with Marty Cooper, who is widely known as
the ``father of the cell phone,'' to come up with the idea of
``Race to the Top, a Spectrum Challenge.'' We need to create a
prize that incentivizes the development of new technologies
that are cost-effective that could increase the capacity of
existing airwaves by, say, 100 times.
If we did that and we were able to tap into American
ingenuity and create those kind of new technologies, we would
find all the spectrum that we have today would be able to
perform better and carry more traffic.
So Marty Cooper and I have proposed that the winner of that
type of prize should perhaps just get some spectrum license
themselves in order to keep this internally consistent. That
would be valuable for them, but the greater value for all of us
in the wireless economy who would benefit from those new
efficiencies.
Senator Udall. Yes. Thank you very much for that response.
And I would note we had an earlier hearing where we talked
about prizes, Chairman Thune. And it was very interesting to
hear the witnesses talk about the innovative capability and
developing that and that there is huge potential.
Ms. Baker, Senator Moran and I recently wrote a letter,
signed by Chairman Thune and Ranking Member Nelson and other
members, to the Office of Management and Budget about the
Spectrum Relocation Fund.
This multimillion-dollar fund pays the costs of relocating
Federal users when a particular spectrum band is auctioned for
commercial use. But my understanding is that the rules
governing this fund seem to limit the ability to meet President
Obama's goal of freeing up more spectrum for commercial use.
Could you expand on your earlier comments on making better
use of this Spectrum Relocation Fund?
Ms. Baker. Well, first of all, thank you for your letter,
and thank you for your efforts. We think it is really important
and critical, and we think it can make a significant difference
in the way that agencies do their planning.
I think that it is very important for them to be able to do
technology research to see if they can share, to see what sort
of technologies are out there that they can move to if they are
going to be moved but not when they are under the gun of
moving. So I think that that research is important.
And I also think that long-term spectrum planning is
critical to our future. You don't want to move someone to a
band that you are then going to move them again. That is just a
waste of everyone's time and money.
So I think giving the financial support for these agencies
to do long-term planning--it is tough, because a place like the
Department of Defense has people who are spectrum experts. Some
of the smaller agencies who are using, you know, spectrum do
not.
But providing them more money to be able to look into this
is going to be really critical to our future and to be able to
get the 350 megahertz that the wireless industry sees that we
need by 2020. So we appreciate your efforts.
Senator Udall. Yes. Thank you.
Do any other panelists have comments on that?
Mr. Levin. Two things.
First, on prizes, I completely agree with Commissioner
Rosenworcel. I just might note, consistent with Dr. Lenard's
testimony, a version of that is providing greater flexibility
in the uses of the MSS spectrum. We pushed for that in the
plan; the Commissioner has done that. And I think you are going
to see private incentives drive new innovation and
technological change.
Second, I completely agree with the spirit of the letter.
And, indeed, Recommendation 5.5 in the plan talked about
amendments to the CSEA and, I think, are consistent with that
letter. And I look forward to OMB's response and hope that
there is follow-up to that.
Senator Udall. Thank you. Thank you very much.
Thank you, Chairman Thune.
The Chairman. Thank you, Senator Udall.
I think we have kind of started to wind it down here. I do
want to ask one last question. I want to direct this to Dr. de
Vries.
You have raised concerns about that inability of private
spectrum licensees to negotiate agreements related to
interference. Do you believe interference disputes are likely
to increase as license holders live closer and closer together?
And what obstacles exist for parties to enter into arrangements
that would enhance efficiency?
Mr. de Vries. Yes, thank you, Chairman Thune. That is a
very good question, and I think it is inevitable, as we squeeze
all these services closer and closer together.
I mean, we have heard from Senators from rural states, but
I think, in terms of spectrum, we are facing a transition from
a rural spectrum society to an urban spectrum society, where,
you know, in the past, if you think about, you know, you have a
large land holding, if you have a feedlot, it is really not
going to bother your neighbor, who is, you know, 40, 80 acres
away, and even if it does bother them, they have one too. Now,
in spectrum, we are building a situation where we have feedlots
right next to residential neighborhoods. So the likelihood of
interference disputes grows.
There are a couple of things we can do to deal with that.
The first is we need to make sure that there are expedited ways
to deal with those disputes. Many options.
Right now, if private parties have an issue, they have to
ask the FCC to resolve it. They should be able to deal with
each other directly. If there is a dispute between the FCC and
the NTIA, as far as I know--and I am a physicist, and I
apologize--but, as far as I know, there is no way you can go to
resolve a dispute between the FCC and the NTIA.
We should also allow parties to find the optimum
arrangements themselves. Right now, because rights to spectrum
are vague, it is OK if everybody is in the same business. If
everybody is a farmer, you can make the arrangements, but if
you are actually talking between farmers and householders and
factories, it is much harder because of the ambiguity in the
rules.
And that is why I suggest things like harm claim thresholds
that actually make it clear what interference protection one is
entitled to and what you are not entitled it. That will make it
easier for people to negotiate, because they will know what the
starting point is for the negotiation.
The Chairman. Thank you.
Well, I think we have covered a lot of ground today. I
appreciate very much all our panelists, your responses, your
testimony. We will take it to heart and encourage you as we
move forward, and we will have, hopefully, a plan moving
forward.
We encourage you to work with us and share suggestions,
thoughts, advice, recommendations with us. Because, obviously,
this is an issue that is not going to go away; demand is only
going to increase. And we need to make sure we are doing
everything to ensure that there is an available supply of
spectrum for the future needs in our economy.
Thank you all very much.
The hearing record will remain open for 2 weeks, during
which time senators are asked to submit any questions for the
record. Upon receipt, the witnesses are requested to submit
their written answers to the Committee as soon as possible.
Thanks again.
This hearing is adjourned.
[Whereupon, at 12:24 p.m., the hearing was adjourned.]
A P P E N D I X
Aerospace Industries Association
Arlington, VA, July 28, 2015
Hon. John Thune,
Chairman,
Committee on Commerce, Science, and Transportation,
United States Senate,
Washington, D.C.
Hon. Bill Nelson,
Ranking Member,
Committee on Commerce, Science, and Transportation,
United States Senate,
Washington, DC.
Dear Chairman Thune and Ranking Member Nelson:
The Aerospace Industries Association (AIA) represents an industry
that employs more than one million direct workers across all 50 states
and adds $240 billion in sales to our national economy. Our industry
leads the manufacturing sector in net exports, adding over $60 billion
each year to a positive balance of trade. Equally important, our
members design, develop and manufacture the cutting-edge aircraft,
satellites, radars, and weapon systems that keep our Nation safe and
protect U.S. national interests around the globe.
As you know, many of these technologies are spectrum-dependent.
Without continued and reliable access to spectrum, Federal agencies and
military service members may not be able to accomplish their missions
effectively. Consequently, our industry is a critical stakeholder in
the debate about spectrum policy and the management and use of spectrum
by the Federal Government. We understand that the civilian economy
demands increased access to additional spectrum, while government
demands for bandwidth increase as well. However, changes in spectrum
policy must take care to ensure that any such transition not be
conducted to the detriment of our national security, intelligence
capabilities, or new entrants to our economy such as the integration of
unmanned aircraft into our national airspace. We urge you to consider
the need for future sharing among Federal and commercial users of
spectrum.
The systems built by our members are primarily developed and
manufactured in the United States. All of AIA's members are U.S.
manufacturers. We have an established industrial base and supply chain
that makes enormous contributions not only to our economy, but also to
our Nation's safety and well being. Our ability to maintain this
resource relies on the continued availability of spectrum to support
our systems and solutions.
I respectfully request your approval, if appropriate; to place a
copy of this letter in the hearing record of your March 26, 2015
hearing titled ``Next Steps for Spectrum Policy''. We greatly
appreciate your expertise and leadership on spectrum issues, and as you
pursue changes in spectrum policy in the current Congress, I hope you
will consider the needs of our industry and consider us a resource in
future stakeholder discussions.
Sincerely,
David F. Melcher,
President and CEO,
Aerospace Industries Association.
Attachment
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Competitive Carriers Association
Washington, DC, July 29, 2015
Hon. John Thune,
Chairman,
U.S. Senate Committee on Commerce, Science, and Transportation,
Washington, DC.
