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September 2012

Airwave overload? Addressing spectrum strategy issues that jeopardize U.S. mobile broadband leadership

Contents

1 Executive summary

3 The United States benefits economically from its global mobile broadband leadership

6 Our Mobile Communications National Achievement Index shows future U.S. leadership is not assured; other countries are aggressively promoting mobile innovation and development

10 U.S. mobile broadband leadership depends on maintaining a robust and adaptable wireless infrastructure capable of offering new services and meeting growing demand

12 U.S. mobile broadband demand is rising at a tremendous rate and the surge is projected to continue

21 Carriers are expanding and upgrading their networks to keep pace with demand as government works to increase mobile broadband spectrum

25 Despite efforts by carriers and government to augment network capacity, mobile broadband demand growth threatens to overwhelm the system

36 Fundamental policy changes are required to avoid choking off the innovation that is responsible for America’s global leadership in mobile broadband

47 Endnotes

52 Contacts

1Airwave overload? Addressing spectrum strategy issues that jeopardize U.S. mobile broadband leadership

Executive summary

In 2011 we issued a paper highlighting mobile broadband’s beneficial effects on America’s economy.1 In this new paper we suggest short- and long-range policy measures that could support the innovation and market-driven spectrum supply that allow the U.S. to lead in mobile broadband.

The U.S. benefits economically from its global mobile broadband leadership.• TheUnitedStatesistheworld’smobilebroadband

leader; a critical success factor has been government policies that relied upon market forces to optimize spectrum supply and use.

• Inachievinggloballeadership,theUnitedStatesbecame the world’s innovation test bed for mobile broadbandservicesanddevices,whichhascontributedsignificantly to U.S. economic growth.

Our Mobile Communications National Achievement Index shows future U.S. leadership is not assured; other countries are aggressively promoting mobile innovation and development.• Acceleratedinvestmentin4Gandrelatedmobilebroad-

band technologies is essential to maintain U.S. leader-ship and to reap the benefits of high-tech innovations thatgenerategrossdomesticproduct(GDP)growthand21st century American jobs.

• Wehavedevelopeda“MobileTelecomAchievementIn-dex” as a tool that tracks the state of countries’ wireless sectors,enablingpolicymakerstoevaluateAmerica’sstanding compared to the rest of the world.

• Theindexfollowstheperformanceofagroupof20countries that includes both established leaders and potentialchallengersfromthedevelopingworld,using15 indicators that measure end user benefits and the health of the wireless industry for each country.

• Eachcountryreceivesanaggregatescorebasedonbenchmarking its standing in each area against the country with the highest score.

• ThisachievementindexprovidesevidenceofU.S.leadershipinmobilebroadband,butalsosuggeststhatthe gap is closing as other countries aggressively pursue developments in this space – continued U.S. leadership is not assured given current trends.

U.S. mobile broadband leadership depends on maintaining a robust and adaptable wireless in-frastructure, capable of offering new services and meeting growing demand.• Therapidevolutionandvitalityofmobilebroadbandnetworks,inresponsetodemandandsupplysignals,have enabled the exceptional performance of the U.S. ecosystem as a whole.

• Demand:Carriersseektostimulatedemandwithmobilebroadband offerings that respond to end users’ needs attherightprices,intherightplaces,andatthedesiredlevel of quality.

• Supply:Carriers’abilitytomeetendusers’needsde-pends on their ability to accommodate today’s demand while serving as test beds for tomorrow’s offerings.

• Industryconfiguration:Enduserneedsarebestmetwhen the structure of the wireless industry combines choice and price competition with sufficient carrier scaletomotivateandenablecarrierstoreducecosts,expandnetworkcoverageandcapabilities,andinvestintechnology.

U.S. mobile broadband demand is rising at a tremendous rate and the surge is projected to continue.• Demandformobileserviceshasaccelerated,fueledby

a multitude of innovative devices and an explosion in applications.

• Demandgrowthislikelytointensifyasmobilebroad-band uses appear in a widening array of business and government segments; among the promising industry growthopportunitiesareautomotivetelematics,vehicletrafficmanagement,andmobilehealthcare(mHealth).

2 Airwave overload? Addressing spectrum strategy issues that jeopardize U.S. mobile broadband leadership

Carriers are expanding and upgrading their net-works to keep pace with demand as government works to increase mobile broadband spectrum to 500 MHz by 2020.• U.S.wirelesscarriershaveextendedtheirnetworkca-

pacity by deploying new generations of technology and building new cell sites.

• CongestionisalsobeingcounteredbyoffloadingtrafficontoWi-Fihotspots,deployingsmallcellstocomple-menttraditionaltowersandcells,managingtrafficdemand,andsharingspectrum.

• Thefederalgovernmenthaslaunchedinitiativestomake more spectrum available for use by mobile broadband,andtoaddressissuessuchaslocalcellsiteapprovals.

Despite efforts by carriers and government to aug-ment network capacity, mobile broadband demand growth threatens to overwhelm the system.• Thepopularityofbandwidth-intensivenewmobilebroadbanddataservicesisgrowingrapidly,meetingorexceedingprojectionsintheNationalBroadbandPlan.

• Carriers’networkinvestmentsinnextgenerationtech-nology and additional cell sites are expanding network capacity,butdemandisgrowingevenfaster.

• SolutionssuchasWi-Fi,smallcells,demandmanage-ment,andspectrumsharingofferpromise,butfornowthey can have only a marginal impact.

• Thepaceofgovernmentinitiativesappearstobelag-gingintermsofwhatisrequiredtoreachthe500MHzgoal by 2020.

• Unresolvedpolicyissuesanduncertaintiesinterferewithfollow-through on spectrum initiatives.

Fundamental policy changes are required to avoid choking off the innovation that is responsible for America’s global leadership in mobile broadband.• ToensurethattheUnitedStatesdoesnotbecomeavictimofitsownsuccess,policymakersshouldconsidermeasures that address not only the potential spectrum deficit but also the need for new approaches to spec-trum management.

• DevelopinganofficialU.S.spectrumstrategycouldpro-vide the opportunity to resolve policy ambiguities that hamper effective mobile broadband decision making.

• Anapproachthatdefinesoverallguidelinesandrelieson markets to work out economically efficient solutions is well suited to a changing and uncertain wireless environment.

• Treatthecostsincurredinmakingsufficientspectrumavailable for commercial mobile broadband as invest-ments with a return that is realized over time in the formofincreasedGDP,jobs,andtaxrevenue.

• AsuccessfulTVbroadcastspectrumauctionshouldbea top priority as a highly visible step toward meeting the2020goaloffreeingup500MHzofspectrumformobile broadband.

• PolicymakersshouldconsiderexpandinggovernmentfundedorsupportedR&Deffortstoexploretheextentto which workable sharing solutions can help alleviate concerns about spectrum supply.

• Traditionalauctionscombinedwithviablesecondarymarkets should continue to play central roles as effec-tive mechanisms for distributing spectrum to users and uses with high-value potential.

• Allocatingandassigningspectruminlargeblocksbasedon technically driven criteria could alleviate constraints causedbythecrowded,fragmentedlegacyspectrumzoning map.

• Principles-basedlicenserenewalreviewsofferameansto ensure that license holdings and spectrum policies are aligned with changing technological and economic realities.

The bottom lineGovernments around the world face challenges in managing a major transition in spectrum policy. Existing approaches are being overwhelmed. Technol-ogy advances are boosting demand for bandwidth-intensive new offerings. Multiple interests need to be balanced. To retain its global mobile broadband leadership the United States must not only head off a spectrum shortage but show the way in adopting a policy framework that can better meet the require-ments of the 21st century marketplace. In this paper we have offered thoughts on how these issues can be addressed, and a set of metrics for monitoring the progress governments make as they compete to capitalize on the potential of wireless technology for the benefit of their economies and citizens.


The United States benefits economically from its global mobile broadband leadership

TheUnitedStatesistheworld’smobilebroadbandleader;acriticalsuccessfactor has been government policies that relied upon market forces to achieve sufficient supply and efficient use of spectrum.

Exhibit 1. U.S. global leadership in mobile broadband: selected comparisons

Inthelastdecade,theUnitedStateshasbecometheworld leader in mobile broadband. American companies excelatdevelopingnewmobilebroadbandservices,de-vices,andapplicationsfordomesticandforeignmarkets.AsshowninExhibit1,theUnitedStatesranksfirstinkeymeasuressuchasadvancednetworktechnologycoverage,subscribersusing3Gand4Gservices,mobileoperatingsystem(OS)shipments,mobiledevicesales,andapplica-tion downloads.

Mobile broadband market leadership indicators

Coveragewiththelatest generation network technology

Subscribers and market penetration

Mobileoperatingsystem shipments

Mobiledevicesales

Application downloads

U.S. position

Greatestnumberofpeople(186million)andpercentofpopulation(60percent)abletoreceivetheindustry’smostadvanced4Gservices.2

Despitehavinglessthan6percentofglobalwirelesssubscribers,theUnitedStateshasmorethan21percentofglobal3G/4Gsubscribers,at164millionasofmid-year2011.TheUnitedStatesalsohas87percentofglobalLTEsubscribers.3

U.S.companiesdominatethesmartphoneOSmarket,owning more than three-fourths of the global market based on20122Qsalestoendusers.ThetoptwoOSmakers,AndroidandApple,achieved64.1percentand18.8percentofglobalsalestoendusers,respectively,in2Q2012.FinlandbasedNokiaownsthethird-rankedOS,Symbian,andachieved 5.9 percent.4

U.S. companies produce close to 22 percent of all smart-phonesbasedonglobal20122Qsalestoendusers.TwoAmericancompanies,AppleandMotorola,areamongthetop 10 smartphone manufacturers globally – Apple is #2 at 18.8percentandMotorolais#10at3.0percent.The#1manufacturer,SouthKoreancompanySamsung,achieved29.7percent.5

Inthemobileapplicationsmarket,AppleandGooglehave acombined83percentshareofmobileappdownloadsglobally.6 An extensive community of developers supports eachplatform,withover43,000developersfortheAppleAppStoreandover10,000forGoogle’sAndroidMarket.7

Government’scontributiontothissuccesshasbeentosupporttheformationofamobilebroadband“entrepre-neurial innovation ecosystem” populated by multiple enti-ties,includingwirelesscarriers,networkequipmentandhandsetmanufacturers,operatingsystemandapplicationdevelopers,cloudserviceproviders,andconsumerandbusinessendusers.TheFederalCommunicationsCommis-sion(FCC)createdthenecessaryconditionsbyauctioninglargeamountsofspectrum,removingspectrumcapslimit-ingindividualcarrier’sspectrumholdings,andpermittingmarket forces to operate. • From1994to2000,FCCauctionstripledtheamount

of spectrum available for commercial mobile services.8 Theseauctionsarecreditedwithpromptinga250percent increase in investment and a 300 percent jobs increase in the mobile market.9

• In2003,theFCCremovedspectrumcaps,makingit possible for U.S. carriers to aggregate sufficient quantities of spectrum for the development of mobile broadband networks.

• TheFCCpermittedU.S.carrierstobuyandsellspec-trum,enablingmoreefficientallocationofavailableairwaves by allowing carriers with the greatest value-generation potential for the spectrum to purchase it from those that were less favorably positioned to use it effectively.10

In achieving global leadership, the United States became the world’s innovation test bed for mobile broadband services and devices, which has contrib-uted significantly to U.S. economic growth.Governmentpolicycreatedconditionsconducivetoflourishingofprivatesectorcreativity,andU.S.companieshave been energetic in seizing the opportunities available inanopenmarket.Theinteractionsofcarriers,high-techcompanies,andtheircustomersresultedinanoutpour-ingof3Gdevicesandservices,andarenowproducingasimilarsurgeof4Gofferings.

Patentgenerationisoneindicationofthisphenomenon.Bythefirstquarterof2012,theUnitedStateswasgrant-ingmobilepatentsat2.5timestherateofEurope.Mobilepatents grew from less than 10 percent of all U.S. patents a decade ago to 20 percent today.11


Innovations hatched in the United States quickly move into international commerce. New offerings are in-troducedintheU.S.market,takingadvantageoftheadvanced mobile communications infrastructure. After theirlaunch,refinement,andvalidation,theyarethensoldabroad,expandingU.S.exportsandcontributingtoGDPandjobgrowth:• Smartphones(2007-2012).Apple’siPhoneandthe

iOS-based App Store revolutionized the mobile device market.TheiPhoneaccountedforabout18.9percentofglobalsmartphonesalesin2011,andenabledAppletocaptureanestimated66percentofglobalsmart-phone operating profit. U.S. dominance has also carried into the operating systems that enable these devices. TheAppleiOSandGoogleAndroidoperatingsystemswerelaunchedin2007and2008,andquicklycreateda shift away from the operating system platforms of NokiaandResearchInMotion.Onlyafewyearslater,in20122Q,theAndroidandiOSplatformsheldacom-bined82.9percentshareofsalescomparedto11.1percentforNokiaSymbianandResearchInMotion.12

• Tablets(2009-2012).Initially launched in the United States,thetabletcomputermarketisdominatedbyU.S.companies:AppleiOSandGoogleAndroidareatoptheglobaloperatingsystemmarketfortablets,capturing58.2and38.7percent,respectively,ofthemarket in 2011;13Amazon’sKindleFireistheleadingtabletintheAndroid-basedmarket,capturing54.4per-cent of this category.14Tabletsare now rapidly spread-ing worldwide to the benefit of these U.S. companies. In2010,morethan50percentoftabletsweresoldinthe North American market. A market research firm projectsthatby2014salesabroadwillexpandtothepoint that sales outside North America will account for more than two-thirds of tablet shipments.15

• e-Readersande-Books(2007-2012). Amazon pio-neeredelectronicpublishingwithitsKindleandKindleStoreproducts,launchinganewmarketinwhichglobalshipmentsofe-Readersamountedto22.8mil-lionunitsin2011,anincreaseof107percentfromayearearlier.Shipmentsareestimatedtotop60millionunits by 2015.16 U.S. companies currently dominate the e-Readermarket:Asoffirstquarter2012,Amazon’sKindlefamilyofproductscapturedapproximately56percent of the market for devices used to read elec-tronicbooks,withKindletallying41percentandKindleFire15percent,respectively,followedbytheBarnes&NobleNookatapproximately16percentandApple’siPadat10percent.17

• Mobileapplications(2010-2012).Mobileap-plicationsdeveloped(ornowowned)byAmericancompanies,includingFacebook,GoogleMaps,Skype,AppleiBooks,andTwitter,areallamongthetop10most commonly downloaded mobile applications in the world today.18 Instagram is an example of the rapid growthofmanyU.S.appventures.BasedinCalifornia,Instagram launched in the App Store in October 2010. Lessthansixmonthslateritwasthemostcommonlydownloaded application in the photography category in each of the 10 countries with the highest App Store usage(U.S.,Japan,Italy,Germany,U.K.,Australia,Canada,China,France,Korea).InApril2012Facebookannounced it would acquire the company for $1 billion incash.Twodayslateritwasthemostpopularappinthe app store across all categories.19

• Mobilechipsets(2007-2012).Fourofthefivelead-ing companies in the market for application-specific mobilephonesemiconductorsareU.S.-based,andin2011 they accounted for more than 50 percent of this market by share of revenue. Qualcomm is the global leader,achieving28percentshare.OtherprominentU.S.companiesinthisfast-growingcategoryareTexasInstrumentsat8.9percent,Intelat7.4percentandBroadcomat6.3percent.20


America’s leadership in this field has produced significant benefits. A recent study cataloged some of the economic contributionsoftheU.S.wirelessbroadbandindustry:21

• Responsiblefor3.8millionjobs,directlyandindirectly,anincreaseofmorethan200,000overthepastsixyears,accountingfor2.6percentofallU.S.employ-ment.

• Retained$146.2billioninGDPintheUnitedStatesandgenerated $195.5 billion in economic activity globally inthe12monthsfromJuly2010toJune2011.

• NowlargerthantheU.S.publishing,agriculture,hotelsandlodging,airtransportation,motionpictureandrecording,andmotorvehiclemanufacturingindustries.

• At$195.5billion,wouldrankasthe46thlargesteconomyintheworld,22 and is generating economic activity across the mobile ecosystem through wireless andwirelineoperators,deviceandaccessorymanu-facturers,devicecomponentsuppliers,advertisingandPRagencies,TV,radio,print,andInternetadchannels,networkandothercapitalequipmentsuppliers,profes-sionalserviceproviders,platformandcomponentsup-pliers,mobileadvertisingnetworks,contentsuppliers,applicationandcontentstores,applicationdevelopers,retailersandthird-partydealers,andmobilevirtualnetwork operators.

Our 2011 report23 provided estimates as to how the futurecontributionof4GnetworkstotheU.S.economycould differ depending on the extent to which the policy environment is conducive to carrier investments in the deploymentofthesenetworks.Thetimeperiodcoveredwas2012-2016:• Baselinescenario. U.S. carriers’ mobile broadband investmentcouldbeontheorderof$25billion.Thisisconsistent with a policy environment that is only mildly favorabletoward4Gdeployment.Underthesecondi-tions,U.S.companiescouldbevulnerabletoincursionsby foreign competitors capitalizing on aggressive ef-fortsintheirhomemarketstodeploy4Gnetworksanddevelop4G-baseddevicesandservices.Applyingstan-dardindustry-specificmultipliers,4Gnetworkscouldaccountfor$73billioninGDPgrowthand371,000new jobs.

• Acceleratedscenario. Under conditions similar to what wasachievedduringthe3Grollout,carrierinvestmentcoulddoubleto$53billion.Thisimpliesascenarioinwhich government policy is more supportive of private-sector initiatives. At this level of investment there is a much better chance that the United States would outpaceothercountriesindeploying4GnetworksandAmericancompaniescouldproducepopular4G-baseddevices and services before foreign competitors gain traction in markets here and abroad. Again applying standardindustry-specificmultipliers,4Gnetworkscouldaccountfor$151billioninGDPgrowthand771,000newjobs.

Thesefiguresareconservative,asistrueofanyanalysisofmobile broadband’s economic impact using the invest-mentmultiplierapproach.Thismethodfocusesontheeffectsofspendingbycarriers,theirsuppliers,andtheworkers they employ – it is basically a look at the results withinthetelecommunicationsindustry.Thecalculationsdonotincludeanyofthebenefitsthatflowfromapplyingmobileapplicationstotherestoftheeconomy.Moreover,thenumbersdonotreflectthesocialbenefitsthatcanaccruewhenminoritygroups,ruralcommunities,andsmall businesses obtain access to mobile broadband; the U.S. economy becomes more fair and efficient as fewer individuals and businesses are at a disadvantage due to a lack of leading-edge broadband connectivity.

Regulatory policy is thus a significant factor in the developmentof4Gmobilebroadband.Anapproachinwhich government focuses on creating conditions that are positive for the operation of market forces has made it possible for the United States to move into a position ofglobalwirelessleadership.Thebenefitsflownotonlyto the U.S. telecommunications industry but throughout theAmericaneconomy,andincludeprovidingproductsand services to markets abroad as well as serving the U.S. domestic market.


Our Mobile Communications National Achievement Index shows future U.S. leadership is not assured; other countries are aggressively promoting mobile innovation and development

Acceleratedinvestmentin4Gandrelatedmobilebroadbandtechnologiesis essential to maintain U.S. leadership and to reap the benefits of high-tech innovationsthatgenerateGDPgrowthand21stcenturyAmericanjobs.

