FCC's Wheeler lays out vision for 3.5 GHz band, incentive auctions

FCC Chairman Tom Wheeler outlined his vision for how the commission will make the 3.5 GHz band open for wireless broadband use, hitting on the three-tier structure that has been at the center of debate around the band for months.

Speaking at the Brookings Institution in Washington, Wheeler said he will soon circulate a proposal on the band to other FCC commissioners.  The proposal will include three tiers of prioritization: federal and non-federal incumbent users, priority access licensees (hospitals, utilities and public-safety entities), and general authorized access users (the general public). He also said it will include a single, highly flexible band plan, "avoiding the analog trap of Balkanizing spectrum into sub-bands, each with its own sets of rules."

Wheeler also said the proposal will anticipate a wide range of flexible uses and that while small cells will undoubtedly be a core use case,  the FCC will not limit the band to such use. Finally, he said the proposal will reflect economic incentives and will allow for spectrum sharing.

"Even with the most efficient technology, there will always be places and times where there is rivalry for spectrum access," he said. "To that end, the proposal would set up a flexible auction and licensing scheme that leverages the technical capabilities of a Spectrum Access System database."

The FCC chief also said the 3.5 GHz band provides a "real-life opportunity to apply some bold thinking about receiver performance. In parallel to our formal rulemaking, I expect that a multi-stakeholder group will be convened to explore ways to drive not only efficient transmission, but also efficient reception, in the band."

Recently, Google (NASDAQ:GOOG), AT&T (NYSE:T) and Verizon (NYSE:VZ) partnered to express their views to the FCC regarding commercial operations in the 3.5 GHz band. The companies joined to support the three-tiered sharing framework proposed by the President's Council of Advisors on Science and Technology (PCAST) for the 3.5 GHz band.

As outlined in a December 2012 Notice of Proposed Rulemaking (NPRM), the FCC's proposed 3.5 GHz Citizens Broadband Service will be covered by a three-tier authorization mechanism and managed by a geolocation-enabled dynamic spectrum access database modeled upon existing TV white spaces databases.

In addition to spectrum sharing, Wheeler extolled the FCC's planned incentive auctions as next-generation spectrum policies "that together hold the promise to completely revolutionize the way we manage our airwaves--and in so doing to provide the underpinning for economic growth."

The incentive auctions of 600 MHz broadcast TV spectrum are set to begin in mid-2015. Under the FCC's proposed rules, broadcasters will submit bids to relinquish their 6 MHz pieces of spectrum in a reverse auction where the FCC will pay them. The FCC is also contemplating having unlicensed wireless use in the guard bands between spectrum blocks.

The process is voluntary for broadcasters, but many worry that broadcasters might not give up their spectrum based to their previous resistance to the auctions and uncertainty over how much money they will ultimately receive, as well as how their operations will be affected by giving up their spectrum. Wheeler sought to address those concerns.

"The auction presents a once-in-a-lifetime opportunity for broadcasters, and we are committed to providing them with information about both our process and the financial opportunity the auction represents to enable them to make informed business decisions about whether and how to participate," Wheeler said. "I came to this position after almost a decade as a venture capitalist and even longer as an entrepreneur myself. Seldom have I seen such a risk-free opportunity as that represented to broadcasters by the incentive auction, including the opportunity to continue their existing business on shared spectrum and take home a check for the spectrum they vacate."

After broadcasters give up their spectrum, it will be "repacked" so that broadcasters that do not give up their spectrum can stay on the air. Then the FCC will conduct a traditional "forward" auction in which wireless carriers will bid for the freed spectrum. There is an ongoing debate over what the band plan should be for the spectrum once broadcasters are repacked. Additionally, the FCC may decide on rules that limit how much spectrum AT&T and Verizon can bid for in the auction.

"Here's the bottom line on incentive auctions: If we get this right--and I'm confident we will--incentive auctions could revolutionize spectrum policy by applying economic forces to the allocation of spectrum and not simply the assignment of individual licenses," Wheeler said.

At the Brookings event a group of panelists discussed various ways that the FCC and Congress could amend how spectrum is allocated and how  interference issues between spectrum bands are resolved.

Phil Weiser, dean and professor at the University of Colorado Law School and executive director of the Silicon Flatirons Center, and J. Pierre de Vries, a senior fellow and co-director of the spectrum policy initiative at the Silicon Flatirons Center, presented a paper on spectrum policy. 

The paper has three main recommendations. The first is to remove ambiguity about the responsibilities of receivers to tolerate interference by defining so-called "harm claim thresholds" that state the signal levels that must be exceeded before one operator can claim harmful interference by another. Another recommendation is reduce spectrum band fragmentation by introducing "band agents" that could represent large groups of licensees as part of an effort to negotiate changes in operating rights with neighboring spectrum licensees. The third recommendation is to move adjudication of spectrum disputes from the ad hoc FCC rulemaking process to "a more fact-based procedure that can resolve spectrum-related disputes in a timely fashion" by using judges with expertise in spectrum policy, either in the FCC and/or in a newly created Court of Spectrum Claims.

Preston Marshall, who heads up wireless networking efforts at Google (NASDAQ:GOOG) and who like Weiser and de Vries was a panelist at the event, said defining harm claim thresholds "that are understood by everybody will greatly benefit everybody."

However, Marshall said he has concerns on the band agents proposal since many are likely going to be wireless incumbents and large carriers, which he said are conservative by nature and want to protect their investments. Such band agents would be less likely to welcome new wireless entrants, he said.

"If we empower incumbents to judge new entrants I think we can predict the outcome," he said, adding, " We have to be careful not to give incumbents the right to make public policy."

Joan Marsh, AT&T's (NYSE:T)  vice president of federal regulatory, and also a panelist, said that AT&T had effectively acted as a band agent when it worked with Sirius XM in 2012 to resolve disputes on the 2.3 GHz WCS band, which AT&T aims to use for LTE services. Marsh acknowledged that "incumbents will hang onto their rights and hold them very close" and that under the current state of spectrum allocations, "our experience is more the exception than the rule."

For more:
- see this paper

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