Hon. Bill Nelson,
Ranking Member,
U.S. Senate Committee on Commerce, Science, and Transportation,
Washington, DC.
Dear Chairman Thune and Ranking Member Nelson:
Competitive Carriers Association (CCA) respectfully submits this
letter for the record regarding today's hearing on ``Wireless Broadband
and the Future of Spectrum Policy.'' CCA commends the Committee for
beginning a bipartisan process to consider ways to meet future demand
for wireless services through a long-term legislative solution.
Mobile broadband is a critical component of modern life, and
spectrum is the lifeblood of mobile services. CCA represents over 100
competitive wireless providers ranging from small, rural carriers to
regional and nationwide providers, as well as approximately 200
associate members consisting of small businesses, vendors, and
suppliers that service carriers of all sizes. All CCA members depend on
procompetitive policies that support their ability to access critical
spectrum resources and continued growth of mobile broadband to meet
their customer's needs.
In addition, mobile broadband powers advanced telemedicine,
limitless education, employment prospects, public safety, precision
farming, and other innovative new services and opportunities, both in
urban population centers and in rural America. Indeed, nearly half of
all United States households are now ``wireless only'' and PEW Research
recently found that ``nearly two-thirds of Americans are now smartphone
owners, and for many these devices are a key entry point to the online
world.'' While carriers continue to make impressive progress to provide
innovative services, there is still work to be done. CCA supports the
Committee's focus on fueling broadband investment and growth with
additional access to spectrum and by promoting policies that remove
barriers to competition and facilitate the next disruptive innovation.
Ensure Competitive Spectrum Policies
Building on the Spectrum Act and the progress made implementing it,
Congress has a key role to play in creating durable, enduring processes
to meet our wireless nation's spectrum needs. Looking over the horizon,
rather than focusing on a particular spectrum band or technology,
policymakers should foster efficient spectrum management that maximizes
utilization of this finite, taxpayer-owned resource.
While we all must cooperatively work to identify additional
spectrum resources for mobile broadband use, competitive principles
currently in place should guide future spectrum policy. For example,
spectrum must be interoperable to support open ecosystems that allow
carriers of all sizes and technologies to maximize use of spectrum to
unleash new services. Interoperability was required for the original
Cellular spectrum band, and policies requiring or restoring
interoperability in other spectrum bands provide carriers with the
certainty that scarce spectrum resources can be used to enhance
competition and service offerings. Future spectrum allocations must be
interoperable to support a competitive mobile ecosystem.
Additionally, the FCC should continue to allocate spectrum in
smaller geographic license sizes. CCA applauds efforts to reinforce
this principle, and commends Chairman Thune's repeated support in
previous hearings for using smaller geographic license sizes to
encourage interest in rural areas. Smaller geographic license sizes,
like Cellular Market Areas or Partial Economic Areas, are necessary for
smaller carriers to be able to compete for spectrum at auction and
support utilization nationwide, particularly in rural areas.
Furthermore, policymakers should consider appropriate build-out
requirements and, as required by the Communications Act, policies that
help to avoid excessive spectrum aggregation that impedes competition.
The Next Band: A Broad Range of Solutions Should Be Considered
There is no one-size-fits-all solution to making more spectrum
available for mobile carriers, and each additional spectrum band will
have unique utilization challenges and opportunities. Congress should
consider a broad range of ideas that collectively add up to new and
enhanced opportunities for access to additional spectrum resources.
Market-based proposals, like those contemplated in the Rural Spectrum
Accessibility Act (S. 417), provide incentives for wireless carriers to
enter into business agreements to partition or disaggregate a spectrum
license to make unused spectrum available to small carriers or for
carriers to serve rural areas, particularly when this spectrum may
otherwise go unused.
Despite recent efforts to repurpose the AWS-3 band, the Federal
Government remains the holder of the largest amount of spectrum. While
Federal users must retain access to resources necessary to complete
their missions, Congress should consider policies to support
reallocation where appropriate. A good example is the Wireless
Innovation Act (S. 1618), which supports identifying Federal spectrum
that can be reallocated for mobile broadband use and encourages
deployment on Federal buildings and lands. Another example, the Federal
Incentive Auction Act (S. 887) provides monetary incentives for Federal
users to reallocate spectrum for commercial use in exchange for a
percentage of the auction proceeds. These legislative efforts provide
opportunistic uses of spectrum which encourage more efficient use. As
FCC Commissioner Rosenworcel has articulated, carrots to incentivize
spectral efficiency among Federal users allow the mobile broadband
industry and the Federal Government to cooperate to identify
opportunities to maximize use of otherwise under-utilized spectrum.
Increasing demand for spectrum, and the limited amount of new
spectrum resources available for license, requires policies that
consider opportunities that unlicensed spectrum offer for innovators,
entrepreneurs and existing mobile operators to maximize spectral
resources. Unlicensed spectrum, as a compliment to licensed spectrum,
helps to support enhanced services and competition. In identifying
future spectrum bands for potential reallocation for commercial use,
higher frequency spectrum can support on-the-spot capacity solutions,
while continued work to identify lower frequency spectrum to support
wide area coverage, particularly in rural areas. Progress in
identifying spectrum for unlicensed use in the 3.5 GHz and 5 GHz bands
provides a good example of ways to support new technologies while
enhancing licensed carrier services. Stakeholders prefer exclusive use
of licensed spectrum, yet facing today's realities all options should
be on the table. Access to new frequencies and technologies, with open
ecosystems that support the availability of devices in all spectrum
bands, for all carriers, should be encouraged.
Role of Technology
Spectrum availability, as vital as it is, requires sound standards-
setting to support both competition and meet growing wireless demands.
Policymakers should continue to play a role as standards are developed
to ensure all Americans benefit from new innovations and technology
advancements. Establishing core competitive principles for emerging
technology while avoiding unnecessary regulation will help bridge the
digital divide between urban and rural areas. New technologies like
LAA, LTE-U, smart antennas, dynamic spectrum access and cognitive radio
may help alleviate network congestion and provide carriers with new
avenues to offer faster, more efficient service to otherwise unserved
areas. This is a particular focus of CCA members that do not have the
same spectrum portfolios of their largest rivals. Ensuring the
capabilities of future networks now will help us to meet the needs of
urban and rural consumers alike and in turn will spur development of 5G
services. The United States has led the world in 4G deployment. The
same should be true of 5G deployment, and these policies will foster
that leadership. Policymakers should keenly emphasize that new
technologies and services are available nationwide to maximize spectrum
utilization and make sure that rural areas are not left behind as new
services evolve.
Infrastructure
While spectrum is the invisible infrastructure over which mobile
services ride, carriers also depend on towers and other physical
network components. Wireless broadband is necessarily dependent on
costly infrastructure to provide services. Competitive carriers depend
on reasonable facilities siting policies to deploy critical wireless
services. Many competitive carriers serve the most rural areas of the
United States and often face challenges obtaining prompt collocation or
tower construction permits or rights of way for siting on Federal
lands. Efforts to streamline the siting process and remove unnecessary
red tape encourage faster deployment of mobile broadband infrastructure
and services to consumers.
The Bureau of Land Management (BLM), National Parks Service (NPS),
United States Forest Service (USFS) Fish and Wildlife Service (FWS) and
other Federal agencies own, manage, or administer significant portions
of land, particularly in western and rural states. Competitive carriers
seeking to deploy mobile broadband in these areas face unreasonable
delays and other impediments to constructing and siting on these lands.
Barriers to deployment often raise a carrier's cost through onerous
administrative, legal and regulatory requirements. Consolidating
Federal requirements, and trimming excessive or duplicative rules when
multiple Federal agencies are involved in approving the same
infrastructure project would help to streamline an otherwise laborious
process. For example, creating an application clearing house to
coordinate all Federal permitting required for a project would reduce
delays and utilize limited resources more efficiently.