America’s innovation and test bed leadership in mobile broadband is far from assured. Others are aggressively planning,investingin,andsupportingdeploymentofadvancedmobileinfrastructure.CountriessuchasChina,France,Germany,Japan,Singapore,andSouthKoreahave adopted national broadband plans that include goals and policies designed to upgrade their wireless as well as wireline broadband platforms.24

Insomecases,governmentsareplayingamoresignificantrole.Certaingovernmentsownsharesindomestictelecomand high-tech companies. Some treat the success of their telecom and high-tech sectors as a matter of national industrial policy and offer assistance through means such astaxincentives,R&Dfunding,andendusersubsidiesinaddition to directly supporting particular entities through theirownershiprole.Exhibit2providesillustrativeex-amples.

Withvariousdegreesofgovernmentalsupport,347opera-torsaroundtheworldhavecommittedtocommercialLTEnetworkdeploymentsorareengagedintrials,technologytestingorstudies.Commercialserviceisalreadyofferedby96operatorsin46countries,and292operatorshavemade firm commitments to commercial deployments in 93 countries. Another 55 operators in 11 additional countries are in pre-commitment stages.26

Inthefaceofthisactivityandinvestment,theUnitedStates should not underestimate the competitive threat fromabroad,particularlyinahigh-visibilityareasuchasmobile broadband.

Whyiscontinuedgloballeadershipimportant?Progres-sive generations of mobile technology have consistently offeredalowercoststructureathigherlevelsofcapacity,aswellasadvancedcapabilitiessuchasincreasedspeed,reducedlatency,improvedsecurityandadvancedqualityof service features such as prioritization by user or applica-tion.Theseprice/performanceandcapabilityimprove-ments,alongwithsufficientcapacityandcoverage,createthe very type of leading-edge test bed environment that attractsinvestment,entrepreneurism,andhigh-technologyjobs,whichsubsequentlystimulatesdemandwithinnova-tive new products and services. Relinquishing America’s leadership position to other countries risks a direct nega-tive impact on U.S. economic contribution from the mobile industry. It could also create adverse indirect effects due to reduced U.S. ability to support the diverse set of industries thatareincreasinglyreliantontoday’smobilesolutions,orare on the cusp of leveraging mobile data for tomorrow’s growth opportunities.

Exhibit 2. Efforts to promote 4G deployment or advanced spectrum use: selected governments25

Government

China

European Union

France

Japan

SouthKorea

Sweden

Illustrative governmental actions

•AdrivingforcebehindthedevelopmentofacompetingversionofLTEandispushingtodevelopasupportingecosystemthatcouldgiveChinesevendorsa competitive edge

•ProvidingR&DforaChineseversionof4Gwirelessinfrastructure•Coordinatinglarge-scaleLTEtrials•State-ownedbanksfinancingtheexportofChina’swirelesstechnology•Fundingcognitiveradioresearchforwirelessnetworks

•Supportinganinitiativetodevelopcognitiveradiosystemsthroughtheintroduction and promotion of real-time secondary spectrum trading and the creation of a new spectrum commons regime

•Collaboratingonstandardsandlicensingtoensurepan-Europeanstandard-ization and spectrum allocations

•Madeavailable30MHzofspectruminthe800MHzbandand70MHzofspectruminthe2.6GHzbandfor4Gservice

•Mandatedthat90percentofthepopulationwillbecoveredby4Gby2025,creatingalargemarketfor4Gservices

•Identified400MHzofspectrumtoreallocateformobilebroadbandpur-poses

•SupportedNTTDoCoMo,theleadingwirelesscarrier,withLTEfieldtests•ReleasedrevisedversionofActionPlanforSpectrumReallocationinSep-tember2011thataccommodatesincreaseddemandfor4Gmobileradiocommunications by repurposing spectrum

•Activelypromotingtheuseofradiospectruminavarietyofsocialinfra-structureapplications,includingpublicsafety,marinemultimedia,mobiletelephony,andmedicaltreatment

•Activelyfieldtestingwhathasbeenratedtheworld’sfastestLTEnetwork•Providingfundstobuilda“mobilecluster”industrialzonetosupportLTE

product development•StruckadealtosupportEricsson,aleading4GnetworkequipmentvendorbasedinSweden,withthedevelopmentofa4GR&Dfacilityinthecountry

•DeregulatedmarketthreeyearsbeforetheUnitedStates•Madethe2.6GHzbandavailabletocarriersinApril2008•ProvidedEricssonanundisclosedleveloffinancialsupport


An index that tracks the state of countries’ wire-less sectors would be a valuable tool for evaluat-ing and anticipating America’s standing compared to the rest of the world.Continuedmobilebroadbandleadershipisanimpor-tant driver of American competitiveness in the global economy.TheU.S.positionisbeingchallengedasothercountriesestablishthepolicies,advancedinfrastructure,and network capacity to support and encourage business activity,consumeruse,andglobalcommerceinmobilebroadband products and services. It would be helpful to establish an index that would provide a broad perspective on the status of factors that bear upon the strength and competitiveness of national mobile telecommunications sectors.Thiswouldfurnishindustryleadersandpolicy-makers with objective readings on the relative positioning ofcountrieswhoseperformanceismeasured,alongwithperformance trends over time.

We have developed a “Mobile Communications National Achievement Index” as a preliminary model for a tracking tool of the type that would fill this need.Toillustratehowaglobalindexmightlook,wehavecon-structedaMobileCommunicationsNationalAchievementIndex that tracks country annual performance on a select-ed set of global competitiveness indicators. By monitoring asetofindicatorsofthetypewehaveassembled,andunderstandingmovementsincountryindices,industryleadersandpolicymakerscangainaclear,objectiveviewof how the U.S. stacks up in the global mobile broadband marketplace,andcandesignplansandpoliciestolever-age and protect areas of strength while developing strate-gies to address areas of relative competitive weakness.

Thisindextracksthetrendovertimeofcountries’relativeperformance with respect to 15 indicators that paint a broad picture of a country’s mobile competitiveness. Whileanyoneindicatorcanbedrivenbyavarietyofunderlyingfactors,thetrendofthecollectivesetprovidesa clear sense of the overall health and relative competitive strength of the mobile telecom industry within a given country.

The index follows the performance of a group of 20 countries that includes both established lead-ers and potential challengers from the developing world.Thecountrieswerefirstselectedbasedonthesizeoftheirinformationandcommunicationstechnology(ICT)sectors.ThatinitialsetwasthenaugmentedwithothercountriesthataredemonstratingemergingICTcapabilities.Intotal,an index score was developed for each of 20 countries that could vie for the global mobile broadband leadership positionoverthenext10to20years:

Other countries can be added in the future to extend the set of global index rankings.

The index consists of a group of mobile perfor-mance indicators that measure end-user benefits and the health of the wireless industry for each country.Inselectingthespecificindicatorstocomprisetheindex,wefollowedtwocoreprinciples:• Useobjectivemeasures.Toguardagainstbias,we

chose to avoid subjective measures and instead focus only on indicators for which quantifiable data exists.

• Selectmeasureswithgoodqualitytimeseriesdata.Although absolute values determine relative global positioningamongthecountries,trendsarearguablymore important for understanding whether a country’s policies and market dynamics are creating favorable conditions for advances in mobile broadband perfor-mance.Wehaveincludedindicatorsforwhichthereare good quality time-series data for the majority of countries.

• Australia• Brazil• Canada• China• Denmark• Finland• France• Germany• India• Japan

• Mexico• Netherlands• Norway• Portugal• Singapore• SouthAfrica• SouthKorea• Sweden• UnitedKingdom• UnitedStates


By applying these principles we arrived at 15 indica-torsspanningtheyears2004–2011.Theindicatorstrackedintheindexspanuserengagement,networkperformanceandaffordability,andindustryecosystemperformance categories – each comprised of several sub-indices:•Userengagement.Measuressuchasmobilepenetra-tionpercapita,advanceddevicepenetration,mobilebroadband penetration and voice usage.

•Networkperformanceandaffordability.Measuressuchaspercentofpopulationcovered,dataspeedsand price per minute.

• Industryecosystemperformance.Measuressuchascarriereconomiccontribution,amountofcarriercom-petition (Herfindahl–HirschmanIndex),carriercapitalinvestment,ecosystempatentgeneration,andshareofwireless device sales.

An aggregate score is determined for each country based on benchmarking its achievement in each indicator against the country with the highest score.Tocalculateacountry’sannualscoreforeachindicatorwe applied a benchmarking methodology that compares each country’s performance to the best overall score on eachmeasureinthatyear.Thehighestperformingcoun-try receives a 1 and all other countries receive a score less than 1 by dividing its performance by the performance ofthehighestperformingcountry.Thisapproachcreatesa relative performance measurement that is recalculated each year without effect from prior-year performance. It can also result in a country scoring lower in a subsequent year,despitemakingyear-over-yearprogress,ifthatper-formance improvement was less than the market leader.27

Afterderivingindividualcountryscoresforeachindicator,the scores are weighted to balance contributions from categorieswithmultipleunderlyingindicators,thenaver-agedintoasingle,overallcountryscore.

This achievement index provides evidence of U.S. leadership in mobile broadband, but also suggests that the gap is closing as other countries aggres-sively pursue developments in this space – contin-ued U.S. leadership is not assured given current trends.TheUnitedStateshassignificantadvantagesintheglobalcontest for mobile broadband leadership – advanced infrastructure,anearlyleadin4Gdeployments,avibrantcompetitivecarriermarket,deeppenetrationofactiveusercommunities,andanextensiveentrepreneurialecosystem that has created many of the world’s most compellingmobileinnovations.Theseadvantagesarenoteasily replicated in other countries and are formidable obstacles for others to overcome.

AsshowninExhibit3,overallcountryscoretrendsintheMobileCommunicationsNationalAchievementIndexindicate that the United States has indeed held a leader-ship position over the last several years. But after peaking around2005withrelativestrengthsinvoiceusage,affordability,competitivebalance,capitalinvestment,andpatentgeneration,theUnitedStates.proceededtolose roughly three-fourths of its lead in a span of four years.Thisdeclinewasdrivenbyothercountries’relativeperformanceimprovementsinpenetrationpercapita,af-fordability,voiceusage,andcapitalinvestment.Also,theUnited States lagged in advanced device adoption. Simply put,theUnitedStateshaslostgroundasothercountriesand their governments make significant investments in developing and growing their mobile broadband capabili-ties and usage.

U.S.relativeperformancestabilizedin2009and2010,and ticked up slightly last year with modest improvements inseveralindicators.Thiscouldwellhavebeentheresultof3Gandearly4Gbuild-outsenabledbythe700MHzspectrumauctionsafewyearsprior.DespiteitssteepdeclinetheUnitedStateshasretaineditslead,albeitwitha margin that is much narrower than just a few years ago andlessthanthepointsitlostfrom2007to2009.AU.S.stumble,suchasamobilebroadbandcapacityshortfall,could allow other countries to close the now relatively narrow performance gap and overtake the United States within the next few years.


U.S. decline, 2007-2009

U.S. lead, 2011

U.S. lead, 2004

It is noteworthy that America’s relative performance declined when the country was active in advancing mobilebroadband–aggressivelyrollingout3G,develop-inganddeployingadvancedsmartphones,andlayingthefoundationfor4Gservices.Inotherwords,itisnotsomuch that the United States lost its intensity during this periodofdecline,butratherthattheglobalcompetitiongotthatmuchbetter.Japan,Korea,andSingaporehaveremainedconsistentlystrongcompetitors,whileChinaand India have made steady gains over the last decade asrisingchallengers.Theseemergingmobiletitanshavebuilt strong technology communities that benefit from governmentinvestmentandsupport.TheScandinavianandOtherEuropecountrieshavegenerallyfaredwellwiththeiradvancedinfrastructuresandhigh-usepopulations,andCanadahasmadesignificantgainsinrecentyearsasmore advanced mobile broadband services have grown in the marketplace. All are viable challengers to U.S. leadership and well prepared to take advantage of a U.S. performance slowdown or misstep.

ThesignificantleadtheUnitedStatesenjoyedinthemid-2000s may relate to the current strong showing of mobile ecosystem companies in the United States – the index could be a leading indicator of mobile ecosystem econom-icperformance.Ifso,theliftfromearlierinvestmentsandinnovations may be diminishing and U.S. leadership across ecosystem industries could be increasingly challenged in coming years.

IftheUnitedStatesweretoloseitsleadershipposition,the opportunity costs would be manifested in foregone GDP,jobcreation,andtaxrevenue.Conversely,therewould be substantial benefits from costs incurred to make sufficient spectrum available and otherwise promote U.S. mobile broadband to sustain U.S. leadership. As discussed inChapter1,the4Ginvestmentscenarioswedevelopedin 2011 indicate the implications of U.S. leadership in 4Govertheperiod2012-2016couldbeontheorderof$75billioninGDPgrowthand400,000newjobsforthetelecom sector alone.

Exhibit 3. Mobile Communications National Achievement Index ratings: selected countries and regions28

Leading

Achievement index score

Lagging

2004 2005 2006 2007 2008 2009 2010 2011

United States

Other Asia

Canada

OtherEurope

Scandinavia

China

India

Rest of world

Mexico

Note:• ScandinaviaincludesDenmark,Finland,Norway,andSweden•OtherEuropeincludesFrance,Germany,Netherlands,Portugal,andtheUnitedKingdom•OtherAsiaincludesJapan,Korea,andSingapore•RestofWorldincludesAustralia,Brazil,andSouthAfrica

• TheU.S.scorerosein2011,butiswellbelowits2004-2007levels•Othercountriesandregionsareshowingrisingscores• TheU.S.leadoverOtherAsiaislessthanthepointsitlostfrom2007to2009,

thus the uptick in the U.S. 2011 score does not necessarily signify at lasting lead


U.S. mobile broadband leadership depends on maintaining a robust and adaptable wireless infrastructure capable of offering new services and meeting growing demand

Therapidevolutionandvitalityofmobilebroadbandnetworks,inresponseto demandandsupplysignals,haveenabledtheexceptionalperformanceofthe U.S. ecosystem as a whole.

TheUnitedStateshasmovedintoworldleadershipthankstoavirtuouscycleofinnovativeofferings,risingdemand,andmoreinvestment.Thecycleconsistsofseveralstages:• Successivegenerationsofmobiletelecommunica-

tions technology have offered a lower cost structure athigherlevelsofcapacity,plusadvancedcapabilitiessuchasincreasedspeed,reducedlatency,andimprovedsecurity.Technologyadvancesalsobringimprovedquality of service features such as network performance prioritization by user or application.

• Theseprice/performanceandcapabilityenhancements,alongwithsufficientcapacityandcoverage,createtheleading-edge test bed environment that attracts invest-ment and entrepreneurialism.

Exhibit 4. Mobile broadband dynamics

End usersDemand factors Wireless carriers

Supply factors Capacity enablers

• Thisinturnstimulatesdemandforinnovativenewproductsandservices,andthepositivemarketresponsepromotes additional investment.

Thevitalityofthenetworksegmentoftheecosystemiscrucial to maintaining U.S. global leadership in mobile broadband.Exhibit4depictsthenetworksegmentoftheecosystem.

ThechartprovidesperspectiveonthefunctioningofU.S.mobile broadband networks within the framework of rules and regulations established by policymakers. It is therefore helpful to examine the elements of the system – the demand side consisting of end users and their consumptionofmobilebroadbandproductsandservices,andthesupplysideconsistingofcarriers,theirnetworks,and their market offerings.

Government policy: Long-term goals and objectives; strategies or approaches to achieve the goals and objectives

•Consumers•Businesses

Spectrum quantity

Spectrum quality/right to use

Network density (cell sites)

Network technology

•Spectralefficiency•Traffic

management

•Services•Devices•Apps•Content•Pricing•Coverage•Quality

•Demandprofile

•Users•Usage

•Capability•Capacity

More

Industry equilibrium

Spectrum supply and demand balance

Government spectrum (re)allocation

Less scaleMore choiceMore price competition

More scaleLower costs

More investment/R&D

Fewer


Demand: Carriers seek to stimulate demand with mobile broadband offerings that respond to end users’ needs at the right prices, in the right places, and at the desired level of quality.Endusersincludeconsumersandbusinesses.Theyhaveneedsinvolvinggoods,services,andinformation.Demanddepends on how well carriers do at providing mobile broadband connectivity products and services that help meetthoseneeds.Thekeydemandstimulatorsaretheproductsandservicesthewirelesscarriersoffer,thepricestheycharge,thegeographicareawithinwhichtheoffer-ingsareavailable,andtheirperformancealongdimen-sions that matter to end users. As end users purchase and use mobile broadband products and services carriers receive signals as to the appeal of different offerings and the characteristics of the usage their networks must ac-commodate.

Supply: Carriers’ ability to meet end users’ needs depends on their ability to accommodate today’s demand while serving as test beds for tomorrow’s offerings.Carriers’abilitytogeneratenewofferingsandrespondto end user demand depends upon factors that govern network capacity – the infrastructure’s ability to handle trafficvolume,thesophisticationoftheapplicationsitcansupport,andthequalityofitsoperation.Thesefactorsde-termine not only a network’s ability to administer today’s applicationsandtrafficvolumes,butalsoitsviabilityasatestbedfortomorrow’smobilebroadbandofferings.Thecapacityenablersare:• Spectrumquantity: the volume of radio frequencies allocatedtowirelessservicesbytheFCC,andacquiredbyagivencarrier,measuredinmegahertz.

• Spectrumquality: the suitability of the spectrum for thepurposeintended.Forexample:– Lowerfrequenciestendtobebetterthanhigher

frequencies for carrying mobile wireless signals long distances and for penetrating buildings

– Larger,contiguousblocksofspectrumareeasiertomanage and allow greater efficiency of use than a patchwork of smaller ones

– National allocations of the same frequencies enable simpler and lower cost nationwide operations than regional allocations that require a carrier and the associated devices to operate on and seamlessly transfer signals across multiple frequencies

– Licensedspectrumthatisdedicatedtoaparticularnetwork operator enables improved security and service management capabilities compared to unli-censed spectrum available for general public use.

• Networkdensity: the shorter the distance between cell sites,thegreatertheamountofwirelesstrafficacarriercanhandlewithagivenamountofspectrum.Thisisbecause cell sites with smaller radii serve on average fewer users for the same amount of spectrum capacity.

• Networktechnology:the more advanced the technol-ogy the greater is the network’s ability to use spectrum efficientlyandmanagetrafficeffectively.Forinstance,LTE,afourthgenerationtechnology,canbeupto96timesmoreefficientinitsuseofspectrum,measuredinbitspersecondperHertz,thanGSM,a2Gtechnology.

A robust set of network capacity enablers will encourage ahighlevelofdemandstimulation,inturnleadingtoincreasedenduserpurchasesandusage.Thiswillstimulatefurther improvements in network capacity and capabilities.

Thereisanothersetofvariablestoconsider,however,which is the configuration of the wireless industry.


