Continuing Lapse of FCC Auction Authority Threatens U.S. Competitiveness: CTIA Chief

The wireless industry had to meet the “staggering spike” in data demand last year “with no new spectrum auction,” Baker said: “The hard truth is that this year’s growth will have no new spectrum either. That is unsustainable.” Whoever wins the presidential election “will need to move decisively to restore authority, to designate bands to auction and to help ensure that wireless leadership remains” in the U.S.

The country will need at least 400 MHz more spectrum for 5G in the next three years and “hundreds more before the end of the decade ... just to meet our expected consumer demand,” she said. “Globally, we are falling behind our rivals,” she said: “We’re seeing other nations move forward while we are stuck in bureaucratic morass.” By 2027, China will have up to four times more mid-band spectrum for 5G than is available in the U.S., Baker added.

“We must provide all stakeholders with clarity as to which bands will be auctioned and when.” The lower 3 and 7/8 GHz bands are critical, but studies are just starting almost a year after the national spectrum strategy was released, she said. “We need to move more aggressively, more deliberately.”

Baker augmented her words with a video of policymakers bemoaning the loss of auction authority. “After decades of leading the world in spectrum policy, it is frankly embarrassing that the FCC doesn’t even have the legal authority to auction spectrum today,” said Sen. Ed Markey, D-Mass., in the video. “If we don’t get that authority back, the whole progress that we’ve made in closing the digital divide is going to be at risk,” said former FCC Chairman William Kennard. “The fact that we don’t have auction authority is shameful,” said former Chairman Tom Wheeler.

Baker noted that the FCC held its first spectrum auction, of paging frequencies, in a Washington, D.C., hotel ballroom 30 years ago. “Bidders entered old-timey curtained voting booths, and they submitted their bids,” she said. The auction took only five days “for a good reason -- that room was reserved for a wedding that weekend.” Licenses “went for far more than anyone expected” and raised a little more than $600 million.

“It was a striking success,” Baker said of the auction, adding the proceeds would get you only a single C-band license in Los Angeles today.

Regional Carrier Concerns

Carriers of all sizes need more spectrum, but regional carriers also face steep financial challenges, said Slayton Stewart, CEO of Carolina West Wireless and CTIA chair. Stewart said expiration of the affordable connectivity program has had a “significant” impact on communities that smaller carriers serve. Rural carriers need multiple sources of funding to succeed, he said.

Stewart called on the FCC to move forward on the recently approved 5G Fund (see 2408290041) and provide USF support to maintain uneconomic cell towers, much like how the program pays for maintenance of wired facilities. Congress must change how USF is funded, requiring that edge providers “contribute to the broadband networks they so heavily benefit from," he said. The U.S. also needs a spectrum auction process that gives rural carriers “a fair chance to win.”

“We stand in limbo today as federal policies are not addressing the problems rural carriers have in maintaining existing infrastructure,” Stewart said. “Too many of our cell towers lose money every month” and some towers in rural areas, constructed with USF money, may “need to be decommissioned, leaving residents without connectivity.” Given the low population density and mountainous terrain, “customer revenues alone are not enough.”

Small carriers are making 5G available in small towns across the U.S., but it isn’t easy, Stewart said. There are few cell towers, so carriers have to build them “and the payout is limited by design.” But companies like Carolina West have invested hundreds of millions in their networks and have brought 5G to customers twice as fast as they brought 4G, he said.

“The economics of wireless at our scale can be daunting,” Stewart said. “We understand what connectivity can mean to the towns we serve -- towns with proud histories and challenging futures.” Connectivity is “key” to bringing jobs to rural markets.

Stewart also said Hurricane Helene devastated the mountainous counties his company serves in North Carolina. “We have a long road ahead, but we will get through this together."

Notebooks

The growth in fixed wireless access has been “astronomical” and “a tremendous success story for our industry” and 5G, but, eventually, growth will level out, predicted UScellular CEO Laurent Therivel. The problem is revenue, Therivel said. An average FWA customer uses 21 times more data than an average mobile customer but produces 15 times less revenue per GHz, he said. The challenge is accounting for the amount of network investment required to support the capacity required, he said. The economics work, but only as long as carriers have excess capacity on their networks, he said. FWA doesn’t produce enough revenue to justify network improvements, from installing towers to buying spectrum, he said. “I can’t do that for fixed wireless because it doesn’t pay for itself,” Therivel said. Carriers will have to look at whether they can increase revenue per GHz, but raising prices probably isn’t an option, he said: “The problem is this is an incredibly competitive market. I’m not just competing against T-Mobile and AT&T and Verizon, I’m also competing against cable players.” One answer may be focusing on business customers, who consume about a quarter of the amount of data per user as residential customers, he said. Carriers can also focus on FWA as a backup solution for other networks. UScellular charges low prices for backup service, but since data usage is low, the average backup customer produces 22 times more revenue per GHz than the average primary user, he said. Carriers should also focus on making their networks more efficient, and finding a way to isolate fixed users from mobile users so that mobile customers see no degradation of their service. Therivel discussed the potential benefits of network slicing, which lets providers create multiple virtual networks on top of a shared network. External antennas are also important for FWA, offering a 65% improvement in spectral efficiency over an antenna inside the home or business, he said.

Competitive Carriers Association President Tim Donovan supported the comments of Stewart, also a member of the CCA board. Federal support programs are “essential to maintaining services in areas where carriers … face unique challenges due to difficult terrain, low population density, and limited revenue streams,” Donovan said in an emailed statement. “As roaming revenues have decreased across the industry, many rural towers … are at risk of being decommissioned, cutting off vital connectivity for residents and compromising public safety.” The 5G Fund must “provide resources to preserve as well as expand wireless connectivity.”