Similarly, carriers depend on timely responses from state and local
governments on siting applications. Shot clocks and other defined
timeframes and parameters allow for efficient application consideration
without creating unnecessary delays or obstacles for carriers to expand
their facilities. The Supreme Court's ruling in T-Mobile South LLC v
City of Roswell, which requires local and state governments to act
expeditiously and clearly state their objections to a tower siting
application, is a step in the right direction. Should further disputes
regarding state and local authority continue to arise, we encourage
Congress and the FCC to provide additional guidance to provide clear
rules of the road for tower siting.
Certainty Regarding Other Inputs to Wireless Broadband Supports
Continued
Investment
While today's hearing is focused on spectral inputs for continued
growth of mobile broadband services, CCA would be remiss not to mention
the need for certainty regarding access to other inputs and incentives.
For example, carriers, non-nationwide carriers in particular, require
access to reasonable data roaming, access to devices, and certainty
regarding the Universal Service Fund (USF) to continue to invest to
meet growing demands. Congress created USF to provide reasonably
comparable services to urban and rural consumer alike, requiring that
support be predictable and sufficient. These policies have enabled
years of expansion of mobile wireless services in rural America. USF
injects a healthy dose of funding to supplement and compliment
competitive carriers' private sector investments to expand mobile
broadband service in rural and high cost areas that are otherwise
uneconomical to serve. Any uncertainty regarding existing and future
support has the potential to delay or prevent deployment of broadband
infrastructure.
Uncertainty regarding existing and future support has the chilling
effect of stalling deployments and forcing carriers to make difficult
decisions regarding existing and planned mobile broadband services. In
addition, this uncertainty has the potential to strand existing
investments, leaving behind a legacy of rusty towers and reduced
services. Congress must continue its oversight to ensure that USF
support is sufficient and predictable to support wireless service
throughout rural America.
Similarly, uncertainty regarding the availability of devices to
utilize new spectrum allocations or access to backhaul and roaming to
provide services limits smaller carriers' ability to invest and provide
services in rural and underserved areas. As the legislative process
continues, CCA encourages the Committee to focus on providing carriers
of all sizes with access to all inputs necessary to meet continually
growing demands.
In conclusion, CCA applauds and supports committee efforts to
provide additional spectrum resources for mobile broadband and welcomes
the opportunity to help craft a proactive approach to potential
solutions. Enacting policies that provide competitive carriers with
certainty while eliminating or streamlining burdensome procedures and
creating innovative solutions to access finite spectrum resources will
encourage investment and expansion in mobile broadband infrastructure
and foster continued innovation and economic growth. Consumers across
the United States, especially in rural areas, will benefit from
Congress's continued focus on policies that support competition and
investment in mobile broadband. CCA appreciates the opportunity to
contribute to the record for today's hearing, and looks forward to
continued work with the Committee, its Members, and the FCC on these
important issues to increase mobile broadband services and support
competition in the industry. Please do not hesitate to contact me with
any questions.
Sincerely,
Steven K. Berry,
President and CEO.
______
Response to Written Questions Submitted by Hon. John Thune to
Hon. Jessica Rosenworcel
Question 1. Commissioner Rosenworcel, you have emphasized the
importance of small-scale policy experiments to examine the impacts of
new policies and laws before they are put in place on the large scale.
How can policymakers use small-scale experiments to develop innovative
approaches to spectrum policy?
Answer. Our economy now depends on a potent mix of mobility,
increased broadband capacity, and the decreased cost of cloud
computing, allowing us to send information anytime and anywhere. Up
ahead lies the Internet of Things, where billions of machines with
sensors seamlessly communicate with one another, turning today's steady
stream of data into a torrential flow.
While this new digital landscape is dynamic, the traditional
regulatory process is not. It can often be risk averse to new ideas.
But we can overcome this risk aversion if we experiment on a smaller
scale, with ``sandbox'' projects, before implementing ideas on a
national scale.
The Commission has already begun to embrace this kind of sandbox
thinking. We have tested broadcast channel sharing on towers serving
television stations in Los Angeles. We have towns in Alabama and
Florida that are our test cases for migration to all IP networks. We
also have created an experimental spectrum licensing process to help
researchers and developers tinker with our airwaves--a process that has
already led to systems that support rocket launches, patient-monitoring
equipment, and robotic technology for the armed forces.
I believe we also can use this approach for developing innovative
ideas in spectrum policy, including ideas that facilitate the
reallocation of airwaves from Federal to commercial use. To do this, we
could identify specific spectrum bands used by Federal authorities that
are ripe for repurposing through auction. We could test different ways
of expediting reallocation with these bands--by providing financial
incentives for speedy Federal relocation, by encouraging other Federal
authorities with spectrum to make space for those being relocated
through benefits in the Spectrum Relocation Fund, or by exempting some
Federal users from the Miscellaneous Receipts Act and allowing the
auction of spectrum not yet fully cleared for commercial use.
Question 2. Commissioner Rosenworcel, you have proposed auctioning
to commercial entities the right to negotiate with a particular Federal
agency for access to its spectrum assignment. Please explain how your
proposal would operate as a practical matter. Would a reasonable
alternative be to allow agencies to directly lease their excess
spectrum to the private sector?
Answer. We need a Federal spectrum policy that is based on carrots,
not sticks. In other words, we need to develop a system of incentives
to help free more Federal spectrum for commercial use. If we do this
right, we can reward Federal authorities for efficient use of spectrum
in a manner where they see gain in commercial reallocation, rather than
just loss.
We can do this by designing auctions of imperfect spectrum rights.
These auctions would involve spectrum bands that have not fully been
cleared of Federal users. However, we would provide the winning bidder
in such auctions with the right to negotiate directly with remaining
Federal users to help meet their wireless needs. This option would
require adjusting the Miscellaneous Receipts Act. This law presently
prevents negotiations between Federal agencies and winning bidders. It
also prevents provision of service or equipment from winning bidders to
remaining Federal users. But if we made changes to this law, we would
be able to speed repurposing of our Nation's airwaves and provide
commercial carriers with incentives to help update Federal systems that
are past their prime. To do this right, however, we would have to have
sufficient information about remaining Federal uses at the time of
auction. This information would be necessary for bidders to assess the
viability of their participation in the auction, including the
likelihood that they would be able to address existing Federal needs
and also make commercial use out of the band.
To some extent, the same kind of repurposing could be accomplished
with allowing agencies to directly lease their excess spectrum to the
private sector. However, the leasing approach has some problems that
need to be considered. Arguably, this approach would deepen the
property right of Federal users in spectrum they presently hold. It
also would create challenging incentives, encouraging Federal
authorities to hold onto their excess airwaves for leasing instead of
working to help clear them for auction. In addition, commercial
entities may be better positioned to develop new efficient solutions
for Federal users through an exemption in the Miscellaneous Receipts
Act, than Federal authorities themselves, who may have an institutional
bias toward providing service through more limited changes to existing
systems.
______
Response to Written Question Submitted by Hon. Roger F. Wicker to
Hon. Jessica Rosenworcel
Question. During your testimony, you noted the need to make sure
that rural America is not left behind in the wireless revolution and
that smaller carriers are more likely to deploy in rural communities.
The Universal Service Fund (USF) plays a critical role in supporting
existing and planned wireless services in these areas. To this point,
you stated that ``we are going to enhance the Mobility Fund to ensure
we support small wireless providers serving in rural areas.'' Congress
created USF to provide reasonably comparable services to urban and
rural consumers alike, and required that support be predictable and
sufficient. Uncertainty regarding existing and future support can have
the chilling effect of stalling deployments and potential reductions in
wireless service.
What steps is the Commission taking to ``enhance'' the Mobility
Fund, and will ongoing support through Phase II of the Mobility Fund be
sufficient to support existing services in rural areas as well as
continue to expand mobile broadband in rural and high-cost areas?
Answer. The Commission first developed the Mobility Fund in the
Universal Service Fund and Intercarrier Compensation Transformation
Order, which was adopted in 2011. In doing so, the agency sought to
support ``the universal availability of mobile networks capable of
delivering mobile broadband and voice service in areas where Americans
live, work, or travel.'' The development of this fund has proceeded in
phases--in an effort to ensure that the limited dollars available are
deployed in rural areas that truly lack service and are most at risk of
falling behind.