Industry configuration: End user needs are best met when the structure of the wireless industry combines choice and price competition with suf-ficient carrier scale to motivate and enable carriers to reduce costs, expand network coverage and capabilities, and invest in technology.Wherethecarrierindustrysitsonacontinuumbetweentwo industry consolidation extremes determines the nature of certain tradeoffs that affect the functioning of thenetworksector.Theextremesarealow-consolidationsituationinwhichthereisalargenumberofsmallcarriers,and a high-consolidation situation in which there is a small numberoflargecarriers:• Atthelow-consolidationextreme,endusershavemorechoicesamongcarriers,andcarriershaveasignificantincentivetocompeteforincreasedmarketshare.Whilethiscanoftenleadtoaggressivepricecompetition,thefact that carriers are smaller means they have less of the scale that enables the spreading of significant fixed costsacrossahighnumberofusers,whichlimitshowfartheycancutprices.Inaddition,therelativelackofscale limits the amount carriers can invest in underlying capabilitiesandassetssuchasspectrum,networkcover-ageandcapacity,andthemostadvancedandefficientnewtechnologies.Thatinturncurtailstheirabilitytoofferadvancedproductsandservices,andtofurtherreduce prices.

• Atthehigh-consolidationextreme,carriershavesuf-ficient scale to spread fixed costs across a high number ofusers,reducingtheirper-unitcostsandmakingitpossibletokeeptheirpriceslow.Likewise,largescale gives carriers the financial wherewithal to make substantialinvestmentsinspectrum,networkcoverageandcapacity,andtechnologyR&Dthatwouldleadtoamoreextensive,geographicallyexpansiveandtechno-logicallyadvancedarrayofofferings.However,thereisless competitive pressure and thus carriers may be less motivated to invest their financial assets in the most advancedcapabilitiesandofferings,andtokeeptheirprices low.

Theoptimallocationforthewirelessindustryisnotateither of these extremes but closer to the middle. A mid-point location means end users are able to choose among multiplecarriersandfromawidearrayofadvanced,widelyavailable,affordableofferings.Carriersareforcedby competition to bring new and improved offerings to marketasrapidlyaspossible,andtheyhavesufficientscaletoequipthemselveswiththespectrum,networkcoverage,andtechnologyrequiredtomaintainoptimalresponsivenesstomarketsignals.Importantly,thecombi-nation of scale and competition motivates carriers to pass scale savings to end users in the form of lower prices. Thisbalanceisthuscriticalforenablingathrivingmarketenvironment and ecosystem in which innovation with at-tractive pricing stimulates continued demand growth.

In the next sections we will examine the U.S. wireless marketusingthisconceptualframework.Firstwewilllookatthestateofcustomerdemand.Thenwewillseeto what extent wireless carriers are willing and able to provide the network facilities and offerings that align with currentandpotentialmarketdemand.Finally,wewilloffer observations regarding the decisions about main-taining America’s global mobile broadband leadership confronting U.S. policymakers.


U.S. mobile broadband demand is rising at a tremendous rate and the surge is projected to continue

Demandformobileserviceshasaccelerated,fueledbyamultitudeofinnovativedevices and an explosion in applications.

Globally,thewirelessindustryreachedapproximately6billionsubscribersandover$1trillioninrevenuesin2011.29Alittleoveradecadeearlier,in2000,globalwire-lesssubscribersnumberedapproximately750million.30 Thistranslatesintoacompoundannualgrowthrate(CAGR)of20.8percentforsubscribersandhasexceededeventhemostoptimisticexpectations.Moreover,thegrowth has been stimulated by demand for both voice anddataservices,leadingindustryanalyststoexpectthat“by2013mobilephoneswillovertakePCsasthemostcommonWebaccessdevicesworldwide.”31Exhibit5summarizes the development of wireless technology over the past decade.

Exhibit 5. The critical developments of recent wireless technology generations32

38% to 77%

Digital wireless telecom in most people’s hands

83% to 105%

Faster download speeds enable

development of mobile browsing and applications market

105% to ?

Mobility further embedded in daily life with technologies such as near-field communi-

cations. Shift from “best efforts” service to managed performance

2G2000 to 2006

3G2007 to 2011

4G2012 forward

Wireless penetration

Critical development


America’s entrepreneurial innovation ecosystem has per-formed well in making available products and services that appealtowirelessendusers.Asdiscussedinchapter1,the United States leads the world in take-up of advanced devicesandservices.Exhibit6illustratesthatthistake-uphasledtoexponentialgrowthintraffic:U.S. mobile traffic in2011wasroughly47timestheratein2000andgrew74percentover2010.33Alsoin2011,wirelesspenetra-tion in the U.S. market reached 105 percent – more than onedeviceinserviceforeveryman,woman,andchildinthecountry.Whileothercountries,particularlyinEurope,achieved this milestone years earlier and now have pen-etrationratesintherangeof140-160percent,theU.S.milestone is notable in that it was achieved with a broader baseofvoiceanddataconnecteddevices,suggestingamore diverse and dynamic industry.

Exhibit 6. U.S. mobile traffic growth34

Demandformobilebroadbandserviceshasneverbeenstronger,andusagecontinuestogrowvigorouslyas subscribers respond favorably to new devices and services.Exhibit7highlightsthedifferencesinthescopeand magnitude of the U.S. industry since the turn of the millennium.

Drivingthispopularityandgrowthhasbeeninnovationinthe sense of a new device or service that breaks existing tradeoffsinvolvingperformanceandcost,i.e.,thenewoffering provides more for less. It may be possible to obtainsuperiorperformance,butonlyatahigherprice;it may be possible to pay less but only at a sacrifice in performance. A smartphone that offers a new com-bination of capabilities at a price competitors cannot immediatelymatchisanexample.Therearealsocasesin

1,200

1,000

800

600

400

200

0

BillionsofMBper year

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Data

MMS

SMS

Voice


Exhibit 7. U.S. wireless industry evolution over the last decade35

Adoption

Usage

Devices

Uses

Affordability

2000 2011

Light

Voice centric

Feature phones

SMS

ARPU and priceperMB

Heavy

Data centric

Smart phones

S/MMS and Apps

ARPU and priceperMB

•34%penetration

•Voiceasprimaryapplicationat255minutes per subscriber per month

•Voicequality/coverageasprimarypurchasecriterion

•Perminutepricingplansdefinevalue

•Competitionbasedonformfactor,reliabilityand voice quality

•Lowprocessingpowerandmemory requirements

•Over170millionSMSmessagessent

•$48.95voiceARPU•$1.95perMB

•105%penetration

•Voiceusage2.5Xgreaterat632minutespersubscriber,butdeclininginfavorofdata

•Datacomprises38percentoftotalwirelessrevenue

•Usageat517MBpersubpermonth

•40percentofthemarketissmartphoneandemerging devices

•Competitionbasedonuserinterface,webaccess,applicationavailability

•PC-likeprocessingandmemoryrequirements

•2.3trillionSMSssentand3.5billionappsdownloaded

•$46.10voiceARPU•$0.19perMB

11 years of continuous change and growth

which evolving technology powers a new business model thatchallengesanentirelydifferentmarket,asinthecaseofsmartphonesandPCs.36 As mobile broadband devices and services break prevailing performance and cost constraints,theymakeitpossibleforsimilaradvancesinsectors where they are being used.

Such changes were first encouraged by the advent of data-enabledfeaturephones.TheBlackBerry5810,introducedin2002,wasthefirstBlackBerrydevicetosupplementRIM’spopularmobilee-mailandcalendarfeatures with the functionality of a mobile phone.37Thiscombination of mobile voice and data functionality was an initial step toward mobile phones with ever broader setsoffeatures,leadingtomoreadvancedsmartphones,3Gmobilebroadbandservices,andfirst-generationmobile user interfaces overlaid on existing Internet and business applications.

GrowthfurtheracceleratedupontheemergenceofmobileapplicationecosystemssuchasthosefortheiPhoneandAndroid.ThiscreatedawirelessinfrastructureenvironmentinwhichsuccessfulU.S.companiessuchasFacebook,Twitter,PayPal,andSkypeledinofferingmobileversionsof their services. Another important factor has been the continueddeclineinthecostsofmobiledeviceprocessors,displays,andsensors,whichenabledthedevelopmentofmoreadvancedsmartphones,tablets,andotherspecializedmobiledevices.Thehigh-techindustryhasnowenteredthe stage where mobile solutions are not adapted from stationary precursors but are built from the ground up through the development of fully integrated devices and applications,betterrealizingthetruepotentialofmobilebroadband connectivity.


Therateanddiversityofapplicationgrowthunderscorehow mobile broadband devices and services have pro-motedvastdemandforanytime,anywheredataconnec-tivity.Mobilesolutionsarenowembeddedinnearlyeverywalkoflifeandineverybusinesssector,withroughly1.1million applications available on the market38 and over 1,000newapplicationsbeingaddedonaweeklybasis.39

Exhibit 8. Mobile applications available on the major mobile platforms40

Theprocesscontinues–hardwareprice-performanceratiosimprove,networktechnologycapabilitiesincrease,andnewofferingsproliferate.Forexample,smartphoneswillincreasingly be able to offer tracking mechanisms and sen-sorsthat,withuserpermission,cancollectdataabouthu-manbehavior,physiology,activity,geographicmovement,and even surrounding environments. By aggregating and analyzing this data companies are beginning to develop deeper and near real-time understanding of their custom-ersthroughavarietyofleadingandlaggingindicators,which in turn can lead to sophisticated applications and solutions to address and even anticipate customer needs. Thetraditionalphoneformfactorisbeingchallengedaswell,withtabletsbecomingincreasinglyprevalentandglasses and other wearable devices coming soon.41

Count of mobile applications

Games

Entertainment

Books

Lifestyle

Utilities

Education

Business

Travel

Health&fitness

Reference

Finance

Music

Productivity

News

Sports

Social networking

Multimedia

0 50,000 100,000 150,000 200,000

AppleAndriodBlackberryWindows


Exhibit 9. The evolution of mobile devices42

1983

MotorolaDYNATAC–Firstcommercial

mobile phone

Nokia101–FirstGSMphone

MotorolaSTARTAC–First flipphone

Nokia9000Com-municator–First“smartphone”

HTCDream–FirstAndroid phone

Apple App store

Android market

MotorolaROKR–FirstiTunesphone

(2005)

NokiaN-Gage–Firstmobile

gaming phone (2003)

SharpJ-SHO4–Firstcamera

phone

BlackBerry5810–FirstRIMvoice

and data device

AppleiPhone(2007)

Apple Siri available oniPhone4S

(2011)

Googleglassesconcept

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Demand growth is likely to intensify as mobile broadband uses appear in a widening array of busi-ness and government segments.Beyondadvancedpersonalcommunicationdevices,“machinetomachine”solutionsarealsopoisedtodelivertremendous growth in applications across a broad swath ofbusinessesandgovernmentorganizations.Hundredsof specialized devices are now certified to operate on U.S. carriernetworkstoprovideautomatedcommunications,remotesensing,andactuatingsolutions.Theseprovidenewcapabilities,efficiencyimprovements,anddata-richinsights,enablingcompaniesacrossavarietyofindustriesto drive top- and bottom-line growth and become more competitiveintheUnitedStatesandabroad:• Progressiveinsurancecustomerswhooptforusage-

based insurance pricing plug a Snapshot device into theircar’sdiagnosticport,typicallynearthesteeringcolumn.Wirelesstransmissionsfromthedevicereportonhowoftencustomersmakesuddenstops,howmanymilestheydrive,andhowoftentheydrivebetweenmidnightand4a.m.Theirdrivingprofiledeterminestheamount of discount they receive on the price of their insurance coverage.43

• ThelatestdevicesfromTomTom,thesatellitenavigationprovider,automaticallytallytrafficinformationfrommil-lions of users to set better routes for other drivers.

• LogisticsfirmssuchasUPSusemobiledevicesintheirvehiclefleetsnotonlytooptimizedrivingroutes,butalso to provide live package tracking information for customers.44

• SmartGridcompanySilverSpringNetworkshasinstalled tens of thousands of wireless smart meters to provide remote monitoring and reporting of utility network status and use.45

Some of the more promising industry growth opportuni-tiesareautomotivetelematics(connectedcar),vehicletrafficmanagement,andmobilehealthcare(mHealth):

Automotivetelematics.TheNorthAmericanmarketforautomotivetelematics,whichintegrateswirelesstelecom-municationsandinformationtechnologies,ispoisedfortremendous growth over the next five to 10 years. After amodeststartinthemid-1990s,theindustry has steadily putnewtechnologies,infrastructure,andpartnershipsinplace. It now provides wireless services such as automatic collision notification and remote door unlocking for millions of subscribers. A 2011 study estimated that U.S. telematicsunitsales–includingbothOEMinstalledandaftermarket–wouldriseto13.1millionunitsin2011,up22.6percentfrom10.7millionin2010,andclimbto32.3millionby2017.46 Another study estimated that by 2020 connected car services of some form will be in 90 percent ofnewpassengercarssoldandcontribute$600billioninglobalrevenue,costreduction,orserviceimprovementeconomic value.47


Duetoitsheavyuseofintelligentsensors,devicesandwirelesscommunications,automotivetelematicswillbealeadingcandidatetomigratefromolder2Gand3Gnet-worktechnologiestoLTEnetworksthatsupportbothcorevehicle management and in-car infotainment services. U.S. automanufacturersarecurrentlyplanningLTE-equippedvehiclesforassoonas2014,48andanLTEVentureForumforConnectedCars,includingBMW,Honda,Hyundai,Kia,andToyota,isinvestingandpromotingnewwaystointegrateLTEconnectivityintovehiclesandpromotingthetechnology among automotive suppliers and application developers.49

Among industry analysts and car manufacturers opinions differregardingtheshort-termpaceofLTEadoptiontosupporttheconnectedcarofthefuture,butthereiscon-sensusforacontinuedandincreasingneedforLTElevelsofbandwidthtofeedandsupportfeatures.Theseincluderear-seatvideomonitors,3Dnavigationsystems,surround-soundstereos,andotherinfotainmenttelematicsap-plications that will be largely accessed through consumer smartphone devices installed in vehicles.50

Vehicletrafficmanagement.Themarketfortrafficman-agement solutions and intelligent transportation systems islikelytoseerapidgrowthinthecomingyears.Withthenumber of cars on the road set to increase from 900 mil-lionin2011to1.2billionin2020,51 and the percentage of people living in cities expected to grow from 50 percent to 70percentby2050,52 road congestion will be a far-reach-ingproblem.Tohelpmeetthechallengesimplicitinthisgrowth,stateandlocalgovernmentsarelookingforwaysto minimize congestion and generate revenue through the deployment of intelligent transportation systems that includenetworkedroadsigns,dynamicroadtolling,andcongestion-chargingschemes.Manyofthesesolutionshave already been implemented in one form or another on a limited basis and by 2020 revenue generated by these systems may reach $100 billion.53

Inadditiontogeneratingrevenue,deploymentofintel-ligent traffic management systems can help cities realize substantial efficiency gains through reduced congestion andimprovementstolivingquality.Onestudyfrom2006estimatedthat5to10percentofurbantraffic,andupto60percentofsmallstreettraffic,isaccountedforbydriv-erslookingforparkingspace.AsnotedbyMotorola:

Trafficcongestioncostsmoney,imperilspublicsafetyandinfluencesthefamilyandsociallivesof billions of people. In 2003 in the United States alone,highwaycongestioncostover$63billionintravel delays and wasted fuel. In international busi-ness,congestionaffectsthebottomlinebyaffect-ing everything from inventory control to shipping tocustomerrelationships.Finally,congestionandother roadway safety issues are partially to blame for traffic fatality rates that have begun rising again after years of decline.54

Intelligenttransportationsystems,enabledbywirelessbroadbanddataconnections,haveemergedasapromis-ing set of technologies that can help address the conges-tionchallenge.Over3,000companiesarecurrentlyop-erating in the intelligent transportation systems space in NorthAmerica,includingmajorplayerssuchasSiemens,Telenav,andMagellan.55CitrixSystems,acloud,network-ing,andvisualizationtechnologiescompany,recentlymovedintothespacebyacquiringBytemobile,amobiletraffic optimization company.56 Thisbroad-basedmarketparticipation has been elicited by expectations of strong revenuegrowth–forecastedtobeashighas41percentbetween 2009 and 2015.57 Subsegments identified as having particularly strong growth prospects are electric tollcollection,videodetection,andparkingoptimization.Whilewiredversionsofthesesystemshaveexistedforsometime,“comprehensivemonitoringandmanagementoflargescale,widespreadtransportationsystemshavebeen hampered when only wired systems are in place.”58 Wirelessbroadbandsystemsenableimprovementsinboth the scope and effectiveness of intelligent monitoring systems,andcouldsignificantlyincreaseinnovationinthisarena.


mHealth.Thehealthcareindustryisapproachingapoten-tially transformational shift enabled by mobile broadband capabilities.Mobilehealthservicescouldsignificantlyalter the current health care business model by creating opportunities to increase care provider efficiencies and productivity,improvediagnosticsandtreatmentregimens,provide remote monitoring and diagnosis of patient conditions,increaseaccesstospecializedmedicalskills,andfacilitatesecurerecordstransmission.Thepotentialissignificant:• Adramaticexpansioninpatienthistoricalhealthinfor-mation,capturedbymobiledevicesensors,formoreac-curate and semiautomated diagnosis of patient health

• Areductioninpatientandpractitionertravelforcare,yielding both savings and safety benefits

• Anincreaseinthenumberofpatientsthatdoctorsandnurses can serve in a unit of time

• Expandedaccesstomedicalprofessionals–fromlocalto global

• Equalaccesstospecializedcareforcitizensinruralareas

Healthprofessionalsalreadyrelyheavilyonmobiledevices,with81percentofphysiciansowningsmartphonesand38percent using medical apps daily. One-third use smart-phonesortabletstoaccessmedicalrecordscurrently,andanother 20 percent are expected to start using them this year.59 Analysts are projecting that in the next several years mHealthsolutionswilladvancebeyondthesetypesofba-sic physician aids to become one of the major growth op-portunitiesintheglobalM2Mmarketplace.Oneresearchgroup estimates that the number of home monitoring systems with integrated communication capabilities will growatacompoundannualgrowthrateof18percentbetween2010and2016,reaching4.9millionconnectionsgloballyby2016.Thenumberofthesedeviceswithinte-gratedcellularconnectivityhasincreasedfrom420,000in2010toabout570,000in2011,andisprojectedtogrowataCAGRof34.6percentto2.47millionin2016.60

Another study estimates that the global health care cost savingsandbenefitsofjustclinicalremotemonitoring,asubsetoftotalmHealthpotential,couldreach$350billionby 2020.61

ThefederalgovernmentissupportingmHealthdevelop-mentthrougharangeofinitiatives.PresidentObamaplanstocreateatechnologyinnovatorsfellowshipprogram“topairtopinnovatorsfromtheprivatesector,nonprofits,or academia with federal government employees to col-laborate on game-changing solutions that aim to deliver significant business results in just six months.”62Twoofthefive target areas for this program involve health care and health care information technology.

