WYDEN URGES BROAD SPECTRUM REFORM AT FCC, WHILE NTIA SEEKS IDEAS

Victory said her summit would draw suggestions from service providers, private and public safety users and consumers in what she said was “first step in a long term effort” to address spectrum management policy. Key issues to be covered would include market-based management, property rights, spectrum flexibility, trading, and auction design. Like Victory, Wyden said Sept. 11 attacks had affected spectrum policy. Since U.S. military operations in Afghanistan, policymakers here have acknowledged political landscape has been altered from previous consideration of relocating DoD users from 1755-1850 MHz for 3G uses. Administration’s 3G announcement last month of new plan for advanced wireless spectrum had taken all but 15 MHz of military spectrum off the table for advanced wireless consideration.

“Spectrum scarcity has clearly gotten worse since September 11,” Wyden said. Until then “substantial chunk” of DoD spectrum had been eyed for 3G services, he said: “Now, with our country engaged in major national security operations overseas, the armed forces are obviously occupied with more pressing concerns than spectrum location. This is not exactly an ideal time to discuss with our military switching frequencies.” Victory said narrower focus of 3G bands now under study “reflects realization of the practicalities of the time frame within which spectrum needs to be made available” and “limited resources” for formulating assessment in near term. She reiterated that govt. assessment of those new bands was set for completion in spring.

Victory listed spectrum questions that she said merited further review, including “where and how far can market-based management be adopted,” whether licensees should be awarded “full property rights,” whether it was fair for current licensees to get “greater, more valuable rights than they initially were granted,” whether rights could be defined clearly enough so that market for bandwidth trading could be created and whether auctions should be used more broadly for spectrum allocation rather than just awarding licenses. Victory also cited FCC’s pending secondary markets proceeding for wireless spectrum. “The Commission has proposed going beyond established partitioning and disaggregation policies to afford broad flexibility on how spectrum can be ’sublet’ or used by ’third parties,'” she said.

Evan Kwerel, senior economist in FCC’s Office of Plans & Policy (OPP), outlined proposal he developed with OPP Senior Engineer John Williams that would entail large-scale, 2-sided auctions that would involve spectrum held by current licensees and bands held by FCC that still awaited auction. Auctions would be 2-sided because they would involve participants’ both buying and selling spectrum at same time. OPP Chief Robert Pepper told us later that proposal simply was idea that had been floated at Commission, but said Kwerel had significant “track record” of developing such plans, having been architect of what has evolved into FCC’s auction policy. Kwerel said, “What we're saying is [that FCC] just getting out of the way and providing property rights is not enough, we need to do something more.”

Under “band restructuring” proposal, 2-sided auctions would be held that would include spectrum voluntarily offered by incumbents as well as spectrum now held by FCC, Kwerel said. Reform plan would offer incentive to incumbents who might not otherwise have incentive to participate because by holding out they could receive more for their spectrum, he said. Incumbents who participated would gain spectrum flexibility, with licensees who opted out of scheme having to wait 5 years to gain same flexibility, he said. As further incentive, incumbents could choose to buy their own spectrum back, in which case they would receive proceeds from transaction and still get more flexibility, Kwerel said. That system would ensure that “all the complementary and sustainable spectrum would be available to the market at the same time, that we don’t have a series of bilateral negotiations,” he said.

Other spectrum ideas raised at AEI conference included: (1) Ultimate move by govt. out of spectrum “relocation business” and delegation of responsibility to market, suggested by Gregory Rosston, deputy dir. of Stanford Institute for Economic Policy Research. He presented plan under which all usable spectrum would be auctioned, including rights for usage and auctioning those rights when there was mutual exclusivity in demand. That would mean FCC would have to make all current spectrum available to public and provide “comprehensive rights” for bands that were licensed and in use, meaning that spectrum rights wouldn’t hinge on one technology. (2) Hogan & Hartson partners Michele Farquhar and Ari Fitzgerald said FCC could allow flexible use in all new spectrum allocations, with emissions limits designed to protect incumbent services, unless such flexibility would result in harmful interference. Farquhar said one solution of current regulatory encumbrances would be to accelerate timetable for auctioning initial licenses by having spectrum allocation and service rule proceedings occur at same time. (3) AEI Scholar Thomas Hazlett called for generic reform of wireless licenses, with FCC proceedings be less dependent on waivers and existing rights structures remaining intact. Spectrum authorizations should prescribe transmission limits rather than describing what FCC licensees can do, he said.