The Mobility Fund kicked off with Phase I, which offered roughly
$300 million in a one-time reverse auction to providers serving rural
areas where updated wireless service was not available. This auction
concluded three years ago, in September 2012.
It was followed in February 2014 by another reverse auction
specifically designed to provide support for updated wireless service
on tribal lands. This Tribal Mobility Phase I auction awarded
approximately $50 million in support for mobile voice and broadband
service offered by providers serving tribal communities.
These efforts were followed by a rulemaking in June of 2014 seeking
comment on Phase II of the Mobility Fund. This rulemaking made clear
that our purpose was to ``target. . .Mobility Fund Phase II on
preserving and extending service in'' rural areas ``that will not be
served by the market without governmental support.'' In particular, the
rulemaking sought comment on how to ensure that our Mobility Fund Phase
II is devoted to ``preserving service that otherwise would not exist
and expanding access to 4G LTE in those areas that the market will not
serve.'' I think this approach is a good one. With this next step in
our Mobility Fund efforts, we should apply laser-like focus on areas
that lack service and areas where updated service requires additional
support. I believe the funds we have available will be sufficient to
make this happen and the Commission should move forward to complete
Phase II of our Mobility Fund efforts.
______
Response to Written Questions Submitted by Hon. Steve Daines to
Hon. Jessica Rosenworcel
Question 1. Given that all of the spectrum that is best suited for
mobility is occupied, much of it by Federal users, what can we do to
ensure that agencies are using spectrum efficiently and/or reallocate
some of the Federal spectrum for mobile broadband use?
Answer. Federal authorities have substantial spectrum assignments.
They use their airwaves for everything from protecting our borders to
keeping planes in the skies to fighting forest fires. These are
critical tasks that we should support. But if we want to continue to
grow our wireless economy, we need to reassess just how much of our
airwaves are dedicated to these tasks and consider if there are ways to
accomplish the same objectives using scarce spectrum resources more
efficiently.
I believe the best way to do this is to develop a Federal spectrum
policy based on carrots, not sticks. In other words, we need to find
ways to reward Federal authorities for efficient use of their spectrum
so that they see benefit in commercial reallocation--rather than just
loss.
To do this, we need a series of incentives to serve as the catalyst
for freeing more spectrum for commercial markets. We could begin with a
valuation of all spectrum used by Federal authorities, ideally
developed by the Office of Management and Budget. This effort would
help us develop consistent ways to reward efficiency, identify
incentives for reallocation for commercial use, and better understand
the opportunity cost of continued Federal use.
We also could adopt a system of incentives that are straightforward
and financial--under which a certain portion of the revenue from
commercial auction of spectrum previously held by Federal authorities
would be reserved for the Federal entity releasing this spectrum. This
is a complex undertaking, because agencies do not operate in a market
environment and are subject to an annual budget allocation.
Nonetheless, we could explore such incentives with discrete spectrum
bands or agencies.
In addition, we should consider auctions of imperfect spectrum
rights, which could provide the winning bidder with the opportunity to
negotiate directly with the existing Federal authority calling those
airwaves home. This option would require adjusting some laws, like the
Miscellaneous Receipts Act. This law prevents negotiations between
Federal agencies and winning bidders in wireless auctions. But if
changes are made, the Federal Government could auction spectrum that is
not fully cleared and allow winning bidders to negotiate directly with
Federal authorities remaining in the band to help meet their wireless
needs. This could speed repurposing of our Nation's airwaves and also
help provide commercial carriers with incentives to help update Federal
systems that are past their prime.
Finally, we should look at the Spectrum Relocation Fund, which was
created in the Commercial Spectrum Enhancement Act. Today this fund
assists Federal authorities with relocating their wireless functions
when their spectrum is being repurposed for commercial use. But this
fund also could provide incentives for more government spectrum
sharing, if changes were made to reward Federal users when they share
their airwaves with agencies that are being relocated.
Question 2. While many parts of the country are gearing up for 5G,
there are still parts of the U.S. where it is not possible to make a
phone call wirelessly. Are there things we can do to encourage build-
out and streamline infrastructure deployment in rural areas, and
particularly tribal areas?
Answer. Yes. We can and should take steps to encourage
infrastructure deployment in rural areas, including on tribal lands.
This is not only the right thing to do--it is consistent with our duty
to promote universal service under the law.
To encourage wireless deployment in rural areas, the Commission has
taken a number of steps. These include recently revising our auction
policies to include a bidding credit for rural service providers so
that they can compete more effectively for spectrum in the remote
communities where they serve. The Commission also has a Tribal Land
Bidding Credit program to facilitate service on underserved tribal
lands. In addition, for the upcoming 600 MHz auction, the Commission
will offer licenses in Partial Economic Areas, which are smaller than
traditional Economic Areas, and facilitate broader participation by
small and rural service providers.
To encourage infrastructure deployment in rural areas, on October
17, 2014, the Commission adopted a Report and Order updating its
infrastructure policies. Among other things, the Commission exempted
certain wireless deployments on utility structures from review under
the National Historic Preservation Act. This approach will reduce
bureaucratic hurdles that can slow infrastructure deployment,
especially in rural areas with limited population.
Going forward, there are additional actions we should consider. For
instance, I think we should explore incentives for wireless carriers to
lease unused spectrum to rural or smaller carriers in order to expand
wireless coverage in rural communities. I know this approach is under
consideration in the proposed Rural Spectrum Accessibility Act. I also
believe the Commission should work closely with the Advisory Council on
Historic Preservation, tribes, and other stakeholders to develop a
``program alternative'' which could expedite deployment of small cell
infrastructure under the National Historic Preservation Act. This would
help facilitate the deployment of this infrastructure nationwide, but
could be especially helpful in rural areas.
Question 3. What steps is the FCC taking to encourage wireless
deployment on tribal lands?
Answer. Wireless deployment on tribal lands lags behind deployment
elsewhere and puts residents at a clear disadvantage in an economy that
is increasingly dependent on mobile connections. As a result, a variety
of Commission polices have been put in place to help expedite
deployment and improve wireless service in tribal communities.
For nearly a decade and a half, the Commission has had a Tribal
Land Bidding Credit program, which provides incentives for wireless
carriers participating in spectrum auctions to offer service on tribal
lands. Today, this credit is available to any entity that secures a
license at auction and deploys service to federally-recognized tribal
areas where the wireline penetration rate is 85 percent or less. In
order to ensure that tribal lands receive timely service, deployment
covering 75 percent of the qualified tribal lands is required within
three years.
More recently, in February 2014, the Commission concluded its
Tribal Mobility Fund Phase I reverse auction, known as Auction 902.
This auction for universal service support offered up to $50 million in
one-time funding to accelerate service on tribal lands and enhance
broadband availability. To encourage tribal participation, the
Commission offered a 25 percent bidding credit for tribally-owned
entities participating in the reverse auction. It is my understanding
that two of the winning bidders from this auction plan to provide
service on tribal lands in Montana. As the agency continues to update
its universal service support policies, we will need to study the
impact of this auction--in Montana and elsewhere--and identify what
further efforts are necessary to facilitate greater deployment on
tribal lands.
In addition, the Commission has an outstanding Notice of Proposed
Rulemaking seeking comment on how to promote greater use of spectrum
over tribal lands--in order to improve the availability of wireless
service to unserved and underserved tribal communities.
______
Response to Written Question Submitted by Hon. Amy Klobuchar to
Hon. Jessica Rosenworcel
Question. The recent AWS-3 spectrum auction raised a record $45
billion. However, some of the big winners were the largest wireless
carriers. Last Congress I held a hearing in the Antitrust Subcommittee
about competition in the wireless market and I believe it is important
to make sure that auction rules do not create barriers to entry for
other wireless carriers. Additionally, I have worked with Senator
Fischer on making sure that rural carriers can also get access to
already licensed spectrum in the secondary markets by introducing the
Rural Wireless Spectrum Act to incentivize companies with spectrum
licenses to partner with small rural carriers to provide service in
rural America.
Commissioner Rosenworcel, do you agree that we need to protect
competition in auctions as well as use additional tools to boost
wireless coverage in rural areas through the secondary market?
Answer. Yes. I agree that our spectrum auctions must remain
competitive and that we must take steps to improve wireless coverage in
rural areas.