Another program aims to expand the Blue Button program –aVeteransAffairsDepartmentinnovation–oftext-baseddownloadsofpatientmedicalrecords.The“BlueButtonforAmerica”initiativeaimsto“developappsandcreateawareness of tools that help individuals get access to their personal health records – current medications and drug allergies,claimsandtreatmentdata,andlabreports–thatcan improve their health and health care.”63

TheU.S.DepartmentofHealthandHumanServices(HHS)is promoting the development of mobile technologies throughitsownprograms–suchastheText4HealthTaskForce–andthroughtheprogramsofvariousotherhealth-orientedgovernmentagenciesitsupports.Forexample:• TheHHSOfficeofMinorityHealthhaspartneredwiththeAmericanAssociationofDiabetesEducators,AT&T,and Baylor University to investigate the use of smart phones’ secure video streaming by demonstrating live diabetes self-management education courses directed by clinicians and community health workers.64

• HHShaspartneredwiththeWhiteHousetolaunchtheApps Against Abuse developer’s challenge – a national competition that encourages the development of innovative applications that offer young adults a way to connect with trusted friends in real time to prevent abuse or violence from occurring.65


• AttheNationalInstituteofBiomedicalImagingandBioengineering(NIBIB),researchershavedeveloped“technologiesformultimediaremoteintraoperativemonitoringsystemscapableoftransmittingdata,voice,and images over the Internet.”66Thesetechnologiesbuild on advances in mobile computing power and wirelesscommunications,andhavethepotentialtolead to substantial changes in the way doctors care for patients. Advances in these technologies can be particularly beneficial for patients with chronic illnesses and those that live in rural areas far from medical centers.TheNIBIBhasfunded“developmentofsensorand microsystem technologies for point-of-care testing. Theseinstrumentscombinemultipleanalyticalfunctionsintoself-contained,portabledevicesthatcanbeusedby non-specialists to detect and diagnose disease.”67

CarriersalsorecognizethemHealthopportunity:• Ata2011mHealthconference,VerizonWireless

announced that it will develop a new suite of digital health care products focused on treating and prevent-ing chronic conditions such as diabetes and chronic heart failure.68

• AT&T’smHealthSolutionsbusinessunitispursuingopportunities such as a remote patient monitoring service to help health care providers and payers more effectively manage chronic diseases and reduce hospital readmissions,andmobileconnectivityforanapplicationthatcollects,analyzesanddeliverspatientinformationfor a pharmaceutical company trialing a new product.69

Toenablethisgrowth,telecommunicationsproviderswillneed to provide sufficient mobile network bandwidth and capacitytoconnectcarepractitioners,medicalinstitu-tions,andpatientswithcapabilitiessuchashigh-volumedatatransportofmedicalrecords,high-resolutionimagingandvideostreamingforremoteconsultations,andquickdownloadofnear-real-timemedicalinformation.TheseandothertypesofmHealthservicescallforsophisticatedand advanced mobile broadband technologies such as LTE.70

Implicationsforfuturedemand.Giventhebroadpo-tential for mobile broadband growth in industry segments suchasthoseoutlinedabove,manyanalystspredictthatU.S. mobile data use will continue its high growth rate as mobile data becomes increasingly embedded in U.S. society and an indispensable enabler within U.S. indus-tries. Bullish industry forecasts expect enormous growth in mobile data traffic in the coming years with one report suggestingthat“mobiledatatrafficwillexperiencea70%CAGRfrom2011to2016”whileanotherpredictsaCAGRof78%overthesametimeperiod.71

GloballyandwithintheUnitedStates,mobilebroadbanddemandisburgeoning.Technologyadvancesaremakingit possible to introduce new products and services while holdingpricesincheck.Consumersarerespondingfavor-ablytoofferingsthatincorporateanytime,anywhereuse,particularlyinvolvingmobiledata.Machine-to-machinesolutions are also evolving and have the potential to transform the operations of many businesses and govern-mentorganizations.Automotivetelematics,vehicletrafficmanagement,andmHealtharethreeexamplesofareasinwhich current activities and structures could be materi-ally altered by mobile broadband and which in turn could producefurthergrowthinusage.Meetingallthisdemandisawelcomedchallenge,butonethatcouldjeopardizeAmerica’s mobile broadband leadership if it is not ad-equately addressed.


Carriers are expanding and upgrading their networks to keep pace with demand as government works to increase mobile broadband spectrum

U.S. wireless carriers have extended their network capacity by deploying new generations of technology and building new cell sites.

U.S. carriers are investing in their networks to increase capacity in an effort to accommodate demand while maintainingattractivepricing.Carrierinvestmentsince2004hasincreasedtotalnetworkcapacityapproximately12.5 fold.72

Theinvestmentshavebroughtaboutupgradestonext-generation,morespectrallyefficientnetworktechnolo-gies and the construction of cell sites to create denser networkgrids,especiallyinhighlypopulatedareas.• Newtechnologyrollouts:Thedevelopmentand

deployment timelines for new technology generations have been decreasing. Roughly eight years elapsed betweentherolloutofanalog(1G)andGSM(2G).Themovefrom3Gto4Gtookabouthalfthattime.

• Efficiencyimprovements:Eachgenerationofmobiletechnologyfrom1Gtothecurrent4Ghasimprovedthe traffic capacity efficiency of mobile spectrum use.

• Cellsplitting:Carriershavemorethandoubledthenumberofcellsitesoverthepastdecade,partlyforgeographic coverage growth but also significantly for capacityexpansion,substantiallyincreasingthetraffic-carrying capacity that is feasible with existing spectrum within a given geographic area.

Congestion is also being countered by offloading traffic onto Wi-Fi hotspots, deploying small cells to complement traditional towers and cells, manag-ing traffic demand, and sharing spectrum.Wi-Fihotspots.AWi-Fihotspotisessentiallyaminiaturewirelessdatanetwork,witharangeofseveralyardsormore,thatoperatesinunlicensedspectrumbands.Theseshort range wireless networks can generally be deployed easily and cheaply and are typically connected to the Internetviaalocalwirelinebroadbandnetwork.Carriershave been actively pursuing a variety of means to enable and encourage mobile broadband users to connect their devicestoWi-Fihotspotswheneveravailable,therebyre-ducing the demand load on the licensed mobile network.

A hotspot acts as an unlicensed cell within a licensed cell,sparingthelicensedwirelessnetworkfromhavingtotransmitaportionoftrafficinthearea.Thisisparticularlyeffective when handling traffic from users with high data demand,suchasvideostreaming,duringpeakusehoursin high traffic areas. Users often benefit from this ar-rangement because they are moving their data usage off licensed carrier networks that typically have metered rates or monthly use caps.

ConsumersoftenhaveaWi-Fihotspotintheirhome,con-nectedtotheirDSLorcablemodemservice,orfindsimilardata“hotspots”incoffeehouses,libraries,campuses,malls,restaurants, airports,andotherpubliclocations.Therearemorethan114,000publicallyavailableorpayWi-FihotspotsintheU.S.today,withgrowthprojectedat45percentCAGR73 through 2015.

Wi-Fihotspotsarealsowidelydeployedbyenterprisesforcommercialprivateuse,andcarriershaveinvestedinWi-Fideploymentsfortheexplicitpurposeofmobilenetworktrafficoff-loadinhightrafficareas;AT&Taloneownsover33,000Wi-FihotspotsinNorthAmericaandisplanning to deploy many more to support surging growth in connections and data usage.74In2011,AT&TincreaseditsWi-Finetworkdeploymentbyapproximately1,000hotspotsperquarter.ConsumerconnectionstoitsWi-Finetworks more than doubled over this time period and data uploads increased 550 percent.75


AlthoughWi-Fihotspotstodayaredata-onlyandhavelittle ability to hand off communications from one hotspot toanotheriftheuserisonthemove,theindustryisworkingonaWi-Fi2.0nextgenerationtechnologythat is designed to bring the ease of cellular roaming toWi-Fi,enablingseamlessuseraccessandhandoffsbetween networks when roaming.76Deploymentoftheseenhanced hotspots over coming years can enable carriers to make greater use of unlicensed spectrum as a capacity complementtotheirlicensedspectrumnetworks.Fornow,Wi-Fiislargelyforoff-loadingtrafficonbehalfofstationary wireless users who stay within the range of a single hotspot.

Smallcells.Carriershavealsobeenworkingonhet-erogeneous or hybrid network solutions that involve a distributednetworkoverlayofsmallcells,typicallycalled“picocells”,“femtocells,”or“microcells,”thathandlemobile traffic within a much smaller coverage radius thantraditionalcells.ThesesmallcellsaresimilartoWi-Fihotspots except that they are typically owned by the carriers as targeted overlays within the mobile broadband networktoaddressspecificcapacityorcoverageissues,and operate in the same licensed spectrum bands. By being designed into the mobile broadband network archi-tectureandoperatinginthesamelicensedbands,thesesmall cells enable carriers to move the wireless traffic ontowirelinenetworksinmanymorephysicallocations,thusenablingthesamespectrumbandstobe“reused”many times over within a given geographic footprint. Furthermore,thesecellsofferimprovedcapabilityoverWi-Fihotspotsbyenablingcarrierstoofferhigherqualityservice,voicecommunications,andseamlessconnectivityforendusersmovingfromonecelltoanother.Carriersarecurrentlyexperimentingwithpicocells,femtocells,andmicrocellsinvariouslocationssuchashomes,officebuild-ings,andpubliclocationstodeterminethecommercialviability,operationalfeasibility,andeconomicsoflargerscale deployments.

Demandmanagement.Carriershavesoughttolimitcapacity constraints on their networks by optimizing the flowoftraffic.Optimizationcantakeavarietyofforms,includingimproveddatacompression,adaptivevideostreamingtomatchdevicetype,timeshiftingoftraffictooff-peakhours,andempoweringuserstounderstandandmanage their usage patterns. Some of these techniques offergreaterpromisethanothers,butcollectivelytheyare expected to provide incremental benefit in managing demand relative to the exponential growth rates that exist today.

Spectrumsharing. Spectrum sharing solutions allow multiple uses of the same spectrum ranges and may be promising options to increase future wireless capac-ity.Therearedifferentwaystosharespectrum.Oneisgeographic sharing – different users operate on the same frequency but use low-power devices with limited ranges; so long as the devices are not in close proximity the risk of interference is minimal. New technologies are increasingly supporting“dynamicsharing”or“opportunisticaccess.”Theseallowamobiledevicetosenseortoqueryadata-base on which frequencies are being used and to move toadifferent,availablefrequencyforcommunications.Frequency-hoppingandsmart-antennatechnologiesarecurrentlyofparticularinterest:• Frequencyhopping:Cognitiveorsoftware-based

radio technology is able to scan or query a geolocation database for frequency bands or ranges that are shared with other users and types of usage for frequencies thatarenotcurrentlyinuse.Thisenablesthedeviceto intelligently avoid capacity bottlenecks and the operator to carry more capacity within a given amount ofspectrum.Importantly,italsogivesmobilecarriersaccesstomorespectrum,suchasspectrumcurrentlyallocatedtofederalagenciesanddepartments,thatotherwise would not be available for mobile broadband useforyears,ifever.


• Smartantennas:Smart antennas with variable gain correct for certain inefficiencies by directing signals toward devices generating or consuming traffic. In effect this shrinks the cell site by only occupying the spectrum in the direct line of sight between the tower anddevice.Asotherdevicesconsumetraffic,theycanshare that same spectrum by also taking advantage of the directionally focused antenna.

Spectrumsharing,onalongertermbasisandonceproven,notonlyhaspotentialtoaddresstheneedforadditionalmobilebroadbandcapacity,butprivateinvestments in these new technologies helps foster an expanded base of U.S. innovation should those technolo-gies take hold with carriers throughout the world.

The federal government has launched initiatives to make more spectrum available for use by mo-bile broadband and to address issues such as local cell site approvals.Spectrumreallocation. InMarch2010theFCCpub-lishedaNationalBroadbandPlan.Congressorderedthatthe plan be developed to ensure that every American has “accesstobroadbandcapability.”ThePlancharacterizesmobile spectrum as a key enabler of national broadband interests. It defined measures for encouraging further development and use of this strategically vital national as-set.Specificrecommendationsregardingspectrumwere:1.Providegreatertransparencyconcerningspectrum

allocation and utilization.

2.Expandincentivesandmechanismstoreallocateorre-purposespectrum,includingsecondarymarketpoliciesand rules to promote improved access to spectrum.

3.Make500MHzspectrumavailableforwirelessbroad-bandwithinthenext10yearsand300MHzwithinfive years.

4.Expandinnovativespectrumaccessmodels,includ-ingunlicensed,TVwhitespacesandotherunlicensedapplications,andR&Dthatwilladvancethescienceofspectrum access.

5.TakeadditionalstepstomakeU.S.spectrumpolicymorecomprehensive,includinganFCCandNationalTelecommunicationsandInformationAdministration(NTIA)jointroadmaptoidentifyadditionalcandidatespectrum for mobile and fixed wireless broadband use.

6.Increasetheflexibility,capacity,andcosteffective-ness of spectrum for point-to-point wireless backhaul services.77

In2010PresidentObamaissuedhisownMemorandumwith goals that are similar to the National Broadband Plan.78ItinstructsNTIAtocoordinatewiththeFCCinmaking500MHzoffederalandnonfederalspectrumavailable by 2020 for wireless broadband on an exclusive orsharedbasis,anddirectsNTIAtoidentifyfederalspec-trumthatcouldbeusedforthispurpose.SincethenNTIAalong with interagency coordinating groups and outside advisors has prepared several reports on repurposing fed-eral spectrum for commercial mobile broadband service.79

InFebruary2012Congresspassedlegislationthatincludedprovisionsrelatingtomobilebroadband.ThenewlawgavetheFCCauthoritytoconductincentiveauctions and established guidelines for using an incen-tiveauctiontofreeupTVbroadcastspectrumformobilebroadbandservice.ItalsoauthorizedcreationofaPublicSafetyBroadbandNetwork(PSBN),withfundingfromthebroadcast auction and from leases to commercial mobile broadband users.80

TheFCCplanstoauction120MHzofTVbroadcastspectrumandisworkingontherulesfortheprocess.Thecommission intends to publish proposals regarding the auction process in the fall of 2012.81

TheFCChasalsomadeavailableforsharedusethe“whitespace”inTVbroadcastspectrumandisrevisingrulesandregulations that could impede broadband use in certain frequencies.Thecommissionislikewisefreeingupspec-trum for wireless backhaul.82


Cellsiteapprovals.TheFCChassoughttoreducedelaysin gaining state and local government action on ap-plications for cell site construction and modifications. In November2009theFCCadoptedaDeclaratoryRulingwhich,amongotherthings,limitedthetimestateorlocalzoning authorities have to make decisions on cell site applications.Thelimit(or“shotclock”)fordecidingonan application involving a collocation is 90 days and an applicationinvolvingconstructionis150days.Thisrulinghas had a limited effect on reducing the average time required to approve applications for cell site modifica-tion and construction.83TheFCCissuedasecondrulinginFebruary2012thatstipulatesautomaticapprovalaftera 90-day review period of cell site modifications that do notresultin“significant”physicalalterationstoanexistinginstallation.84


Despite efforts by carriers and government to augment network capacity, mobile broadband demand growth threatens to overwhelm the system

Thepopularityofbandwidth-intensivenewmobilebroadbanddataservicesisgrow-ingrapidly,meetingorexceedingprojectionsintheNationalBroadbandPlan.

TheFCC’s2010NationalBroadbandPlanpredictedthatdatademandin2014willbeapproximately24to47times that of 2009.85 Actual demand over the past few years is tracking closely or even exceeding that forecast andothers,reinforcingthepointthatcontinuedsignifi-cant network capacity expansion will be necessary to keep pace.

Exhibit10.LatestdemandforecastsrelativetoFCCNationalBroadbandPlan assumptions86

25x

20x

15x

10x

5x

0x

450

300

150

0

-150

-300

Traffic relative to 2009

MHz

2010

2009 2010 2011 2012 2013 2014

377

322

225

87

-90

-275

FCC2010

Actual(2010-2011) + average of forecasts (2012-2014)

2011 2012 2013 2014

AsthePlanpointedout,thisgrowththreatenstocreateaspectrum deficit if network efficiencies and new spectrum allocations do not expand capacity on a timely basis. So far it appears that supply increases are not keeping pace with rising demand.

Carriershavesteadilymultipliedtheircellsitesandup-gradedtechnology,butthenumberofuserspercellsitehasriseninsteadoffallen.Localitiesaretakinglongertodecideoncellsitedevelopmentproposals.Workcontinuesonnewtechnologiesandcapabilitiessuchasmicrocells,demandmanagement,andspectrumsharing,butrealisti-callythesewillnotmatureintocommerciallyviable,sig-nificant capacity management solutions in the near-term ormidtermtimehorizon.TheFCCisseekingtoconductspectrum auctions and prod localities to expedite their decision process but political and technical considerations are slowing progress.

AsshowninExhibit11,giventhecurrentmobilebroad-bandspectrumallocationof547MHz,theFCCestimatesaspectrumdeficitof275MHzby2014,using“conserva-tive assumptions about the market factors that affect spectrumneed,”andacknowledgingthattheoutputis“anaggregatenationalprojectionoflikelyspectrumneeds,which is likely to mask differences across markets.”87Withdemand growing as predicted or faster than assumed by theFCC,andwithspectrumsupplyeffortstoclosethegapdelayedrelativetotheNationalBroadbandPlanschedule,the magnitude of the problem may be more significant thantheFCCprojectedin2010.

Toputtheestimatedshortfallinperspective:A50percentshortfallinspectrumcapacitywasprojectedby2014relativetothecurrentlyallocated547MHz.Twoyearslaterthedemand-supplyimbalancehasgrown,mean-ing that the United States is facing a spectrum shortfall greaterthan50percentofcurrentsupplyby2014unlessimmediate action is taken to remedy the demand-supply imbalance.

Exhibit 11. FCC forecast of U.S. spectrum surplus/deficit

26 Airwave overload? Addressing spectrum strategy issues that jeopardize U.S. mobile broadband leadership26

Carriers’ network investments in next-generation technology and additional cell sites are expand-ing network capacity, but demand is growing even faster.U.S. wireless carriers have achieved significant mobile broadband network capacity increases by upgrading to new generations of technology and are now in the processofdeploying4Gonanationwidebasis.How-ever,evenaseachnewgenerationoftechnologydeliversvaluableimprovementsinspectralefficiency,itintro-duces functionality improvements that permit new uses andattractnewusers.Thenetresulthasbeenthatthespectral efficiency increases have been more than offset by demand stimulated by the new functionality.88

Carriershavebeendeployingnewcellsitesbutareexperi-encingchallengingtrendsintermsofdemandpersite,sitecosts,siteavailability,andsiteconstructioncycletimes.• Addingcellsiteshasincreasednetworkdensityand

achieved more intensive use of existing spectrum. But even as the number of cell sites more than doubled from104,000in2000to253,000in2010,subscriberspercellhaveincreased,fromapproximately993in2000to1,144in2010.89 After accounting for growth in demandpersubscriberoverthesameperiod,demandpercellhasgrownmorethan1,000percentdespitethedoubling in cell count.

• Cellsiteconstructionandmodificationcostsaresignifi-cant,requiringextensivecapitalinvestmentandongo-ingoperatingcostsforitemssuchaspower,HVAC,siteleases,andmaintenanceactivities.Developmentcostspernewcellsitehaveincreasedfromroughly$215Kin2005to$275Kin2011,90 and are likely to continue rising as the cell site locations for capacity expansion are increasingly in the most densely populated and expen-sive urban areas.

• Carriersattempttoreducethesecostsbycollocatingwith other carriers on shared cell sites when possible. However,ascellsitedensitiesincrease,lackofspaceonthese sites is limiting the optimal placement of new an-tennaarrays,forcingcarrierstoseekalternatesolutionssuchas“tenantimprovement”siteslikebuildingwalls

androoftops,and“streetfurniture”siteslikesignpoles,busstops,streetlamps,andbillboards.Thesealternatelocations often come with other challenges such as reduced coverage ranges due to height limitations and limited access to power and high-capacity backhaul.

