Spectrum: America’s Invisible InfrastructureIncentive Auctions and Broadcast Spectrum

CGB State and Local Government WebinarRebecca Hanson

Senior Advisor, Broadcast SpectrumMedia Bureau, FCC

October 5, 2011

Overview

1. Spectrum is a key driver of the economy and deficit reduction

2. America is facing a spectrum crunch

3. FCC action to address growing need for broadband spectrum

4. Incentive auctions are a key policy tool

1. Spectrum: Economy and Deficit Reduction

Spectrum: A National Resource• Spectrum is essential input to the provision of

all wireless services

• As new uses arise, such as mobile broadband, spectrum must be shifted from historic uses

• Wireless is an economic engine

– Consistent growth in subscribers, revenue, jobs

U.S. Wireless Industry Highlights• Contributed 16% to U.S. GDP annually from 1992 to

2007 (vs. 3% growth in rest of economy)• 12% job growth since 2000 (vs. 1% for U.S. economy)

• Capital investment over $20 billion per year• “Apps” have generated $6 billion globally in 2010

alone• Significant indirect economic benefits

– Education, health care, energy, civic engagement

Budget Benefits from Spectrum

Spectrum receipts to U.S. Treasury• Over $50 billion since 1993• Over $30 billion in past 5 years

Demand for spectrum remains strong

2. The Spectrum Crunch

Why the Spectrum Crunch is Important

We are running out of unoccupied spectrum for broadband

Without action, the spectrum crunch will mean:• Higher prices for consumers, rationing

• Poorer service

– Dropped calls

– Slow texting and web browsing

• Lost opportunities for innovation

Mobile Broadband: More Users…

Consistent Wireless Growth

050

100150200250300

20002001

20022003

20042005

20062007

20082009

2010

Wire

less

Con

necti

ons

(mill

ions

)

Source: CTIASource: CTIA

• PCs/AircardsPCs/Aircards consuming consuming gigabytesgigabytes per month per month

• SmartphonesSmartphones consuming consuming hundreds of megabyteshundreds of megabytes per monthper month

• Feature phonesFeature phones consuming consuming tens of megabytestens of megabytes per per monthmonth

0

50

100

150

200

250

Q12009

Q22009

Q32009

Q42009

Q12010

Q22010

Meg

abyt

es p

er M

onth

Mean Mobile Data Usage per User, 2009-2010Mean Mobile Data Usage per User, 2009-2010Megabytes per MonthMegabytes per Month

Source: ValidasSource: Validas

…and More Usage per User

Challenge – Keeping Up with Mobile Data Growth

0X5X

10X15X20X25X30X35X40X45X50X

2009 2010 2011 2012 2013 2014

Traffi

c Re

lativ

e to

200

9

Source: Cisco VNI; Yankee Group; Coda ResearchSource: Cisco VNI; Yankee Group; Coda Research

35X growth by 2014

Projected Increase in Mobile Traffic - Analyst Forecasts

Spectrum Implications

-300

-200

-100

0

100

200

300

400

2009 2010 2011 2012 2013 2014Megahertz

3. FCC actions to meet broadband spectrum needs

Opportunities for New Broadband SpectrumOpportunities for New Broadband SpectrumSpectrum Band Current Status

Wireless Communications Services (WCS)

• Revised rules to permit broadband uses in 25 megahertz

Mobile Satellite Services (MSS) • Opened proceeding to evaluate rules in MSS bands, especially S-Band

• LightSquared launching in L-Band

Advanced Wireless Services (AWS) • Working with NTIA on pairing options for AWS-3

Broadcast Television (VHF/UHF) • Launching “groundwork” proceedings later this month, engaging with stakeholders

Federal Spectrum (NTIA) • Recent report identifies 15 megahertz for broadband, another 100 megahertz for sharing

4. Incentive Auctions:A Key Policy Tool

Incentive AuctionsIncentive Auctions

Most of the attractive spectrum is currently occupied today– Some allocations may not be currently used to fullest potential

Incentive auctions would share auction proceeds with the current occupant to motivate voluntary relocation of incumbents– Otherwise, no incentive for current occupant to give back spectrum

Modification of FCC auction authority needed from Congress– 47 USC 309(j) does not permit sharing of auction proceeds– Many bipartisan bills circulating through Congress

Potential Applications of Incentive Auctions to TV BandsPotential Applications of Incentive Auctions to TV Bands

• Excellent propagation characteristics (travels long distances, in-building penetration, wide through-put)

• Adjacent to 700 Band (recently auctioned for 4G LTE mobile broadband)

• Opportunity to strengthen television sector with cash infusion

• Industry poised for new approaches to station operations that are more spectrally efficient

Broadcaster Options – All VoluntaryBroadcaster Options – All Voluntary

In an incentive auction, a broadcaster could:

1. Contribute one or more 6 MHz channels, in exchange for a share of auction proceeds;

2. Share spectrum with another broadcaster, in exchange for a share of auction proceeds, and stay on the air;

3. Relocate from UHF to VHF, in exchange for a share of auction proceeds, and stay on the air; or

4. Choose not to participate!

Broadcaster participation in incentive auction is voluntary

Incentive Auctions Benefit All StakeholdersIncentive Auctions Benefit All StakeholdersUS economy wins

– Global leadership in innovation, job creation, economic growth

US consumers win– Continued advancements in wireless products and services

US taxpayers win – Multiple $ billions in cash to Treasury and deficit reduction

Contributing licensees win– Capital infusion to support new business models