I believe that fostering competition in our spectrum auctions is
not just a good idea--it's required under the law. In Section 309 of
the Communications Act, Congress charged the Commission with
``promoting economic opportunity and competition'' when developing the
bidding methodologies that govern the auctions of our airwaves. To this
end, the Commission recently revised its competitive bidding rules in
order to provide more opportunities to participate in our auctions and
win spectrum licenses. As part of this effort, for the first time ever,
the Commission adopted a bidding credit for rural service providers so
that they can better compete for spectrum in the remote communities
that they serve. In addition, for the upcoming 600 MHz auction, the
Commission has established a market-based spectrum reserve that will
provide competitive carriers and rural service providers with greater
access to valuable low-band spectrum.
I am optimistic that these recent revisions to our competitive
bidding rules will both enhance competition and expand coverage in
rural areas. But I recognize that more can be done, especially with
respect to deployment in rural areas through use of the secondary
market. That is why I believe we should explore developing incentives
for wireless carriers to lease unused spectrum to rural or smaller
carriers in order to expand wireless coverage in rural communities.
This is the fundamental idea behind the Rural Spectrum Accessibility
Act--and a concept I support.
______
Response to Written Questions Submitted by Hon. Brian Schatz to
Hon. Jessica Rosenworcel
Question 1. Commissioner Rosenworcel, as you may recall, Hawaii
transitioned to digital television a month earlier than the rest of the
United States to accommodate the unique nature of the state and to
ensure a smooth transition. As we prepare for the upcoming incentive
auction, likewise, we want to be certain that the needs and economic
realities of non-contiguous states are taken into account to make sure
this transition is successful as the digital television transition.
The law specifically created a $1.75 billion fund to compensate any
broadcasters for expenses associated with repacking. Do you expect that
this fund will be sufficient for the affected broadcasters to repack?
Answer. Yes. At this point in the auction process, I believe that
the $1.75 billion fund established by Congress will be sufficient to
cover the reasonable costs and expenses associated with the relocation
of stations following the incentive auction. I recognize, however, that
there are estimates from the broadcasting community that suggest that
the cost of relocation may be slightly greater than the amount in
existing law. If in the future the current fund proves insufficient,
Congress may wish to take steps to provide additional support.
Question 2. The law also provides a 39 month window for the
transition. Is the FCC confident that the equipment and personnel
required to repack the affected stations will be available within the
specified timeframe?
Answer. Yes. At this point in the auction process, I believe that
the 39-month period for the transition will be adequate for the
repacking process. The Commission has already adopted policies designed
to facilitate a smooth transition for broadcasters and their viewers
during this period. For instance, in the Incentive Auction Report and
Order, the Commission determined that stations required to repack
following the auction will receive a construction period tailored to
their specific circumstances. Stations also will have the opportunity
to request a one-time, six-month extension of construction permits if
they experience delays or unexpected challenges. In addition, the
Commission will work with stations to help mitigate any service
disruptions if construction of post-auction facilities is not completed
prior to the 39-month deadline for all stations to cease operating on
their pre-auction channels. I believe these policies will support an
orderly transition during the 39-month period. But I also recognize
that unexpected difficulties may arise, including pressures on the
capacities of tower and transmission companies as well as regional
weather events. I believe that the Commission must work with Congress
to ensure that such difficulties do not jeopardize a smooth transition
or harm viewer access to free, over-the-air television.
______
Response to Written Questions Submitted by Hon. John Thune to
Hon. Meredith Attwell Baker
Question 1. Ms. Baker, the Spectrum Act created the Technical Panel
to review agency spectrum relocation plans. What has been the
experience of the wireless industry with the Technical Panel? In what
ways might the panel be improved to address our Nation's spectrum needs
going forward?
Answer. Industry's experience with the Technical Panel, which is
comprised of three agencies, the FCC, NTIA and OMB, has been positive
and, in general, we believe anything that enhances communication and
collaboration between the government and industry is a positive. In the
AWS-3 process, carriers and vendors alike participated in the CSMAC
working groups to collaborate with agency stakeholders on ways to gain
spectrum access on a system-by-system basis and this interaction proved
to be very helpful in understanding each side's operational
requirements and ultimately paved the way to developing each agency's
transition plan.
As far as improving upon this concept, it likely would be
worthwhile to have a Technical Panel post-auction so that it can review
each agency's transition plan throughout the implementation process.
This oversight could include measuring agency progress toward certain
milestones, which in turn could be tied to payment to agencies as a way
to incentivize quicker transitioning of the spectrum for commercial
use.
Question 2. Ms. Baker, you have previously argued that continued
growth of wireless broadband is based on availability of exclusive use
licensed spectrum. Please share your views on whether exclusive use is
a viable model for the future and the appropriate role for sharing
arrangements and technologies.
Answer. Exclusive use spectrum has played a central role in the
U.S.'s global lead in 4G technologies. Exclusive use auctions in 2006
and 2008 provided spectrum that is the backbone of much of our national
4G deployment. As I noted in my written testimony, the backbone of our
national spectrum policy should remain licensed and exclusive use
spectrum for the foreseeable future. Exclusive use spectrum is critical
to carriers' planning; without it, they would be unwilling to make the
enormous capital investments to build network capacity--investments
that drive technology, create jobs and provide services to businesses
and consumers. Of course, as the wireless industry evaluates spectrum
that may be made available for exclusive licensed use in the future, we
recognize that temporal and geographic sharing may be required,
particularly as incumbent licensees relocate to other bands, or
otherwise vacate their spectrum. The AWS-3 band provides a good example
of how commercial users will work with Federal licensees to share
spectrum while the relocation process occurs. This type of sharing,
which always has been part of our national approach, can be an
effective bridge to exclusive licensed use. Other types of database-
based sharing may be appropriate in the future. For example, the FCC
continues to refine the rules that will govern shared access to the 3.5
GHz band for government users, licensed entities and unlicensed
operations. However, these forms of flexible sharing, driven by
database access and other technologies that have not been fully tested,
cannot currently satisfy our spectrum needs and consumer demand. While
we continue to support the FCC's efforts to evaluate potential sharing
arrangements and technologies, they are not yet mature enough to meet
our Nation's critical spectrum requirements.
Question 3. Ms. Baker, are reforms needed to the Spectrum
Relocation Fund to meet Federal agencies needs and facilitate
reallocation of Federal spectrum? Please provide specific examples of
changes that you believe are required.
Answer. The Spectrum Relocation Fund has been an important and
positive development, and further enhancements to the Fund could
facilitate more efficient and effective spectrum use. CTIA strongly
supports changes to how auction proceeds that are deposited into the
Spectrum Relocation Fund are distributed, to provide Federal entities
with incentives to use spectrum more efficiently and potentially make
additional spectrum available for auction to commercial users. Today,
money from the Spectrum Relocation Fund only compensates Federal users
whose spectrum is being immediately auctioned. A portion of auction
proceeds should be available to Federal agencies that wish to conduct
research and development activities, even if their spectrum has not
been designated for auction. Of course, distribution of those research
and development funds cannot be unchecked; Federal agencies should be
required to show specific plans and how they may lead to the re-
allocation and auction of some or all of the spectrum they currently
use. Another way the Spectrum Relocation Fund can be reformed is to
provide an incentive to Federal entities that vacate their current
spectrum when it is auctioned, instead of being relocated to
alternative spectrum. Today, Spectrum Relocation Fund money is only
available to cover relocation costs. However, if a Federal agency
vacates the spectrum completely--and uses a commercial system or shares
a system with other Federal users--it should recognize a benefit for
doing so. Finally, because the Spectrum Relocation Fund only covers
spectrum that is auctioned, there is no path to compensate Federal
entities whose spectrum becomes available for unlicensed operations.
While CTIA believes that exclusive use licensed spectrum should
continue to be the focus of U.S. spectrum policy, if Federal spectrum
becomes available for unlicensed use, those incumbent users must also
be compensated.
Question 4. Ms. Baker, what actions can Congress or the Federal
Communications Commission take to promote United States leadership in
5G?