• Itcantakeyearstodeployorupgradeacellsite.Underfavorableconditions,particularlyregardinglocalpermit-tingandapprovals,deploymentofnewtechnologyonan existing site can typically be accomplished within a few months. New site construction may double that time.Deploymenttimelinesforbothsituationscanextend to several years in cases of more complex or challenging local zoning and regulatory situations.

Solutions such as Wi-Fi, small cells, demand man-agement, and spectrum sharing offer promise, but for now they can have only a marginal impact.Wi-Fihotspots,picocells,andfemtocellsarepromisingoptions but care must be taken in projecting their ability to alleviate network capacity issues. None of these has yet been implemented at sufficient scale for a long enough periodtodeterminewhen,whether,andtowhatextentthey will offer cost-effective solutions to the mobile broadbandtransmissionneedsofcarriers,enterprises,andconsumers.Amongtheissuestoconsider:

Wi-Fi.Today’sWi-Fiinstalledbaseisnotcarrier-gradeinthatithaslimitationswithrespecttosecurity,handoffsforanenduseronthemove,andothercapabilitiesconsum-ersexpect.BringingWi-Fi2.0intofulloperationwilllikelytake substantial time and investment.

Smallcells.Thesignalradiusofasmallcellistypically100feet.Coveringacityblocktakeshundredsofaccesspoints.EachhastobepoweredandprovidedwithbackhaulInternet connections.


Spectrumsharing.Achieving workable sharing arrange-mentsamongcarriers,governmentagencies,andotherswill likewise require an extended phase-in period and additional rounds of technology advances.• Effectivedynamicaccessrequiresuserswithcomple-mentarytraffic,peaktimes,andpayloadprofiles.Commercialcarrierstypicallyhavesimilarusagecharacteristics; more promising are matchups between government and commercial users.

• Thepublic safety subset of government users is not al-ways a good choice for sharing with commercial users. Thecellularnetworkhasverylittleunusedcapacityatthepeakandthepeakisbroad.Thecommercialpeakand public safety peak will often correspond – public safety activity tends to correspond with the cycles of community life. By the same token commercial use typically spikes along with public safety use during emergencies.

• Structuringasharingarrangementinvolvingpublicsafetyandcommercialuserscanbecomplex.Withre-specttoemergencies,forinstance,therearequestionsas to what constitutes an emergency and who has the authority to declare when an emergency begins and ends. Rules governing commercial sharing with federal entitiessuchastheDepartmentofDefenseorDepart-mentofHomelandSecurityarelikelytobeconserva-tive,makingitdifficultforcommercialcarrierstoplanon capacity from these shared resources.

• Carrierscompetemostlybasedonnetworkquality,and spectrum sharing affects network performance. Introducing spectrum sharing is inherently a sensitive proposition for carriers concerned about differentiation and competitive advantage. If spectrum sharing policy mandatesthatcarriersshareholdingsequally,withoutconsideration of which carrier can put the spectrum mostrapidlytouse,thencarrierswillnaturallylooktoothermethodstoincreasescale,namelyconsolidation.

• Beforespectrumsharingtechnologiescanhaveamaterialimpactoncapacity,carriersmustupgradeboth towers and end-user devices for tens of millions ofcustomers.Thecapitalexpendituresandoperatingexpense increases involved presumably will be passed alongtoendusersatleastinpart,sotimetoachievetechnical maturity and lower costs will likely be benefi-cial in managing the transition.

• Intoday’scompetitiveenvironment,spectrumiscentralto how carriers design their networks. Spectrum holdings and the costs and opportunities involved in acquiringspectrumfactorintocapacityplanning,capi-talinvestment,anddemandmanagement.Untilrulesare defined and technology performance is tested in a real-worldenvironment,carriersandenduserswillbeunable to benefit from additional capacity offered by spectrum sharing.

Collectivelythesefactsimplythatitwilltakeyearstoestablishthespectrumsharingtechnologies,infrastruc-ture,policies,practices,andadministrativemechanismsthat will make it possible to know with any certainty the impact of sharing on commercial mobile broadband capacity.

Demandmanagementmethodsarealsopromisingbutareonlyexpectedtoslowtherateofdemandgrowth,not fundamentally change the need for capacity expan-sion.Inaddition,demandmanagementneedstobeused carefully because it risks limiting the utility of some services and restricting the potential of emerging services. Carriersareconductingexperimentsandtrialstodeter-minesavingspotentials,validatetechnicalfeasibilities,andunderstand operational implications of deploying these more advanced capabilities on a widespread basis.


The pace of government initiatives appears to be lagging what is required to reach the 500 MHz goal by 2020.Thecomplexitiesinvolvedincoordinatingtheuseofspectrum by federal and nonfederal users described above are but one example of the reality that spectrum management entails not only technical challenges but alsocopingwiththeeconomic,legal,andpoliticalconsiderations that come into play when dealing with multiplecompetinginterests.Exhibit12belowisonewayof illustrating the situation – the colored bars represent frequencies that have been allocated to various uses and users.Cellularspectrumoccupiesthefrequenciesbetween

Exhibit 12. U.S. frequency allocations91

approximately300MHzand3GHz.Currently,about16percent of that spectrum is allocated to wireless carriers forprovidingcellularvoiceanddataservices.Theremain-ing84percentisallocatedtousesthatincludedefense,government,scientific,satellite,andotheruses.Modifyingexistingarrangementsisnosmallundertaking,whethertheissueissharingspectrum,relocatingincumbentusersandgrantingspectrumtootherusers,alteringalloca-tionandassignmentpractices,orothersuchinitiatives.Changesareinherentlyproblematicandtimeconsuming.Havingsaidthat,majorchangesarerequirediftheU.S.isto preserve its mobile broadband lead.

THIS CHART WAS CREATED BY DELMON C. MORRISONJUNE 1, 2011

UNITEDSTATES

THE RADIO SPECTRUM

NON-GOVERNMENT EXCLUSIVE

GOVERNMENT/NON-GOVERNMENT SHAREDGOVERNMENT EXCLUSIVE

RADIO SERVICES COLOR LEGEND

ACTIVITY CODE

PLEASE NOTE: THE SPACING ALLOTTED THE SERVICES IN THE SPECTRUM SEGMENTS SHOWN IS NOT PROPORTIONAL TO THE ACTUAL AMOUNT OF SPECTRUM OCCUPIED.

ALLOCATION USAGE DESIGNATIONSERVICE EXAMPLE DESCRIPTION

Primary FIXED Capital LettersSecondary Mobile 1st Capital with lower case letters

U.S. DEPARTMENT OF COMMERCENational Telecommunications and Information AdministrationOffice of Spectrum Management

August 2011

* EXCEPT AERONAUTICAL MOBILE (R)

** EXCEPT AERONAUTICAL MOBILE

ALLOCATIONSFREQUENCY

STAN

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RAD

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(radio

beac

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3 9 14 19.9

5

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59 61 70 90 110

130

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275

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AeronauticalRadionavigation(radiobeacons)

MARITIMERADIONAVIGATION

(radiobeacons)

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(radiobeacons)

Non-Federal Travelers Information Stations (TIS), a mobile service, are authorized in the 535-1705 kHz band. Federal TIS operates at 1610 kHz.300 kHz 3 MHz

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25 M

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LAN

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RADI

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MAR

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LAN

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LAN

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mobile

300

325

335

405

415

435

495

505

510

525

535

1605

16

15

1705

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1900

20

00

2065

21

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2170

21

73.5

2190

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94

2495

25

05

2850

30

00

30 MHz 300 MHz

FIXE

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LAND

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MOB

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MOB

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MOB

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LAND

MOB

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LAND

MOB

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FIXE

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LAND

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LAND

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FIXE

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MOB

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BROADCASTING(TV CHANNELS 5-6)

BROADCASTING(FM RADIO)


AERO

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(R)

AERO

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Mobile

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Mobile

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SPAC

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MET.

SATE

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MET.

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MET.

SATE

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MET.

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FIXE

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AMAT

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MAR

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FIXE

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AERO

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BROADCASTING(TV CHANNELS 7 - 13)

FIXE

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Land m

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Fixe

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30.6

30.56

32

.0 33

.0 34

.0 35

.0 36

.0 37

.0 37

.5 38

.0 38

.25

39.0

40.0

42.0

43.69

46

.6 47

.0 49

.6 50

.0 54

.0 72

.0 73

.0 74

.6 74

.8 75

.2 75

.4 76

.0 88

.0 10

8.0

117.9

75

121.9

375

123.0

875

123.5

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128.8

125

132.0

125

136.0

13

7.0

137.0

25

137.1

75

137.8

25

138.0

14

4.0

146.0

14

8.0

149.9

15

0.05

150.8

15

2.855

15

4.0

156.2

475

156.7

25

156.8

375

157.0

375

157.1

875

157.4

5 16

1.575

16

1.625

16

1.775

16

1.962

5 16

1.987

5 16

2.012

5 16

3.037

5 17

3.2

173.4

17

4.0

216.0

21

7.0

219.0

22

0.0

222.0

22

5.0

300.0

FIXE

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Fixe

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LAND

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300.0

32

8.6

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39

9.9

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0.15

401.0

40

2.0

403.0

40

6.0

406.1

41

0.0

420.0

45

0.0

454.0

45

5.0

456.0

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0.0

462.5

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462.7

375

467.5

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467.7

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470.0

51

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608.0

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4.0

698.0

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3.0

775.0

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3.0

805.0

80

6.0

809.0

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9.0

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85

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6.0

901.0

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90.0

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95.0

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27.0

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30.0

1432

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35.0

1525

.0 15

59.0

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.0 16

10.6

1613

.8 16

26.5

1660

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60.5

1668

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70.0

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00.0

1710

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55.0

1850

.0 20

00.0

2020

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25.0

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80.0

2200

.0 22

90.0

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05.0

2310

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20.0

2345

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60.0

2390

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95.0

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50.0

2483

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95.0

2500

.0 26

55.0

2690

.0 27

00.0

2900

.0 30

00.0

300 MHz

AERO

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(Radio

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BROADCASTING(TV CHANNELS 14 - 20)

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(active)

Space research(active)

Earthexploration-

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RADIO-LOCATION

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AERONAUTICALRADIO -

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Amateur

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MOBIL

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MET

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FIXE

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SPACERSEARCH

(Earth-to-space)(space-to-space)

EARTHEXPLORATION-

SATELLITE(Earth-to-space)(space-to-space)

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Earth exploration-satellite

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Space research(passive)

Radioastronomy

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(passive)

RADIOASTRONOMY

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Radiolocation

RADIOLOCATION

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AERO

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RADI

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AERO

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Earthexploration-

satellite (active)

EARTHEXPLORATION-

SATELLITE(active)

Fixe

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Standard frequencyand time signal

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Space research

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RADI

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Earthexploration-

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Radiolocation


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RADI

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Radiolocation


EARTHEXPLORATION-

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RADIOLOCATION

AERONAUTICAL

RADIONAVIGATION

Earthexploration-

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RadiolocationSpace research

(active)

EARTHEXPLORATION-

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RADIOLOCATION

RADIONAVIGATION

Earthexploration-

satellite (active)


EARTHEXPLORATION-

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MARI

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RADI

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Amat

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(spac

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Mobil

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FIXED

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FIXE

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Fixed

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SATE

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RADIO-

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Radio

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Radio

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Earthexploration -

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Earthexploration-

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3.0

3.1

3.3

3.5

3.6

3.65

3.7

4.2

4.4

4.5

4.8

4.94

4.99

5.0

5.01

5.03

5.15

5.25

5.255

5.3

5 5.4

6 5.4

7 5.5

7 5.6

5.6

5 5.8

3 5.8

5 5.9

25

6.425

6.5

25

6.7

6.875

7.0

25

7.075

7.1

25

7.145

7.1

9 7.2

35

7.25

7.3

7.45

7.55

7.75

7.85

7.9

8.025

8.1

75

8.215

8.4

8.4

5 8.5

8.5

5 8.6

5 9.0

9.2

9.3

9.5

9.8

10

.0 10

.45

10.5

10.55

10

.6 10

.68

10.7

11.7

12.2

12.7

13.25

13

.4 13

.75

14.0

14.2

14.4

14.5

14.71

45

14.8

15.13

65

15.35

15

.4 15

.43

15.63

15

.7 16

.6 17

.1 17

.2 17

.3 17

.7 17

.8 18

.3 18

.6 18

.8 19

.3 19

.7 20

.2 21

.2 21

.4 22

.0 22

.21

22.5

22.55

23

.55

23.6

24.0

24.05

24

.25

24.45

24

.65

24.75

25

.05

25.25

25

.5 27

.0 27

.5 29

.5 30

.0

MOBI

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Earthexploration -

satellite (active)

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FIXE

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Standard Frequency and

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Mobile-

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ISM - 6.78 ± .015 MHz ISM - 13.560 ± .007 MHz ISM - 27.12 ± .163 MHz

ISM - 40.68 ± .02 MHz

3 GHzISM - 915.0± .13 MHz ISM - 2450.0± .50 MHz

3 GHz

ISM - 122.5± 0.500 GHz

This chart is a graphic single-point-in-time portrayal of the Table of Frequency Allocations used by the FCC and NTIA. As such, it does not completely reflect all aspects, i.e. footnotes and recent changes made to the Table of Frequency Allocations. Therefore, for complete information, users should consult the Table to determine the current status of U.S. allocations.

For sale by the Superintendent of Documents, U.S. Government Printing OfficeInternet: bookstore.gpo.gov Phone toll free (866) 512-1800; Washington, DC area (202) 512-1800

Facsimile: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001

ISM - 61.25± 0.25 GHz ISM - 245.0± 1 GHz

AERONAUTICALMOBILE

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Pursuanttothegoalofmaking500MHzofadditionalspectrumavailableforwirelessbroadbandby2020,NTIA,incollaborationwiththeFCCandotherfederalagencies,prepared a plan and timetable that identify an initial list ofcandidatespectrumbands,outlinestepstodetermineadditionalcandidatebands,setaprocesstoassessandevaluatetheirfeasibility,andidentifyactionsnecessarytomake that spectrum available for wireless broadband use within a decade.92

Theplanandtimetableidentifiedapproximately2,200megahertz of federal and nonfederal spectrum to be evaluatedforpotentialwirelessbroadbanduse.NTIA,incollaborationwiththeFCCandotherfederalagencies,prioritizedabout1,500MHzofthisspectrumformorede-tailedreviewandperformeda“fasttrack”reviewof250MHztodeterminewhetheranyspectrumfromthisgroupcould be made available for wireless broadband within fiveyears.Ofthe250MHzoffast-trackedspectrum,NTIAhasrecommendedthat115MHzbemadeavailableonasharedbasisforwirelessbroadband.Followingthisinitialrecommendation,andnotincludingthefederalspectrumrequiredtoberepurposedunderrecentlegislation,93 the affected federal agencies will conduct the detailed assess-ment and planning required to accommodate repurposing oftheirspectrumassignments,subjecttoavailablefund-ing.Theagencieswillhaveuptoeightyearstoprocesstherecommendedtransition,afterwhichanyfundsdedicatedtothetransitionwillreverttotheTreasury.NTIAwill continue to conduct reviews of additional blocks of spectrum through iterations of a process similar to that begununderthefast-trackguidelines.About1,150MHzof spectrum not included in the initial fast-track assess-ment has been prioritized for future analysis and will be the starting point for subsequent rounds of evaluation.94 Our extrapolation of the results of the fast-track evaluation process suggests that the next round of evaluation may resultinarecommendationofabout89MHzofadditionalspectruminlate2013toearly2014.

InadditiontothespectrumunderevaluationbyNTIA,there are five bands previously under consideration by the FCCforwirelessbroadbandusethatwerehighlightedintheNationalBroadbandPlan.Theseinclude:120MHzofTVbroadcastspectrum,90MHzofmobilesatellitespectrum,60MHzofAdvancedWirelessServices(AWS)spectrum,20MHzWirelessCommunicationsServices(WCS)spectrum,and10MHzofUpperDBlock700MHzshared spectrum.

Thesebandsoffer300MHzofspectrumthatmaybeavailableforwirelessbroadbanduse.Currentestimatesindicatethatconsiderablylessthan300MHz,perhapsaslittleas170MHz,willactuallybemadeavailable.Additionally,therearenumerouscomplexitiesassociatedwith repurposing each of these bands that may delay their conversioninthenextfourtofiveyears.Historicalprec-edent suggests that it may take six to eight years for any significantportionofthis170MHztoactuallybereadyforredeployment in support of wireless broadband.

Insum,204MHzisareasonableexpectationoftheamount of spectrum likely to become available through thefirsttworoundsoftheNTIAprocess–thosemostlikely to result in spectrum available on the market before 2020.AsshowninExhibit13,combiningthisamountwiththe170MHzofspectrumthatmayresultfromthepriorFCCevaluationsresultsinatotalof374MHz.Thusthereisasignificant126MHzgapbetweenthe500MHztarget and the amount of spectrum that can reasonably be expected to reach the market before 2020.


Under evaluation byNTIA

Fast-tracked

Recommended for re-purposing

Recommended for re-purposinginNBP

Currentoutlookofpotentially available

TobeevaluatedinfuturebyNTIA

Potentiallyavailablegiven precedent process

1473.9

500

37457% shared

Potential shortfall

(126MHz)

115

170

Currentoutlook

2020target

300

1142.9

250

115(shared)

170(atleast10MHzshared)

89(potentiallyshared)

Spectrum under evaluation and potentially available for wireless broadband use (MHz)

Potential spectrum shortfall

TheFCCandNTIAperiodicallyreportonthestatusoftheactivities associated with their respective evaluation pro-cesses,butitisdifficulttoassesswhethertheircollectiveeffortsareontrackorofftrackwithrespecttotheNBPtarget.Ourassessment,asshowninExhibit14,isbasedon the most recent available information and indicates that the process is behind where it needs to be.

Consequentlythegoalofmaking500MHzofadditionalspectrum available for wireless broadband use by 2020 appearstobeatriskontwocounts:• Thereisastronglikelihoodthatevenwiththesubstan-

tial amount of federal spectrum under consideration forclearing,theMHzeventuallyidentifiedforrepur-posing will be insufficient compared to demand and the goal that has been set.

Exhibit 13. Government progress in identifying spectrum for mobile broadband95

89

• GiventhelengthytimelinesassociatedwiththeNTIAevaluation process and the repurposing processes requiredforanybandsidentifiedbyNTIAand/ortheFCC,thereisasignificantriskofspectrumonlybeingavailable for use in the marketplace significantly after the 2020 target date.