Answer. As I noted in my testimony, a combination of sound spectrum
policy, a light-touch approach to regulation, and pro-investment tax
policy, have propelled the U.S. to its current status as the world's
leader in 4G services. And it is a continued commitment to that course
that will help us retain our lead as we move toward 5G. That requires
filling the spectrum pipeline to ensure that America's wireless
providers can meet user demand for mobile bandwidth with a mix of low-
band, mid-band, and high-band spectrum. It also requires the FCC to
exercise regulatory restraint and avoid the imposition of regulations
that raise cost and slow innovation and infrastructure investment. And
finally, it requires the adoption of both regulatory and tax policies
that facilitate the deployment of advanced wireless infrastructure.
Each of these elements is important and collectively they can work to
help us maintain America's competitive edge.
______
Response to Written Question Submitted by Hon. Kelly Ayotte to
Hon. Meredith Attwell Baker
Question. In your testimony, you noted that the FCC's 2010 spectrum
demand study was quite accurate in estimating the incredible growth of
mobile data traffic. The technological advancements of the Internet of
Things has no doubt assisted this skyrocketing usage. Earlier this
year, I coauthored a resolution with my colleagues--Senators Fischer,
Schatz, and Booker--regarding the significance of the Internet of
Things, which unanimously passed the Senate.
The Internet of Things incorporates innovative devices, services,
and applications that already are and will continue to influence all of
our lives. However, none of this is possible without a robust mobile
network. For our role in creating sound spectrum policy, what is the
most important action Congress can take to ensure the mobile network
has the capacity to support the full potential of the Internet of
Things?
Answer. CTIA is pleased that the Senate has recognized the
significance of the developing Internet of Things (IoT), which is a
means to wirelessly connect everyday objects to the Internet and to
each other, allowing them to send and receive data. This exciting
advance depends on a robust mobile infrastructure. And, the
technological advancements brought about by the increasing popularity
and continued growth of IoT has contributed to the skyrocketing demand
for innovation and faster speeds. Support for IoT will require greater
amounts of spectrum; ideally a continual mix of licensed and
unlicensed, depending on the intended use cases. For instance, given
the need for heightened security and reliability, health information,
medical monitoring, financial records and connected vehicles, for
instance, would be best suited to a licensed spectrum platform. When it
comes to connected home devices and beacons, an unlicensed platform may
be appropriate.
To best ensure that American consumers may fully benefit from the
myriad benefits of IoT, I would encourage the Senate to undertake
comprehensive action to ensure an ongoing, plentiful supply of licensed
and unlicensed spectrum. CTIA supports the broad availability of free,
unlicensed spectrum as long as uses of such spectrum do not interfere
with licensed users or reduce the availability and usability of
licensed spectrum.
______
Response to Written Questions Submitted by Hon. Ron Johnson to
Hon. Meredith Attwell Baker
Question 1. The AWS 3 auction was a huge success for taxpayers,
government, and industry. What can Congress do to ensure that future
auctions are as successful, if not more successful?
Answer. Consumer appreciation for the convenience and ease brought
by the mobile connected life has led to skyrocketing demand for ever
more substantial services at ever faster speeds. By 2019, wireless
networks will face an estimated six-fold increase in data traffic over
record 2014 levels. While carriers continue to upgrade their networks
and deploy advanced services to more areas, infrastructure and
technology alone cannot satisfy consumer demand. To keep up, our Nation
will need more than 350 megahertz of new licensed spectrum by the end
of the decade.
Congress can help ensure that future spectrum auctions are
successful in several ways. First, Congress should prioritize freeing
up clear, unencumbered licensed spectrum for commercial mobile uses.
Unhindered access to clear spectrum is the best way to provide the
reliable and robust services that consumers have come to expect.
Next, Congress should emphasize the importance of freeing up
uniform spectrum bands across the globe rather than in individual
countries, known as ``internationally harmonized'' spectrum bands.
Allocating harmonized spectrum minimizes radio interference and
facilitates international roaming. Further, harmonization reduces the
cost of mobile devices for consumers because the economies of scale
encourage manufacture and delivery of more products and services to
more people and allows them to use their mobile devices for less cost
and with greater ease when travelling.
In addition, Congress should take steps to ensure that auction
winning bidders have access to their spectrum as quickly as possible
post-auction. Condoning or appearing to condone delay in the post-
auction transition process would impede broad auction participation,
hinder competition and delay investment. On the other hand, improving
the speed at which new licensees may access their spectrum would
incentivize more rapid deployment and foster greater broadband
adoption.
Finally, Congress should require the FCC to develop and implement
straightforward auction procedures, as well as understandable and
predictable licensing rules for new spectrum bands. Regulations must be
minimal and interference rules must be clear up front. The FCC should
not condition or suggest technologies or uses. The benefits of flexible
use have become even more apparent over time and thus must remain the
default approach. Similarly, the AWS-3 auction illustrated that paired
spectrum blocks are preferable to unpaired given that bidders in that
auction won unpaired blocks for a fraction of the cost of paired
blocks.
Question 2. What can Congress do to ensure that the necessary
infrastructure is in place to handle the ever-expanding mobile
broadband service offerings and increased data traffic?
Answer. The FCC's 2009 ``shot-clock'' order, which was upheld by
the U.S. Supreme Court in City of Arlington, Texas, Et Al., v. Federal
Communications Commission, Et Al. (2013), has significantly improved
the process for siting wireless infrastructure on properties governed
by the municipal zoning process. Similarly, the FCC's 2011 decision
facilitating access to utility poles has improved the process for
deploying small cell and distributed antenna system technologies.
Unfortunately, the process does not work as well when a provider is
attempting to site on property controlled by the Federal Government,
which accounts for 28 percent of the landmass of the United States.
This property is often adjacent to population centers or transportation
corridors and is attractive for siting if approvals could be gained in
a reasonable expeditious manner. While Congress made a good-faith
effort to address this in Section 6409 of P.L. 112-96, and the
President did so as well in Executive Order 13604--Improving
Performance of Federal Permitting and Review of Infrastructure
Projects, and Executive Order 13616--Accelerating Broadband
Infrastructure Deployment, siting on Federal properties continues to
take significantly longer than siting on properties governed by the
municipal zoning process. To remedy this disparity, Congress should act
to impose streamlined timeframes for review and approval of wireless
infrastructure deployments on Federal property. Industry does not seek
free access to these locations, and CTIA recognizes that there may be
instances in which siting requests may not be granted, but enactment of
procedural reforms should generally have the effect of promoting
investment and wider access to services.
______
Response to Written Question Submitted by Hon. Dean Heller to
Hon. Meredith Attwell Baker
Question. Ms. Baker, while it is clear that additional spectrum is
necessary moving forward, I am also interested in another aspect of
mobile broadband--infrastructure deployment, particularly on Federal
lands considering Nevada is 85 percent Federal lands. What are some of
the challenges industry faces in deploying wireless infrastructure on
Federal lands? Do you have any recommendations for streamlining the
process?
Answer. Compared to the process for siting infrastructure in a
location governed by the municipal zoning process, which generally
works well, the process for siting on Federal property is cumbersome
and time consuming. While the municipal zoning process takes months,
Federal processes often are measured in years. This is true across many
agencies, and it is certainly the case at the Bureau of Land Management
and the National Park Service, two of the largest landholders in
Nevada. Leases to place new sites on lands regulated by BLM and NPS can
take two or three years to negotiate and even simple lease renewals can
take 12-18 months. In addition, even though BLM generally requires
applicants to collocate antennas at existing sites (reducing the impact
on subject lands), its processing of applications for ``joint use of
facilities'' is time consuming. Both agencies should take steps to
ensure that applications necessary for the deployment of wireless
broadband service are processed without delay. As a first step in this
process, BLM and NPS should consider adopting more standardized and
streamlined procedures for processing wireless broadband siting
applications.
______
Response to Written Question Submitted by Hon. Cory Gardner to
Hon. Meredith Attwell Baker
Question. Ms. Baker, I recently introduced the Wireless Innovation
Act with Senator Rubio and others. Our legislation would create a
spectrum pipeline as well as lead to more transparency and efficiency
among Federal spectrum users. Moving forward, is this the right kind of
spectrum policy to enable industry to keep up with consumer demand and
maintain its global leadership?
Answer. It is, and CTIA greatly appreciates the work you and the
other sponsors of S. 1618 have invested in crafting a blueprint to
ensure that our wireless future is as bright as our present. The bill's
comprehensive acknowledgement of and plan to address the need for both
licensed and unlicensed spectrum, improved spectrum management, and a
streamlined process for infrastructure deployment offers an outstanding
starting point for the Committee's work to address the critical
question of what comes after the broadcast incentive auction.
Collectively with other bills pending before the Committee, such as the
Federal Spectrum Incentive Act (S. 887), the Rural Spectrum
Accessibility Act (S. 417), and the Wi-Fi Innovation Act (S. 424),
there is clear bi-partisan interest in advancing America's wireless
future. CTIA stands ready to work with you and all members of the
Committee to advance comprehensive spectrum legislation at the earliest
possible date.
______
Response to Written Questions Submitted by Hon. Steve Daines to
Hon. Meredith Attwell Baker
Question 1. Ms. Baker: what steps is industry taking to increase
deployment on tribal lands?
Answer. By making available licensed spectrum on Tribal lands for
commercial use, wireless carriers can provide the Tribes with access to
a valuable resource that gives rise to a number of economic, social,
and public safety benefits. But while broadband--and wireless broadband
in particular--can be a boon for economic development, this is only
true if broadband can be and is actually deployed. Steps can and should
therefore be taken to streamline the siting process, while protecting
Tribal interests and cultural resources. There are several steps the
Bureau of Indian Affairs (``BIA'') should take to facilitate wireless
broadband deployment on Tribal lands.
First, BIA should conclude its pending proceeding to streamline the
right of way approval process. On June 17, 2014, BIA sought comments on
new rules that would streamline the process of obtaining BIA grants of
rights-of-way on Indian lands. BIA recognized that the rules, which
were last updated in 1980, were burdensome and outdated. CTIA supports
the proposed changes to the extent they would expedite broadband
deployment on Tribal lands. Parties filed comments in November 2014 and
BIA held Tribal consultations during August 2014. Thus, this item is
ripe for action and BIA should act expeditiously to conclude its
proceeding.
Second, BIA should consider ways to implement or encourage
uniformity in the Tribal consultation process. For example, Tribes
generally do not follow uniform timetables for responding to Tower
Construction Notification System (``TCNS'') notifications. Tribes often
enter the process late and then seek additional information regarding a
project, which merely delays action. CTIA recommends that Tribes have a
standardized window not only to respond to the initial TCNS
notifications of a proposed facility, but also for responding to
information subsequently provided by the applicant to the Tribe at the
Tribe's request. The Tribal application process should also be
standardized to the extent possible. That way, applicants are better
able to provide necessary materials and information to Tribes at the
outset. A more simplified application process also could simplify and
streamline review. In addition, BIA should encourage use of a uniform
fee schedule by federally recognized Tribes for reviewing and
processing wireless applications. The fees should be cost-based and
used to ensure that Tribes are not penalized for protecting their
cultural rights.
Finally, BIA should make clear that Tribal monitoring should be
limited to situations of particular concern where the proposed site and
excavation indicates that a potential impact on items or areas of
Tribal significance is likely, based on clearly articulated factors.
Monitoring can be an expensive process. In some cases, negotiation of
these monitoring agreements, or the actions of monitors themselves, has
delayed projects. For example, Tribal monitors have effectively shut
down projects by refusing to oversee work until the financial terms of
their employment are re-negotiated. BIA should work with Tribes to
narrow the scope of antenna siting actions that require Tribal
monitoring, subject at all times to the applicant's obligation to cease
excavation and construction immediately upon the discovery of any items
of cultural significance. In this way, the relevant Tribe(s) can be
consulted during the most sensitive siting projects without impeding
the deployment of valuable broadband services in areas where extensive
Tribal monitoring is not needed.
Question 2. Ms. Baker: In your testimony, you mention that other
countries are working to leapfrog the U.S. in the race to 5G. Can you
talk a bit more about what our European and Asian trading partners are
doing in this area?
Answer. From Western Europe to South Korea and Japan, our trading
partners are taking steps to enhance their competitiveness and overtake
the U.S. in wireless innovation. While the steps they are taking vary
by country, these initiatives include the allocation of additional
spectrum and investment in or support for research into 5G
technologies. South Korea has pledged to facilitate the deployment of
5G trials for the 2018 Winter Olympics, with full deployment
anticipated by 2020. South Korea's initiative, which includes 1.6
trillion Won in government support, is intended to include ultra-HD and
hologram transmission. Japan has undertaken a similar initiative, aimed
at delivering 5G by the time Japan hosts the 2020 Summer Olympics in
Tokyo. While the U.S. is widely acknowledged as the world's current
leader in wireless, these and other countries are working to claim that
mantle, which is exactly why the United States needs a comprehensive
plan to maintain our advantage in this key sector. That plan starts
with a meaningful spectrum pipeline.
Question 3. Ms. Baker, I think we can all agree that more spectrum
is needed to keep up with consumer demand and maintain our lead
globally. But once spectrum is made available, the industry then
invests billions more to deploy wireless infrastructure. As you know,
in a state like Montana we have unique challenges but I want all of
Montanans to be able to enjoy all of the benefits that access to mobile
broadband provides. Are there things we can do to streamline
infrastructure deployment in rural areas, and particularly tribal
areas?
Answer. Deploying infrastructure in rural, less dense areas is a
challenge for any networked industry, and wireless is no exception to
that. While the substantial fixed costs associated with infrastructure
deployment make such investments difficult, there certainly are things
policymakers can do to help strengthen the business case for rural
investment.
First, Congress and the Executive Branch should take steps to
streamline the process for deploying telecommunications
infrastructure--wireless and wireline alike--on Federal properties. The
Federal Government controls more than a quarter of the lands that make
up the United States. In many cases, those Federal land holdings are
adjacent to, or even surround, rural communities. Streamlining the
process for deploying infrastructure on or across these parcels may
improve access for all those who live or work near, or traverse, these
areas. Such relief also should be afforded to energy providers, as
communications networks rely on access to commercial power.
Second, Congress should enact legislation to extend bonus
depreciation, a proven tool to encourage businesses to make additional
capital investments. High fixed-cost industries like wireless are very
sensitive to tax policies and a failure to extend this provision, which
lapsed at the end of 2014, would raise the cost of infrastructure
deployment, the exact opposite of what is needed to encourage
investment in hard-to-serve areas. Senator Roberts has proposed a bill,
S. 1660, to extend bonus depreciation permanently and CTIA urges
support for his legislation.
And third, it is imperative that a meaningful Universal Service
Mobility Fund component be available to facilitate wireless deployment.
Universal Service Fund support should be disbursed in a technologically
neutral manner to support services that consumers--including those who
live in rural areas--actually want and need. Increasingly, those
services include mobile broadband. While 4G LTE service is available to
97 percent of the American public, there is more to be done. As
industry works to fill in gaps in coverage, there are many providers
that view the current Mobility Fund as inadequate to support the sort
of ubiquitous deployment you seek for all Montanans.
Individually and collectively, these policy initiatives would
improve the case for continued, or new, investment in rural America.
Finally, with specific respect to tribal areas, please see my
answer to question 1.
Question 4. Ms. Baker, in a Wall Street Journal opinion piece that
ran the day before the hearing, two former FCC officials noted that
U.S. investment in mobile infrastructure--nearly $32 billion last
year--is more than 50 percent higher than in Europe. I'm sure that
delta has a lot to do with why you say we lead in this space. Can you
talk a bit about what conditions have led U.S. companies to invest at
such a significantly faster rate than their counterparts in other parts
of the world?
Answer. There are a number of factors that have helped drive the
disparity in investment that divides the U.S. from Europe. First, the
U.S. was ``first to market'' with the spectrum that provides the
foundation for 4G services, and the first to deploy LTE technologies.