Exhibit 14. Potential timeline for mobile broadband spectrum additions96

2009 (andbefore)

June2010

June2011

June2012

June2013

June2014

June2015

2020

Today

0 0

-126??-8087

10

Prior

evalua

tion

Anticipatedspectrumsurplus/deficit(MHz)

Fast-trackspe

ctrumevaluationproc

ess

377 322 225 -90 -275 500*87

Advance wireless servicesMobilesatellitespectrumWirelesscommunicationservices

BroadcastTVbandsUpperDblock

On-goingFCCproceedings(Notice–Comment–Order)Auction

first bandsAuction

additional bands

Dblockauction

Transitionplanningto accommodaterepurposing,approximately48to96months

Additional spectrum from among blocksof115,160,and89MHzto potentially become available subject to clearing and sharing implementation timelines

Technicalanalysisofrepurposing,approximately12to18months

Detailedanalysisofbandsatlicense-holderlevel, approximately12to18months(largelyconcurrent)

Resultsreportingandconsolidation,deliberation

PresidentialMemorandumissuedPrioritizationofbandsfor evaluation,approximately3months

*TargetestablishedinNationalBroadbandPlan

Potentialadditionalspectruminmarket(MHz)

Potentialsurplus/deficitnetofadditions(MHz)

364


Localcellsiteapprovals. No major improvement has resultedfromtheFCC“shotclock”rulingsdesignedtoprevent undue delays when state or local government entities consider applications for cell site construction or modifications.Roughly80percentofapplicationsareap-provedwithintwoweeksorless,97 but there are numerous examplesofextensivedelaysordenials,oftenforhightrafficareaswithpriorityneedforcapacityupgrades.Forexample:• StateA.Collocationrequest.Initialdecisionwasdenied

after 31 hearings and three years. Appeal took six more years.

• StateB.Newconstructionofaflush-mountantennaona commercial building. Initial decision remains pending after four years.

• StateC. New construction to cover a section of road with no mobile service. Initial decision attempted over sevenyearswith17planningboardmeetings.Currentlyin court.

• StateD. Application for new construction pending after three years.

• StateE.Processingtimeof30monthsinsomecasestoapprove new construction.

• StateF.Application for new construction pending after two years.

Overallthe time required to add cell sites has been length-ening.Therearenumerousexamplesofcitieswithlength-eningcellsiteapprovalsacrossthecountry.Forexample,average approval times of cell site collocation applications have more than tripled in one major U.S. city between 2003andtoday.Theseapplicationsweretypicallygrantedwithin15-30daysin2003andin30-60daysin2005,buttoday the average approval period is more than 90 days. Inanothercity,averageapprovaltimesfornewconstruc-tion have doubled from five months in 2003 to 10 months in2007.Similarly,statewideaverageapprovaltimesfornew construction in a midwest state have roughly tripled from two to three weeks in 2003 to six to eight weeks today.98

Newlocallawsimpactsiteapprovaltimes.Forinstance,some communities have adopted laws that require carriers to comply with separate zoning variance processes for allcelltowerstallerthan10feet.Thatrestrictionimpactsvirtually all new construction applications.99

In addition to delaying and sometimes preventing network capacityexpansionaltogether,lengthyapprovalcyclescreate costs that are ultimately passed on to end users and limit carriers’ ability to lower prices.

EconomicanalysessuggestthattheUnitedStatesrisksundervaluing the role of infrastructure. Over the past 50yearsU.S.investmentininfrastructuresuchasroads,bridges,andwatersystemsasashareofGDPhasdroppedbyhalfto2.4percent.100TheAmericanSocietyofCivilEngineeringhasgiventheUnitedStatesagradeofDinits“ReportCardforAmerica’sInfrastructure.”101 It would be especially damaging to U.S. national economic interests if the difficulty in approving cell site construction applica-tions foreshadows a similar decline in attention to mobile broadbandinfrastructure.Aspointedoutabove,wirelessnetworks are the equivalent of a test bed at the center of an innovation ecosystem that has the potential to increase GDPgrowthandcreate21st century jobs for the United States.Aswithotherformsofinfrastructure,theinitialexpenditures can be viewed as investments with extended and significant returns.

TheFCC’sattemptstoavoidcellsitingdelaysnowfaceaSupremeCourtchallenge.AgroupofTexasandCaliforniamunicipalitiesrecentlyaskedtheU.S.SupremeCourttoreviewanappealscourtdecisionthatsidedwiththeFCC.Concernedaboutwhattheyseeasafederalintrusionintotheirzoningpower,theycontendthattheFCC’sshotclockrulesexceedtheauthorityCongressgrantedtothecom-missionintheTelecommunicationsActof1996.102

Thedisputebetweenfederalregulatorsandlocalgovern-ments over the proper interpretation of a section of the 1996actprovidesatransitiontoanotherissuethatjeopar-dizestimelyaction,whichisthepersistenceofgrayareasin American policies on matters relevant to the advance-ment of mobile broadband.


Unresolved policy issues and uncertainties interfere with follow-through on spectrum initiatives.In crucial areas U.S. spectrum management is hampered by a lack of clarity or disagreement on important policy questions.Manyoftheseinvolvemattersofbalance–notonlyfederalversuslocalgovernmentresponsibilities,butlicensedversusunlicenseduse,traditionalauctionsversusincentiveauctions,federalversusnonfederaluse,licenseeinterestsversusgovernment-definednationalinterests,incumbent users’ interests versus the interests of newer usersanduses,morecompetitiontopromoteaffordabilityversusmorescaleeconomiestopromoteinvestment,andcontinuity in spectrum management versus the potential benefits of updating and rationalizing the approach to spectrum allocation.

Spectrum policy is not unusual in presenting difficult ques-tions,norisittheonlyfieldinwhichchangingtechnol-ogy and marketplace conditions make it challenging to drawlinesandfixdefinitions.Nevertheless,ambiguitiesand contradictions complicate the task of promoting U.S. mobilebroadbandleadership.Thefollowingdiscussionshighlight some of the issues that are shadowed by doubt about what policy is or should be.

Licensedandunlicenseduse.Commercialmobilebroadband spectrum has always been assigned through exclusive-use licenses. But with different types of spectrumsharingshowingincreasingpromise,adebatehasarisenastotheefficacyofexclusivelicensing.ThePresident’sCouncilofAdvisorsonScienceandTechnology(PCAST)recentlyconcludedthatclearingspectrumforex-clusiveuseis“notasustainablebasisforspectrumpolicy”andarguedthat“thenormforspectrumuseshouldbesharing,notexclusivity.”TheNTIAadministratorendorsedthePCASTreportwhiletheFCCchairmansaidhefavoredsharing as a tool to supplement rather than replace clear-ing for exclusive use.103

Traditionalauctionsandincentiveauctions.Foralmost20yearstheFCChasusedauctionstoawardlicensesforcommercialmobileservice.However,theNationalBroad-bandPlanstatedthat“increasingspectrumavailabilitydoesnotnecessarilyimplyatraditionalspectrumauction,”andcharacterizedthetraditionalauctionasa“backstop”foruse“whenavoluntaryprocesshasfailedentirely.”104 TheFCCaskedCongresstoconsidergrantingitauthor-itytoconductincentiveauctions.Asnoted,Congressobliged.

Licenseerightsandgovernment’sprerogatives.TheFCChasthepowertoamend,revoke,ordeclinetorenewalicenseundersomecircumstances.Thereisdisagree-ment among legal experts as to the exact nature and extentofalicensee’srightsandremedies,whichisoneofthereasonstheFCChaselectedtotrytoinducebroad-casters to yield spectrum rights voluntarily.105

• TheCommunicationsActof1934statesthatlicensespermit the use of radio channels but do not convey ownership,andCongresshasneverchangedthatlanguage.106

• CongressandtheFCChaveintermittentlymademajorchangesaffectinglicensees’interests,suchastheintroduction of competition into local telephone service marketsandthechangeoverinTVbroadcasttechnol-ogy from analog to digital.107

• However,somelegalscholarsarguethatgovernmentpolicy has evolved from a model in which govern-ment allows private parties to use spectrum for government-defined public benefit purposes to one in which government treats spectrum licensees as private parties and encourages them to make investments they considerworthwhile.Theymaintainthatgovernment’sdiscretionisconstrained,ifnotbypropertyrightsthenby rights that have much the same effect when it comes to modifying licensees’ interests.108


Market’srole. U.S. telecommunications policy is gener-allycharacterizedasmarket-driven,withgovernment’srole limited to ensuring that competition is free and fair.109OverallU.S.mobilewirelesspolicyhasreflectedthisprinciple.Indeed,thatwastheapproachthatledtoU.S. leadership in mobile broadband.110 Nevertheless,therecord also contains instances when government can be viewed as being overly prescriptive with respect to ends and/ormeans.Therearetwopotentialinterrelatedriskswhen the balance between market and government tilts in favor of government – that government decisions couldbewrongandthatexecutioncouldbeflawed.111

In the context of spectrum management the results can be reducing the efficiency of spectrum use or delaying deploymentofinfrastructureanddevices:• CBlock.Legalchallengesandauctionrulesrelatedtothe1996CBlockauctionof30MHzofspectrumre-sulted in the original buyers not building infrastructure for mobile services. Use of the spectrum was delayed by more than eight years.112

• DBlock.The10MHzDBlockinthe2008700MHzspectrum auction was subject to public safety use requirements and shared use. Stringent build require-ments and lack of clarity on future shared use require-ments resulted in no bids that exceeded the required minimum and have left the spectrum unused for four years.113

• WCS.30MHzofWCSspectrumauctionedin1997hassat unused for 15 years due to restrictions intended to protect adjacent bands from interference.114

• EBS/BRS.Fragmentedlicensingofthe194MHzofEBS/BRSspectrumfortwo-wayservicesinthemid-tolate 1990s resulted in the original auction winners not buildinginfrastructure.Companieswithsufficientfundsand capabilities to use the spectrum spent several years buying spectrum from the auction winners to aggre-gate nationwide coverage. Altogether 10 to 12 years elapsed before commercial services were deployed.115

Strategicclarity.TheabilityoftheUnitedStatestokeeppace with the explosion of mobile broadband demand is imperiled not only by unresolved issues on individual policy matters but also by the lack of a clearly articulated overall strategic framework for spectrum management.

One of the basic characteristics of U.S. spectrum manage-mentisdividedauthority.NTIAsetsExecutiveBranchpolicyandmanagesfederalspectrumwhiletheFCCover-seesnonfederalspectrum.TheGovernmentAccountabilityOffice(GAO)hassaidthatalthoughthetwoentitieshaveimprovedtheircommunication,theirdifferingperspec-tivesandjurisdictionalresponsibilities“mayposeabarrierto spectrum reform.”116

TheGAOhasreviewedspectrummanagementatbothNTIAandFCCandhasnotedopportunitiesforimprovingtheperformanceofstrategicplanning.ThebenchmarksfortheGAOfindingsareU.S.governmentstandardsforstrategicplanning,asmandatedbytheGovernmentPer-formance and Results Act of 1993.117ThestandardshavebeendefinedbytheOfficeofManagementandBudget(OMB)andGAO.Theystatethatstrategicplansshouldidentify long-term goals and objectives and then put for-ward approaches or strategies to achieve these goals and objectives.Thestandardslikewisecallforplanrevisionsapproximately every three years.118


A2011GAOreviewofNTIAnotedthattheagencyhadproducedonlyoneoftwostrategicplansthattheWhiteHousehadorderedin2003,andtheplanitdiddevelopwas more a compilation of agency plans than a projection offederalspectrumneeds.TheGAOreportsaidtheplandid not discuss long-term goals or specify steps for achiev-ingthesegoals.Additionally,theGAOreportobservedthatNTIAdidnotmaintainanongoingprocessforrefiningandupdating the plan.119Whensurveyingexpertsandstake-holdersaspartofareviewoftheFCC’sauctionactivities,theGAOfoundthatmorethansevenoutof10agreedthattheFCCshouldprovideaclearroadmapdetailingfuturespectrumauctions,whichtheGAOsaidshowedconcern about uncertainty.

Thereareotherindicationsofadesireforclearerspec-trum strategy. A Senate bill would mandate development of a triennial national strategic spectrum plan.120MartinCooper,mobiletechnologypioneerandDynachairman,hassuggestedthattheFCCproduceanationaltechnol-ogy road map to improve the linkage between policy and technology.121Theheadsoffourwirelessandhigh-techindustrygroupshavewrittenthePresidentaskingfor“acommitment that identifies definitive bands and a specific implementable plan of action to provide regulatory cer-tainty for investment.”122


It is apparent that there is nothing immutable about the leadtheUnitedStatesenjoysinourMobileCommuni-cations National Achievement Index. Unless additional remedial measures are taken and policy ambiguities are resolved,U.S.capacityexpansionwilllikelybeinsufficientto ensure adequate spectrum supply. Should U.S. wireless networksencountercapacityconstraints,theadvantagesthat superior infrastructure confer on the rest of the U.S. ecosystem would suffer. Thiswouldmeanhigherprices,rationing,ordegradedservice,andpotentiallyallthree,puttingadragontheU.S.economy.Competitors abroad would be able to gain ground in the development of prod-uctsandserviceswithappealinglobalmarkets.Jobsandprofits would be redirected away from the United States as the center for mobile innovation shifted overseas.123

Fundamental policy changes are required to avoid choking off the innovation that is responsible for America’s global leadership in mobile broadband

ToensurethattheUnitedStatesdoesnotbecomeavictimofitsownsuccess,policy-makers should consider measures that address not only the potential spectrum deficit but also the need for new approaches to spectrum management.

Giventheriskofacapacityshortage,itiscriticalthatpoli-cymakers consider actions that could expedite the process of reallocating and licensing spectrum to meet the 500 MHzgoalby2020.

However,morefundamentaleffortsarerequired.U.S.spectrum policy is the product of 100 years of legislative andregulatoryevolution.ThecurrentsystemhasservedU.S.nationalinterestswell,asillustratedbythecountry’scurrentmobilebroadbandsuccess.Nevertheless,tobetterposition the United States to capitalize on the opportu-nities of the 21stcentury,policymakersshouldconsiderreformsthatbuildonlessonslearned,correctshortcom-ings,andtakeintoaccounttheimplicationsofaccumulat-ing changes in technology and marketplace conditions. Exhibit15highlightstheideasweofferinthischapterfora broad-scale policy refresh.

Exhibit 15. Policy reforms for consideration

Strategic approach Recommendations

Definition of an overarching spectrum management strategy

DevelopinganofficialU.S.spectrumstrategycouldprovidetheopportunitytore-solve policy ambiguities that hamper effective mobile broadband decision making.

An approach that defines overall guidelines and relies on markets to work out economically efficient solutions is well-suited to a changing and uncertain wireless environment.

Treatthecostsincurredinmakingsufficientspectrumavailableforcommercialmobile broadband as investments with a return that is realized over time in the formofincreasedGDP,jobs,andtaxrevenue.

•Defineastrategicframeworkthatoffersamoreclear-cutvisionanddirectionformanaging U.S. spectrum.

•Emphasizebroad,overallgoalsandavoidspecific,prescriptiveformulationsthatmaybe based on assumptions that are overtaken by events.

•Favorpoliciesthatleavetomarketsthetaskofdetermininghowbesttocapitalizeonopportunities and resolve challenges related to mobile broadband.

•Provideanoverallbusinesscaseforthenationalspectrumstrategyintermsofanestimated return on investment.

•Whenmakingdecisionsonindividualprojectssuchasrelocations,auctions,andpilottests,matchthecosttotheamountandtimingofthepaybackratherthanviewingitin isolation.


Exhibit 15. Policy reforms for consideration, cont.

Strategic approach Recommendations

Policies and initiatives that merit special attention within the strategy framework

AsuccessfulTVbroadcastspectrumauctionshouldbeatoppriorityasahighly-visiblesteptowardmeetingthe2020goaloffreeingup500MHzofspectrumformobile broadband.

Giventhepromiseinherentinspectrumsharing,policymakersshouldconsiderex-pandinggovernmentfundedorsupportedR&Deffortstopromotetheemergenceof workable sharing solutions.

Traditionalauctionscombinedwithviablesecondarymarketsshouldcontinuetoplay central roles as effective mechanisms for distributing spectrum to users and uses with high-value potential.

Allocating and assigning spectrum in large blocks based on technically-driven crite-riacouldalleviateconstraintscausedbythecrowded,fragmentedlegacyspectrumzoning map.

Principles-basedlicenserenewalreviewsofferameanstoensurethatlicensehold-ings and spectrum policies are aligned with changing technological and economic realities.

•Identifymeanstoensurethattheauctioniscompletedonanexpeditedbasis,suchasgiving broadcasters full information on all aspects of the auction and follow-up phases.

•Definemeasuresforstreamliningandacceleratingotherreallocationprojectsneededtomeetthe500MHzgoalby2020.

•Beclearthatclearingspectrumforexclusiveuseremainstheoptionofchoiceforpro-motingmobilebroadband,butemphasizethatspectrumsharingandotheremergingmethodsdeservesignificantR&Dsupportascomplementsandpotentiallyreplace-ments.

•Supportpilot-testingofspectrumsharingtogainexperiencethatwillshedlightonitsrole in the government and commercial spheres.

•Focusonhigher-frequencybandsforunlicenseduses,toavoidimpingingonfrequen-ciesthatareoptimalfor4GLTEand5G.

•Treattraditionalauctionsandsecondarymarketsastheprimarymechanismsforspectrumdistribution,withincentiveauctionsasapotentialcomplementtodealwithspecialsituations,guidedbyexperiencewiththeTVbroadcastincentiveauction.

•Permitcarrierstoaccumulatenationalandregionalspectrumblockstailoredtotheirgeographic and capacity needs.

•Enforcebuild-outandnon-interferencerulesalongwithotherrequirementstoensurethat spectrum is used with maximum efficiency and timeliness in response to market demand.

•Shifttoanewspectrumarchitectureinvolvinglargespectrumblocksbothfor experimenting with spectrum sharing and for benefiting licensed uses.

•Permitlarge-scalecarrierstoaccumulatemorespectrum,balancedwithmeasures that preserve the ability of smaller competitors to continue improving their spectrum positions.

•Relyonthesecondarymarketastheprimarymeansforefficientlyallocatingspectrumto rural and disadvantaged carriers.

•Whereothermeanshavenotbroughtaboutashiftfromanexistingspectrumuseinvolvingobsoletetechnologyand/orminimalusage,holdanauctiontodeterminetheuse that the market values most highly.

•Preservethepredictabilityessentialforinvestmentandinnovationbydefiningobjec-tive,transparent,andquantitativestandardsfordecidingwhethermarketaccesstothespectrum through auction is justified.

•Useanalogousmethodskeyedtothegovernmentcontexttoensurethatexistinguseof federal spectrum is achieving sufficient benefit.


•Demandprofile

•Capability•Capacity

TimelygovernmentactiononthesetopicscouldhaveapositiveinfluenceonthefutureoftheU.S.wirelessindustry,ensuringthatmobilebroadbandcontinuestocontributetonationaleconomicwell-being,bothasa

Exhibit16.Benefitsofgovernmentactionsthataddresschronicpolicyissuesandthenear-termneedformoremobilebroadbandspectrum

BenefitstoU.S.fromneededpolicyactions

Cleardecision making authority; strategy guidelines

that eliminate policy gray areas

Expeditiousandmarket-driven

spectrum allocations, assignments,

and transactions

Spectrum allocation and

assignment that enables optimal

network performance

Efficientspectrumuse via means

such as sufficient tower site supply

IncreasedR&Dfocused on improving

mobile broadband

technologies

Continuedindustry

investment in technology and infrastructure

Right balance in industry configura-tion,e.g.,deci-sions on merger

proposals

Freeandfaircompetition that allows markets to determine win-ners and losers

Market-drivendevelopment of

new products and services

1 2 3 4 5 6 7 8 9

servicetoendusersandasageneratorofGDPandjobgrowth.Exhibit16identifieshowthepolicyapproacheswe have suggested could produce benefits within the network segment of the mobile broadband ecosystem.

Strategic approaches

DevelopanofficialU.S.spectrumstrategy

Defineoverallguidelinesandrelyonmarkets

Treatcostsasinvestmentswithreturn

Conductasuccessfulbroadcastauction

ExpandspectrumsharingR&D

Rely on auctions and secondary markets

Allocate and assign spectrum in large blocks

Confirmvalueoflicenseduses

End usersDemand factors Wireless carriers

Supply factors Capacity enablers

Government policy: Long-term goals and objectives; strategies or approaches to achieve the goals and objectives

Spectrum quantity

Spectrum quality/right to use

Network density (cell sites)

Network technology

•Spectralefficiency•Traffic

management

More

Industry equilibrium

Spectrum supply and demand balance

Government spectrum (re)allocation

Less scaleMore choiceMore price competition

More scaleLower costs

More investment/R&D

Fewer

1

2

4

5

6

7

8•Consumers•Businesses

•Services•Devices•Apps•Content•Pricing•Coverage•Quality

•Users•Usage

9

Benefitswithinthenetworksegmentofthemobilebroadbandecosystem

3


Developing an official U.S. spectrum strategy could provide the opportunity to resolve policy ambiguities that hamper effective mobile broad-band decision-making.TheU.S.governmentisworkingvigorouslytomeetthe2020goalofmaking500MHzofspectrumavailableforwirelessbroadband.However,avarietyofpolicygrayareaspersist,whichcouldcreatesufficientuncertaintytoimpede progress and slow desired investment.

Asnotedabove,manyofthepolicyissuesinvolvemattersof balance – federal versus local government responsibili-ties,licensedversusunlicenseduse,traditionalauctionsversusincentiveauctions,federalversusnonfederaluse,licensee interests versus government-defined national interests,incumbentusers’interestsversustheinterestsofnewerusersanduses,morecompetitiontopromoteaffordability versus more scale economies to promote investment,andcontinuityinspectrummanagementversus the potential benefits of updating and rationalizing the approach to spectrum allocation.

Giventhestakesinvolvedinspectrummanagementingeneral,andwithrespecttomobilebroadbandinparticu-lar,itisimportantthatgovernmentdecisionsandactionson subjects such as these have as their frame of reference asetofoverarchingpurposesandstrategies.Thistypeofframeworkcanprovideanagreed-uponvision,direction,andprinciples,offeringguidancewhenaddressingavitalbutvolatiletopicsuchasmobilebroadband.Currentlyspectrum management goals and strategies for the UnitedStatescanbefoundinmajorpiecesoflegislation,inExecutiveBranchdirectivesandplans,andinregula-torydecisionsbytheFCC.However,thelackofclarityon fundamental issues implies that these definitions and guidelines are not fully achieving their intended purposes.

Admittedly it is difficult to gain agreement on a new statementofvision,direction,andprinciples.Especiallyin the current political environment it is difficult to draw bright lines and settle differences cleanly.

Nevertheless it is increasingly important to do so in light of today’s competitive international environment. U.S. economic leadership is increasingly being challenged by othercountries,particularlyChina.AndakeyadvantageChinaissaidtohaveistheabilitytomakeandimplementgovernmentpoliciesefficiently.Thedelaysanduncertain-ties associated with the American policy making system are being compared unfavorably to what is depicted asthemuchmorestreamlinedandorderlyChineseap-proach.124

ForthesereasonsU.S.policymakersshouldconsiderwhether existing spectrum management policy should be set within a framework that offers a more clear-cut vision and direction that in turn could better facilitate decisions and actions required to promote mobile broadband.

An approach that defines overall guidelines and relies on markets to work out economically ef-ficient solutions is well suited to a changing and uncertain wireless environment.It is apparent that governments around the world are encountering changes that raise the question whether approaches that sufficed over the past century are ap-propriate for the wireless marketplace that is now taking shape.However,thenewmarketplaceisnotyetinfocus;its contours and dynamics are unclear. Spectrum sharing is a prime example – it seems likely that spectrum sharing willplayanincreasinglysignificantrole,butitisstilltooearly to tell how and how fast the technologies involved willdevelop,orwhateffecttheywillhave.Policymakersare forced to simultaneously confront near-term chal-lenges while attempting to facilitate the emergence of new technological and commercial models the attributes of which are not yet known.

Thechangeabilityofthewirelessenvironmenthigh-lightsthevalueofemphasizingbroad,overallgoalsandavoidingspecific,prescriptiveformulationsthatmaybecounterproductive if they are based on concepts and assumptionsthatturnouttobeincorrect.Theobjectiveistodefineoverarchingpurposesandstrategiesthatreflectfundamentalvaluesandlong-runinterests,andwhichwilltherefore remain valid across a wide range of potential future circumstances. 125


Thequestionthenbecomeshowtostrikeabalancesothat government avoids specificity and coercion and yet has reason to believe the broad aims it does articulate will beattained.TheU.S.experiencewith3Gmobilebroad-band supports the proposition that reliance upon market forces within certain boundaries and guidelines tends to producepositiveresults.Marketscanbeadeptatfindingeconomically efficient solutions despite – or even because of – turmoil.

Treat the costs incurred in making sufficient spec-trum available for commercial mobile broadband as investments with a return that is realized over time in the form of increased GDP and tax revenue.Any statement of spectrum management policy should set forth a vision as to how the cost of making spectrum available can be justified in terms of the returns on these expendituresovertime.Thecostsshouldbeconsideredinfrastructure investments that have lengthy payback periods,butextensivereturns.Further,therelevantmetricis broader than simply the net revenue to the government from auctions; it extends to the returns from expanded economicactivity,whichincludeincreasedtaxrevenues.Asexplainedinour2011report,investmentin4Gmobilebroadbandovertheperiod2012-2016canexpandU.S.GDPbetween$71and$151billion,andaccountforbetween371,000and771,000jobs.Andthesefiguresareconservative since spectrum investment has beneficial ef-fects not only in the telecom realm but also in sectors that leveragethisinfrastructure,suchasautomotivetelemat-ics,vehicletrafficmanagement,andmobilehealthcare(mHealth).Realizingthehigh-endeconomicbenefitsdoesrequire that the U.S. retain its global mobile broadband leadership position.

Further,whendecisionsaremadeonspecificactionstoimplementthenationalspectrumstrategy,suchasrelocat-ing incumbent government spectrum users or pilot testing spectrumsharing,policymakersshouldrequirenotonlyanestimate of the costs but also a broader business case that details the potential returns on investment and the pay-backperiod.Thiswouldmakeitpossibletoviewthecostsas being spread out over a period that corresponds to the realizationofthebenefits,incontrasttobeingtreatedasifthey apply 100 percent when the expenditure is made.

A policy approach that recognizes the unique infrastruc-ture aspects of spectrum and quantifies the potential returns and payback periods could help create sufficient momentum within both the private sector and govern-ment to help fund the costs of confronting technical challenges associated with making spectrum available on a timely basis.

Policymakers face many questions relating to both structure and substance when evaluating whether there is the need for a more complete and definitive policy framework concerning spectrum management. A variety of factors affect judgments about the need for enhanced guidance and what policies ought to be adopted. The following sections offer options for policymakers to consider.

A successful TV broadcast spectrum auction should be a top priority as a highly visible step toward meeting the 2020 goal of freeing up 500 MHz of spectrum for mobile broadband.Asalsonotedinthepriorchapter,itisnotclearthatef-fortsareontracktomeetthegoalofmaking500MHzofspectrumavailableforbroadbanduseby2020,withaninitial300MHzbeingclearedby2015.AnearlytestistheincentiveauctiondesignedtorepurposeTVbroadcastingspectrum.

Carryingouttheauctionisundeniablychallenging,butconcluding the process successfully and on a timely basis iscrucial.Congressauthorizedtheincentiveauctionmechanism,andthe120MHzofspectrumitinvolvesisasubstantial portion of the total capacity that is to be con-vertedtomobilebroadbanduse–120MHzis40percentoftheinitial300MHzand24percentofthefull500MHz.Moreover,theauctionproceedsaretohelpfundthenewnational public safety mobile broadband network.

TheincentiveauctionisthusahighlyvisibleindicatorofAmerica’s ability to increase the role of mobile broadband inboththecommercialandpublicsafetyspheres.Howthis project fares can have a major impact on the momen-tum of the overall undertaking. Its successful conclusion is thus an example of a priority goal that could feature prominently in an overall policy framework.


Manysuggestionshavebeenmadeforensuringthattheplan for the incentive auction is implemented as intended onanexpeditedbasis.Theseinclude:• Promoteauctiontransparencybyresolvingatanearly

stage questions about all phases of the reallocation project,includingnotonlythosethatpertaintotheconduct of the reverse and forward auctions but those concerningstepsthatfollowtheforwardauction,suchastheTVchannelrepackingandtheawardoflicensesto winners of the freed-up spectrum.126

• Asanextensionofthepreviouspoint,putspecialem-phasis on furnishing broadcasters with information on aspects of the process that affect their decisions about participatinginthereverseauction,suchasthereten-tion of service areas by broadcasters that do not take partintheauction,thefunctioningofthebroadcasterrelocationfund,andmeasurestominimizeserviceinterruptions during the transition to new channels.127

• AssignhighprioritytotheincentiveauctionandkeepitunderclosescrutinyattheFCC,withintheadministra-tion,andonCapitolHill,ensuringthatitremainsonoraheadofschedule.Thiscouldincludegreaterdefinitionand dissemination of information about the timetable for the project and more frequent and detailed progress reporting.128

Although the incentive auction has a high profile and the additionof120MHzwouldbeanimportantcontributiontomobilebroadbandspectrumcapacity,theeffectivenessof that project by no means guarantees attainment of the 500MHzgoalby2020.Manyotherspectrumsegmentsmust be cleared and reallocated as well. As indicated by thedeclarationinthePCASTreportthatspectrumclearingforexclusiveuseisnotasustainablelong-termpolicy,theissuesarenumerousanddaunting.Nevertheless,clearingspectrum appears to be the most productive means for deliveringonthe2020mobilebroadbandgoals,giventherelativelylimitedtimeframe,thepoliciesandprogramsnowinplace,andthecurrentstateoftechnology.

Accordingly policymakers should consider additional means to provide incentives and remove obstacles. Initia-tives that have been suggested or that are in some stage ofimplementationinclude:• Reorganizetheagenciesresponsibleforfederalspec-

trum management to streamline decision making and improvecoordination,forexamplebycreatingaSpec-trumManagementTeamheadedbytheU.S.govern-ment’schieftechnologyofficer,129 or by combining the spectrummanagementfunctionsofNTIAandFCCintoa single federal entity.130

• Makespectrumplanningbygovernmentagenciesmorerigorousandsystematic,forexamplebytighteningrequirements relating to spectrum planning and assign-ment and by requiring agencies to validate the data they submit for planning and review purposes.131

• Expandcurrenteffortstoincreasetheinformationpub-liclyavailableregardingspectrumownershipanduse,including the development of methods for ongoing measurement of the extent to which assigned spectrum is actually being used.132

• Createnewincentivesforfederalagenciestoclearandsharespectrum,forexamplebymakingmorereloca-tion-related costs eligible for coverage by the Spectrum RelocationFundandgivingagenciesmorediscretionasthey decide how to meet their needs once they depart from their current spectrum.133

• Permitagenciestoearncreditforbeingmoreefficientintheirspectrumuse,asmeasuredbytheirabilityto save amounts from their allocation of an artificial “SpectrumCurrency”thatcouldbetradedforactualdollars.”134

• Augmentexistingpoliciesthatobligeprivate-sectorspectrum owners who do not put their spectrum to use withinanappropriateperiodtoeithersellit,leaseit,orfind a partner who can build it out.135


Some of these suggestions could be accomplished via reg-ulation;othersmightrequirelegislation,suchasexpandinggovernmentagencyrelocationincentives.Legislationcouldbe an effective means to underscore the importance of launchingoracceleratingcertainactivities.Further,timelydecisions on appropriate initiatives or remedies would be more certain if there is consistent close monitoring of reallocationeffortsandprogressagainstplanbytheWhiteHouse,FCCcommissioners,congressionalcommittees,and other policymakers.

Policymakers should consider expanding govern-ment funded or supported R&D efforts to explore the extent to which workable sharing solutions can help alleviate concerns about spectrum supply.Clearingspectrumforlicensingtonewusersappearstobe the most productive means for delivering on the 2020 mobilebroadbandgoals,butspectrumsharingshouldalsobe part of the agenda. Unlicensed use within small cells is already making a contribution to more efficient spectrum use,andtechnologyadvancesindicatesharingcouldplaya much greater role as time goes on. It is important for the United States to be early and creative in testing and developing this option.

Intermsofanoverallpolicyframework,thepropositioncould be that clearing spectrum for exclusive use remains theoptionofchoiceforpromotingmobilebroadband,butspectrum sharing and other emerging methods deserve significantR&Dsupportascomplementsandpotentiallyreplacements.

TherecentlegislationauthorizingthePSBNpermitscom-mercialuserstoleaseaccessassecondaryusers,andfees they pay are to help offset the cost of operating the network.Asnoted,developinganationwideinteroperablepublic safety network appropriate for mission-critical uses will be a complex undertaking;136 how best to accommo-date commercial users on this facility is thus a leading-edgechallenge.Experiencegainedfromthisprojectcanbe valuable in the ongoing process of formulating viable spectrum sharing policies and practices.

TherecentPCASTreportoffersarangeofrecommenda-tions for encouraging spectrum sharing on federal govern-mentspectrum,andtheseideasmeritconsiderationbypolicymakers as a means of pilot-testing new concepts. Amongthecouncil’sideasare:• Institutetheneworganizationalframeworkunderthe

federal chief technology officer and introduce the mea-sures to incentivize agency cooperation with sharing initiatives as noted above.

• Definealargeblockoffederalspectrumaspriorityfrequencies for sharing and direct agencies to com-mence preparations for making them available for that purpose.

• Withinthedesignatedblockoffrequencies,experimentwith the implementation of a new spectrum architec-ture of large blocks conducive to sharing.

• EstablishanewspectrumaccesssystemmodeledontheTVwhitespacemanagementsystemthatwouldactas a central clearinghouse for registering users with ac-cess to the bands within its jurisdiction and issuing the conditions of use to which they are subject.

• Createthreenewcategoriesofspectrumusers–federalprimaryaccess,(legacyusersthathavetoppriorityoverotherfederalusersandcommercialusers);secondaryaccess users (federal or commercial users that warrant nextpriority);andgeneralauthorizedaccessusers(low-power,low-priorityuses).

• Movefromthetraditionalpracticeofbasingsharingonfrequencies,whichistransmitter-focused,toanap-proach that takes into account a variety of factors that includedevicecharacteristics–includinggeography,time,economicpriority,codemodulation,anddirec-tionality.

• Setasidetwobandsoffederalspectruminwhichshar-ingwouldbepermittedforlow-power,frequency-agiledevices.


• Experimentwithshort-term,lower-costlicensesforcommercial users sharing federal spectrum.

• Designateatestcitythatcanbecomeacenterfortest-inganddevelopingnewsharingprocedures,technolo-gies,anddevices.

• Createamobiletestingservicethatcangotoremotefederal facilities to test the effectiveness of sharing approachesunderconsideration,aspartofapublic-private partnership with federal agencies.

• Createanadvisorypanelofindustryexecutivestopro-pose ways of sharing federal spectrum with commercial users.137

Initiatives of this type could increase the attention devoted tospectrumsharingwithinthefederalgovernment,en-courage cooperation among government and commercial users,andfurnishpracticalexperiencewithsharingsolu-tions.Theycouldalsoprovidepolicymakerswithanswersto questions regarding the role of spectrum sharing in avoidingfrequencycongestion,themagnitudeofitscon-tribution,andthetimetableforitsdevelopment.

Balances will need to be struck while encouraging spectrum sharing amid a general concern about mobile broadband spectrum supply. In making spectrum alloca-tiondecisionsregardingunlicenseduse,itisimportantto ensure that there is sufficient licensed spectrum across thestandardbandsrequiredfor4GLTE,andthatbandsoptimalforthenextgenerationofmobiletechnology(5G)are not designated for other uses.

One solution might be to treat licensed spectrum as most appropriate for applications in which it is necessary to manage quality of service and unlicensed spectrum where best-effortsserviceisappropriate.However,thatideaassumes an ability to predict future data usage in terms of applicationtypes,dataintensity,andservicemanagementneeds.Recenthistoryshowsthisisdifficult,ifnotimpos-sible,toforesee.Duringthelastdecadeexpertforecasts

failedtoanticipatethepopularityofsmartphones,tablets,mobiledata,andmobilevideo.Consumersunawareofcoming technological advances assured pollsters they werelukewarmtoward3Gapplicationstheywouldsoonembrace with enthusiasm.138

Consequentlyitwouldbeunwisetoallocateasignifi-cant additional amount of spectrum as unlicensed at the expense of prime licensed spectrum. A more prudent approach would be to focus on higher frequency bands forunlicenseduses,sincetheydonotrequirethesamepropagation characteristics as licensed uses given the intentionally small coverage radii and the absence of a service management imperative.

Traditional auctions combined with viable second-ary markets should continue to play central roles as effective mechanisms for distributing spectrum to users and uses with high-value potential.Using traditional auctions and secondary markets is consistent with the principle of minimizing government involvement,andthesemechanismshaveestablishedafavorabletrackrecord.Thecongressionalgrantofauctionauthorityin1993hasmadeitpossiblefortheFCCtoassign hundreds of megahertz of spectrum quickly and efficiently in the intervening years.139 Secondary market transactions,includinglicensetransfersandleasing,haveplayedamajorroleinfurtherdistributingspectrum.FCCdatashowthatmostcellular,broadbandPCS,andAWSlicenseshavebeentransferredtodifferententities,includ-ing regional and smaller providers as well as large carriers. Manyofthoselicenseshavebeenpartitionedordisag-gregated,againtransferringthespectrumtoawiderangeof entities of different sizes.140

Incentive auctions are a promising solution for dealing with situations in which spectrum clearing is particularly difficult,butthemeansforencouragingincumbentstoyield their spectrum both increases the complexity of theprocessandgivesgovernmentaprominentrole.TherepurposingoftheTVbroadcastspectrumcanprovideauseful case study regarding the advantages and disad-


vantagesoftheincentiveauction.Forpurposesofanoverall policy framework an effective approach could be to designate traditional auctions and secondary markets astheprimarymechanismsforspectrumdistribution,withincentive auctions as a potential complement for use in instances where spectrum clearing is unusually challenging and where there are substantial reasons for believing that a voluntary approach would produce better results.141

Relatively unfettered spectrum exchanges can permit the accumulation of national and regional spectrum blocks that permit carriers to establish spectrum positions more tailored to their own geographic and capacity needs. Re-cipients of national licenses should be allowed to disaggre-gateonaregionalbasisinthesecondarymarket,whichcan enable regional carriers to improve their spectrum position while moving rural spectrum to those most willing and able to build mobile broadband capacity in rural areas. Moreover,thiscanpermitthemostefficientandimmedi-ateutilizationofthespectrum,promotinglowpricesandadequate spectrum supply.