Second, until the FCC's recent Open Internet Order, the U.S. market had
benefitted from a twenty-year, bi-partisan consensus that ``light
touch'' regulation was the right approach to enabling both competition
and investment. The Open Internet Order marks a departure from this
course toward a European-style of regulation that has been proven to
result in reduced investment. Third, the U.S. market has more
competition than is the case in Europe. This vibrant competition among
networks necessitates investment by providers hoping to attract and
retain subscribers. Providers that fail to invest lose out in the
marketplace. And finally, a decade-long, bi-partisan commitment to
incenting investment through enactment and extension of bonus
depreciation initiatives has helped fuel investment in U.S. network. In
a high fixed-cost industry like wireless, the right tax policies
matter. As I noted in response to question 1, Congress should extend
this policy.
______
Response to Written Questions Submitted by Hon. Amy Klobuchar to
Hon. Meredith Atwell Baker
Question 1. Earlier this month I was in rural Minnesota and heard
some heart-breaking stories from families, communities and students
about how they needed better broadband access. Many of them are looking
to wireless broadband as an answer. One student wrote an essay to his
local carrier about how he would hold his phone up by the window in
order to try and download information he needed to do his homework.
Another family talked about how when they got Wi-Fi they suddenly had
young kids in their front yard using it. I've also heard from farmers
who are looking to use new technology in their equipment but are
limited based on coverage in the fields. This is one of the reasons I
have introduced the Rural Spectrum Accessibility Act with Senator
Fischer, to incentivize more rural spectrum deployment.
Ms. Baker, right now population density drives where spectrum is
built-out. What more can we do at a national level to reframe spectrum
policy so that rural communities, businesses, and students are not left
behind?
Answer. Deploying infrastructure in rural, less dense areas is a
challenge for any networked industry, and wireless is no exception to
that. While the substantial fixed costs associated with infrastructure
deployment make such investments difficult, there are things
policymakers can do to help strengthen the business case for rural
investment.
First, Congress and the Executive Branch should take steps to
streamline the process for deploying telecommunications
infrastructure--wireless and wireline alike--on Federal properties. The
Federal Government controls more than a quarter of the lands that make
up the United States. In many cases, those Federal land holdings are
adjacent to, or even surround, rural communities. Streamlining the
process for deploying infrastructure on or across these parcels may
improve access for all those who live or work near, or traverse, these
areas. Such relief also should be afforded to energy providers, as
communications networks rely on access to commercial power. With this
in mind, CTIA greatly appreciates the support you expressed for these
efforts in your July 2015 letter to the co-chairs of the Broadband
Deployment on Federal Property Working Group.
Second, Congress should consider initiatives such as the Rural
Spectrum Accessibility Act (S. 417) you have sponsored with Senator
Fischer. By providing an incentive for licensees to partition or
disaggregate licenses to make unused spectrum available to small
carriers or carriers serving rural areas, your bill could help bring
increased investment to those communities. S. 417 could provide an
important supplement to industry efforts such as Verizon's LTE in Rural
America program, which has assisted smaller carriers in bringing the
benefits of 4G LTE service to more than 2.4 million people.
Third, Congress should enact legislation to extend bonus
depreciation, a proven tool to encourage businesses to make additional
capital investments. High fixed-cost industries like wireless are very
sensitive to tax policies and a failure to extend this provision, which
lapsed at the end of 2014, would raise the cost of infrastructure
deployment, the exact opposite of what is needed to encourage
investment in hard-to-serve areas. Senator Stabenow has proposed a
bill, S. 1666, to extend bonus depreciation through 2016 and CTIA urges
you to support her legislation.
And finally, it is imperative that a meaningful Universal Service
Mobility Fund component be available to facilitate wireless deployment.
Universal Service Fund support should be disbursed in a technologically
neutral manner to support services that consumers--including those who
live in rural areas--actually want and need. Increasingly, those
services include mobile broadband. While 4G LTE service is available to
97 percent of the American public, there is more to be done. As we work
to fill in gaps in coverage, there are many providers that view the
current Mobility Fund as inadequate to support the sort of ubiquitous
deployment you seek and your constituents deserve.
Individually and collectively, these policy initiatives would
improve the case for continued, or new, investment in rural America.
Question 2. I've continued to work on issues to promote broadband
investment and deployment. Consumers are demanding increasing speeds
and service levels from both wireline and wireless providers. However,
deployment can often be hampered by slow and redundant permitting
processes, particularly when it comes to placing infrastructure on
Federal lands. That is why I worked with the Administration to advance
the concept of ``Dig Once'' at the Department of Transportation.
Additionally, I sent a letter with Senator McCaskill calling on the
Broadband Deployment on Federal Property Working Group to take action
and streamline permitting and siting processes as well as improve
consistency across Federal agencies.
Ms. Baker, how does the lack of consistency and the resulting
uncertainty affect your member companies' ability to deploy wireless
broadband to more rural areas? What else needs to be done to improve
infrastructure deployment across the country?
Answer. CTIA provided extensive input on this very subject when we
responded to the Broadband Opportunity Council's Request for Comment.
See http://www.ntia.doc.gov/files/ntia/ctia-
the_wireless_association_boc.pdf. In particular, substantial effort
should be undertaken by the Executive Branch, or, failing that, by
Congress, to streamline and expedite antenna siting decisions. The
process for deployments governed by the municipal zoning process
generally works well, with approvals usually issued within the 150 days
contemplated by the Federal Communications Commission's rules. By
contrast, siting on Federal properties can take years, with wide
variance between the processes employed by various agencies and
departments. Initiatives that would move toward the use of common forms
and fee schedules, master contracts, and uniform schedules and
processes for deploying broadband facilities on Federal lands,
buildings, rights-of-way, federally assisted highways, and Tribal lands
would assist the industry in expanding broadband access.
______
Response to Written Question Submitted by Hon. John Thune to
J. Pierre de Vries
Question. Mr. de Vries, you have recommend creating a Court of
Spectrum Claims to deal with spectrum disputes. In what way would your
proposal help alleviate conflicts in the marketplace that are likely to
occur as spectrum utilization increases?
Answer. A Court of Spectrum Claims would provide a forum and a
process where conflicts in the marketplace--especially between Federal
and commercial users, but also others--could be resolved.
It could help prevent conflict, or nip it in the bud, by providing
parties with the reassurance that any disputes that might arise could
be resolved in a neutral forum with expertise in spectrum matters. The
Court would be independent of the FCC and NTIA whose interests, or
perceived interests, might cause concern to some or all of the parties
to a dispute.
The Court's most important contribution would be in fostering
cooperation--the flip-side of conflict. Successfully freeing up and
sharing government spectrum for others to use productively--and
likewise, for government users to gain access to non-federal spectrum--
requires a back-stop to ensure that the promised access rights and
interference protections in such a bi-lateral market will be delivered.
Since Federal and commercial spectrum users are under the mutually
exclusive jurisdictions of the Department of Commerce and the FCC,
there is a need for a new entity--a Court of Spectrum Claims, for
example--that can oversee both types of users (federal ones and private
ones), adjudicate potential disputes, and spur cooperation in advance
of any judicial claim.
______
Response to Written Questions Submitted by Hon. John Thune to
Thomas M. Lenard, Ph.D.
Question 1. Dr. Lenard, in your testimony, you argue that
government agencies do not operate in a market context, and therefore
their goal is not to maximize profits. Please explain incentives that
can be provided to agencies to maximize efficient use of agency
spectrum while allowing agencies to fulfill their statutory
obligations.
Answer. The key is to have a mechanism that requires government
agencies to internalize the costs of the spectrum they use. My
testimony suggests a mechanism based on the General Services
Administration (GSA) model--a Government Spectrum Ownership Corporation
(GSOC) that would take possession of all government-held spectrum and
lease it to agencies at rental rates based on estimates of the relevant
opportunity costs. In this way, agencies would have appropriate
incentives to economize on the spectrum they use. Surplus spectrum
could then be sold or leased to the private sector.
Question 2. Dr. Lenard, do you support permitting agencies to lease
their excess spectrum to the private sector? What considerations might
there be if this idea is pursued by Congress?
Answer. Yes, this would be one way of inducing agencies to
internalize the costs of the spectrum they use and incentivizing them
to release more spectrum into the private sector. For this to be
successful, agencies should be able to keep the lease payments and
Congress (and the executive) should refrain from instituting offsetting
budget cuts.
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