Policiesneedtoensurenotonlyanadequatesupplyofspectrum but also that spectrum is used with maximum ef-ficiencyandtimelinessinresponsetomarketdemand.TheFCCandNTIAcanhelpensurethatspectrummadeavail-able is rapidly used by carriers in a manner that supports the principles of minimal spectrum caps and establishment ofarobustsecondarymarket.Forinstance,theseagenciescan issue defined build-out requirements that focus on apercentofpopulation(versusgeography)andcreatetechnology guidelines that prevent commercial or govern-ment entities from building infrastructure in a manner that renders it unusable for others or interferes with existing or future networks.

Allocating and assigning spectrum in large blocks based on technically driven criteria could alleviate constraints caused by the crowded, fragmented legacy spectrum zoning map.

ThePCASTreportrecommendsthatratherthanfrag-menting spectrum into ever more finally divided exclusive frequencyassignments,spectrummanagersshoulddevelop large frequency bands.142Theadvisorycouncilfo-cusesonusingbroaderbandsforunlicenseduse,butal-locating broader swaths of spectrum applies equally well to facilitating the operation of licensed mobile broadband networks. An overall policy framework could therefore call for a shift to a new spectrum architecture character-ized by large spectrum blocks both for experimenting with spectrum sharing and for benefiting licensed uses.

Theprinciplefavoringlargespectrumblockscanfurtherbe applied to the assignment of frequencies to particu-larlicensees.Stringentspectrumcapsplacedonlarge,national carriers could equalize network utilization across carriers at suboptimum levels and degrade the cost structure that has allowed carriers to hold prices relatively constant as data usage has exploded.

LargescaleintheU.S.wirelessindustryhasprovidedcarriers with a cost structure that enables low prices and immediate reinvestment of profits to expand network capacity and efficiently use existing spectrum. Restricting certain players from access to newly auctioned spectrum could place it in the hands of carriers with existing capac-ity surplus and less incentive to build out immediately and/orlessabilitytoaddadditionaltraffictothenewlyallocated spectrum.

Makingspectrumavailabletocarriersthataremostlikelyto put it to use in ways that benefit end users quickly can provide effective incentives for overall industry growth andinnovation,andcanhelpkeeppriceslow.Itisadvis-able to balance policies allowing large-scale carriers to continue accumulating spectrum with an assurance that theircompetitors–existingandnew,regionalandnation-al – can continue to improve their spectrum position and alleviate potential future spectrum constraints.


Geographicrestrictionscanalsobecounterproductive.Nationwidefrequencies/licensesfacilitateplanningandnetworkdeploymentefficiencies.Previousspectrumal-locations have led to complexity in network engineering andlowerauctionproceeds.Forinstance:• 2006AWSauction:thelicenseswerebrokenupintosixblocks,designatedAthroughF.BlockAconsistedof734CellularMarketAreas.BlocksBandCwereeachdividedinto176EconomicAreas.BlocksD,E,andFwereeachbrokenupinto12RegionalEconomicAreaGroupings.Thusthegovernmentsoughttoawardlicenseforatotalof1,122areas.

• The2005PCSauctionsconsistedof217licensesdis-tributedacross24differentbidders

Thisisnottosaythatthedivisionofspectrumintosmallunits cannot serve a useful purpose. Some awards of regional licenses are appropriate to foster the deployment of mobile broadband networks in rural areas. A balance between regional and national spectrum license blocks is essential to provide for national-level economies while ensuringinvestmentflowstoruralanddisadvantagedcarriers.However,thesecondarymarketshouldbethechief means for efficiently allocating spectrum to serve local needs.

Theseactions,executedcorrectly,canpromotethebal-ance between scale and competition that allows for con-tinuing the consumer benefits of low prices and sufficient supplyofmobilebroadband.Theycanalsohelpensurethat rural and disadvantaged communities receive suf-ficient mobile broadband coverage to support economic development,healthcare,andeducation.

Principles-based license renewal reviews offer a means to ensure that license holdings and spec-trum policies are aligned with changing techno-logical and economic realities.One of the advantages of a free market is that it provides means for encouraging asset transfers when new circum-stances cause a shift in measures of economic efficiency between existing and alternative users and uses. An im-portant question is how to ensure that this type of check functions as it should in the realm of mobile broadband spectrum.Forthesectortocontributemaximumvaluetothe U.S. economy and serve the public interest it is vital that changing technology and marketplace conditions have the appropriate impact on license holdings.

One means of promoting economic efficiency in spectrum holdings could be for the relevant government agen-cies to make periodic determinations as to whether a continuation of a license is economically efficient and in the public interest. In the case of spectrum used for commercialpurposestheFCCcouldmakethisassessmentwhen a license term approaches expiration.143 In the case of government spectrum the assessment could be made bytheNTIAatdefinedintervals.Wherethedecisionisthat the current use is not the most advantageous an auc-tioncouldbeheld.Thiswouldpermitajudgmentbythemarket as to what use has the highest value for the U.S. economy and society.

Inthegovernmentcontext,therecouldbesituationsinwhichanalternativetoanauctionmightbepreferable,for example if a specific spectrum segment is not of inter-esttocommercialusers,orinlimitedcaseswherethena-tional interest requires that certain spectrum be reserved for government rather than commercial use. Should a mechanismsuchasthe“SpectrumCurrency”proposedinthePCASTreportbedevelopeditmightbeworkabletostage a competition to determine whether the incumbent or another agency would hold the authorization.144


It would be crucial to establish clear standards for govern-mentdecisionsonspectrumrightsretention,especiallywith respect to the private sector. If the policies governing thesedecisionswereperceivedasflexibleorsubjecttodiffering interpretations the result would be uncertainty on the part of licensees and the financial sector regard-ing the security of rights to use segments of spectrum. Inparticular,itisimportanttoavoidtheimpressionthatdecisions on whether existing uses remain beneficial could be made according to standards that vary from one case to another or that such decisions could be made in an effort to achieve policy objectives that override market forces.Thiswouldchillinvestmentandinnovation–theopposite of what is intended.

Therefore,thestandardswouldneedtobeobjectiveandtransparent,andwiththeemphasisonquantitativeanaly-sisratherthanqualitativejudgments.Theinquirywouldfocus on how the existing uses and usage compare to alternatives.Thepresumptionwouldbethatalicensere-newal would be largely routine; so long as the secondary market is functioning efficiently there should be relatively few instances in which an existing use is not aligned with thetruevalueofspectrum.Theexceptionwouldbeif,accordingtothedefinedobjectivestandards,itisclearthat the existing use and usage is less beneficial to the economy and society than one or more alternatives (with unambiguous definitions for determining if the differ-enceis“clear.”)Insomecircumstancesaremedycouldberemoving use restrictions from a license to encourage new useorfacilitateasecondarymarketsale,orconductingan incentive auction. Otherwise conducting a traditional auctionmightbethebestsolution.Theincumbentwouldstill have the opportunity to retain the license by bidding intheauction(orthroughanalternate,equivalentmecha-nismincertaincaseswithinthegovernmentcontext).

Developingaprocessforconductingtheseperiodicre-views could be undertaken as part of a larger initiative to clarify wireless license rights and obligations. As discussed inthepriorchapter,therearecurrentlyuncertaintiesinU.S. policy on the legal rights and obligations of wireless licenses holders.145Accordingly,itcouldbeconstructivetoarticulate an approach that offers licensees the certainty they need to substantiate the value of their license and

justify investments while clarifying government’s authority to direct spectrum uses that best serve the public interest. Thiscouldincludeprovisionforprovidingsomemea-sure of compensation to incumbents who under certain circumstances incur losses on investments made prior to a change in or loss of a license.

Dispellingambiguitiesandofferingclearguidanceinthisareaischallenging,buttheneedisacute.Particularlyinaperiodoftechnologyadvancesandcompetitiveferment,it is important to keep spectrum use aligned with the state ofthemarketplace.Atthesametime,uncertaintyoverthe status and duration of a license or authorization could hamperinvestment,sales,leasing,andotherbeneficialactivities.Thepolicyobjectiveistoarriveatabalancingofinterests that injects a degree of market discipline without creating undue instability.

Lack of spectrum availability or policies that allocate spectrum in a manner that fails to reinforce industry health and consumer affordability will constrain the U.S. wireless industry and the associated ecosys-tem. Furthermore, there may be broader negative consequences across the U.S. economy due to the increasingly vital nature of mobile services for both consumers and businesses. The United States needs an expeditious process to resolve the unanswered questions in a manner that best addresses the needs of end users and supports ongoing U.S. leadership. Delay and actions that prevent efficient use of quality spectrum risk demoting the United States from the top rank in the Mobile Communications National Achievement Index to but one of many contenders; the opportunity costs will likely come in the form of diminished growth in jobs and GDP.


1 Deloitte,“Theimpactof4Gtechnologyoncommercialinterac-tions,economicgrowth,andU.S.competitiveness,”August2011

2 Standard&Poor,“WirelessTelecommunicationsIndustrySurvey,”January19,2012

3 CTIA,“50WirelessQuickFacts,”InformaTelecoms&MediaGroupWCISDatabase,2011

4 Gartner,“MarketShare:MobileDevicesbyRegionandCountry,2Q12,August13,2012

5 Gartner,“MarketShare:MobileDevicesbyRegionandCountry,2Q12,August13,2012

6 ABIResearch,“WindowsPhonetoRepresent2%of2012’sAppDownloads,butItsFutureWillBeBrighter,”April3,2012

7 ABIResearch,“AndroidOvertakesApplewith44%WorldwideShareofMobileAppDownloads,”October24,2011;Ap-pStoreHQ,“iOSvsAndroid?Over1,000Developers(IncludingSomeTopNames)AreHavingitBothWays,”July1,2010

8 FCC,“NationalBroadbandPlan,”March2010;MobileFuture,“MobileMomentum:HowConsumer-DrivenCompetitionShapesandDefinestheModernU.S.WirelessLandscape,”November4,2010

9 TelecommunicationsIndustryAssociation,“BroadbandSpec-trum:TheEngineforInnovation,JobGrowth,andAdvancementofSocialPriorities,”March2011

10Deloitte,“Theimpactof4Gtechnologyoncommercialinterac-tions,economicgrowth,andU.S.competitiveness,”August2011

11ChetanSharmaConsulting,“MobilePatentsLandscape:AnIn-DepthQuantitativeAnalysis,”April2012

12Gartner,“MarketShare:MobileDevicesbyRegionandCountry,2Q12,”August13,2012

13JeffreyBurt,“iPadtoGrowMarketShareOverAndroidTablets:IDC,”eWeek.com,June17,2012

14comScore,“TabletCompetitionHeatsUp:KindleFireCapturesmorethanHalfofAndroidTabletMarket,”April26,2012

15MorganStanley,“TabletsDemandandDisruption,”February2011

16Digitimes,“DigitimesResearch:Globalshipmentsofe-bookreaderstoslipto2millionunitsin1Q12,”March5,2012

17BookIndustryStudyGroup,“ConsumerAttitudesTowardE-BookReading,”VolumeThree,Report2of4,April2012;DigitalBookWorld;“iPadE-ReadingMarketShareStagnatesasTabletE-ReadingRises,”May7,2012

18MashableTech,“Top10AppsDownloadedin2011,”201219HenrikKoekkoek,“TheRiseofInstagramandtheSignificanceoftheFirstBillionDollarAppAcquisition,”Distimo,April2012

20Gartner,“MarketShareAnalysis:MobilePhoneApplication-SpecificSemiconductors,Worldwide,2011,June1,2012

21ReconAnalytics,“TheWirelessIndustry:TheEssentialEngineofU.S.EconomicGrowth,”May2012

22IMF,“WorldEconomicOutlookDatabase,”2012.


24FCC,“InternationalBroadbandDataReport,”AppendixE:Mar-ketandRegulatoryBackground,May20,2011

25BergeAyvazian,“LTETDDCarrierBusinessCaseandAdoptionForecast,”HeavyReading,www.heavyreading.com,January2011;MichaelKan,“CarriersBackLTETDDfor4GThroughNewInitiative,”www.pcworld.com,February16,2011;Computerworld,“China4GTD-LTEtrialsexpectedtolast18months,”January27,2011;CentreTecnològicdeTelecomuni-cacionsdeCatalunya(CTTC),“COSTIC0902-CognitiveRadioandNetworkingforCooperativeCoexistenceofHeterogeneousWirelessNetworks,”December2009;COGEU,“COGnitiveradiosystemsforefficientsharingofTVwhitespacesinEUropeancontext,”January2010;GlobalTelecomsBusiness,“Reliancegets$1.93bnloanfromChina,”March10,2011;C114,“Tele-comVendorZTEtoBenefitFromChina’s4GGlobalAmbitions,”March17,2011;WallStreetDaily,“SouthKorea:HomeoftheWorld’sFastest4GMobileNetwork,”March25,2011;Telecoms.com,“Ericssonsetsup4GlabinSouthKorea,”July13,2009;DaeguMetropolitanCity(OfficialWebsite),“GlobalMobileClusterEstablishmentVision,”February5,2010;CNET,“FCC,notfreemarket,bestforspectrumauction,”March18,2011;NetworkWorld,“NTTDoCoMotochase1 Gbpsdown-linkswithLTE-Advanced,”February7,2011;JapaneseMinistryofInternalAffairsandCommunications–TelecommunicationsBureau,“ActionPlanforSpectrumReallocation,”September2011;JapaneseMinistryofInternalAffairsandCommunica-tions,“TelecommunicationsBureau,”2008;Maravedis,“4GSettoGainMomentuminJapan,”May 13,2009;Zacks,“SpectrumonAuctioninFrance,”May23,2011;C114,“Frenchgovern-mentwants4Goperatorstocover99%ofcountryby2025,”December7,2010;Reuters,“Francewantsminimum2.5blneurosfrom4Gauction,”May16,2011;CIOL,“2G,3Gand4Gwillco-existforalongtime,”June24,2009;FinancialTimes,“NewchiefputsfaithinEricssontechnology,”December6,2009;AnalysysMason,“TheoutcomeoftheSwedish2.6GHzauctionsuggestsalowerboundaryforspectrumprices,”May8,2008

26GlobalmobileSuppliersAssociation,“96operatorslaunchedcommercialLTEservicesin46countries,LTE1800nowusedin33%ofcommercialnetworks,”www.gsacom.com/news/gsa_360.php,September2012

27ThiscanbeviewedasfollowingtheRedQueenPrinciple:“Foranevolutionarysystem,continuingdevelopmentisneededjust in order to maintain its fitness relative to the systems it is co-evolvingwith.”ProposedbytheevolutionarybiologistL.vanValen.SeeF.Heylighen(1993):“TheRedQueenPrinciple,”in:F.Heylighen,C.JoslynandV.Turchin(editors):PrincipiaCyberneticaWeb(PrincipiaCybernetica,Brussels),URL:http://cleamc11.vub.ac.be/redqueen.html.Or,astheRedQueensaidinLewisCarroll’sThroughtheLookingGlass,“Ittakesalltherunningyoucando,tokeepinthesameplace.”

Endnotes

http://www.heavyreading.com

http://pespmc1.vub.ac.be/REDQUEEN.html


28InternationalTelecommunicationUnion,“ITUWorldTelecom-munication/ICTIndicators2012,”2012;Informa,“WCISWorldCellularInformationServices,”2011;Akamai,“TheStateoftheInternet4thQuarter,2009,”2009;Akamai,“TheStateoftheInternet4thQuarter,2010,”2010;Akamai,“TheStateoftheInternet4thQuarter,2011,”2011;PortiaResearch,“MobileMessagingFutures2012-2016-AnalysisandGrowthForecastsforMobileMessagingMarketsWorldwide:6thEdition,”Febru-ary2012;ThePatentBoard,analysisofU.S.utilitypatents,June,2012;FierceWirelessEurope,“Analyzingtheworld’s11biggesthandsetmakersinQ22012,”August22,2012;Computer-world,“Smartphoneshipmentstogrowdespiteoverallmobiledecline,”January29,2009;Deloitteanalysis

29ChetanSharmaConsulting,“StateoftheGlobalMobileIndustry–AnnualAssessment–2012,”2012

30RCRWireless,“Globalwirelesssubscribersnumber1.5B,”De-cember9,2004

31Gartner,“MobileApplicationsandInterfaces:NewApproachesforaMultichannelFuture,”February9,2012

32CTIA,“CTIA’sWirelessIndustryIndices–YearEnd2011Results,”May2012;penetrationfiguresareallyearendintheyearnoted

33CTIA,“CTIA’sWirelessIndustryIndices–YearEnd2011Results,”May2012;Deloitteanalysis

34CTIA,“CTIA’sWirelessIndustryIndices–YearEnd2011Results,”May2012;Deloitteanalysis

35CTIA,“CTIA’sWirelessIndustryIndices–YearEnd2011Results,”May2012;CTIA,“CTIA’sWirelessIndustryIndices–Mid-Year2011Results,”November2011;Research2Guidance,“MostmobileappdownloadsperusernotinU.S.butinSweden,”November16,2011;Deloitteanalysis

36 MichaelRaynor,TheInnovator’sManifesto:DeliberateDisrup-tionforTransformationalGrowth,2011,pp.67-73

37RossCatanzarit,“TheMobilePhone:AHistoryinPictures,”www.pcworld.com,September29,2009

38ZachEpstein,“Availableappsacrossmajormobileplatformsapproachingmillion-appmilestone,”BGR,December2011

39AppStoreMetrics,“CountofActiveApplicationsintheAppStore,”July2012;Deloitteanalysis

40MobileWalla,“AppIntelligence–AppCountbyCategory,”May2012

41Deloitte,“Theimpactof4Gtechnologyoncommercialinterac-tions,economicgrowth,andU.S.competitiveness,”p.10,August 2011

42RossCatanzarit,“TheMobilePhone:AHistoryinPictures,”www.pcworld.com,September29,2009

43ProgressiveCasualtyInsuranceCompany,www.progressive.com/auto/snapshot-how-it-works.aspx,accessedSeptember,2012

44TheEconomist,“Riseofthemachines:Movingfromhypetoreality in the burgeoning market for machine-to-machine com-munication,”2012

45SilverSpringNetworks,“ComEdandSilverSpringNetworksExpandSuccessfulSmartGridProgram,”February16,2012

46iSuppli,“U.S.ContinuestoLeadOEMTelematicsMarket,”Janu-ary13,2011

47MachinaResearch,“TheConnectedLife:AU.S.D4.5trillionglobalimpactin2020,”February2012

48SierraWireless,“TechTrends:LTEConnectivityexpandsinfotain-mentandtelematicsapplications,”September29,2011

49PCWorld.com,“VerizonCarCollectiveMayBringIn-VehicleLTEtotheMasses,”June8,2012

50GigaOM,“IsDetroitbuyingVerizon’sLTEConnectedCarVi-sion,”June6,2012

51MachinaResearch,“TheConnectedLife:AUSD4.5trillionglobalimpactin2020,”February,2012

52ABIResearch,“TrafficManagementSolutionsforMegaCities,”2012

53MachinaResearch,“TheConnectedLife:AUSD4.5trillionglobalimpactin2020,”February,2012;PRWeb,“GlobalIntel-ligentTransportationSystemsMarkettoReachU.S.$18.5Billionby2015,”2010

54Motorola,“Motorola’sWirelessBroadbandSolutionsareaDriv-ingForceintheGlobalAdoptionofITS,”2008

55PRWeb,“GlobalIntelligentTransportationSystemsMarkettoReachU.S.$18.5Billionby2015,”2010;ITSA,“TheMarketforIntelligentTransportationSystemsintheU.S.andNorthAmerica,”2011

56GigaOM,“CitrixbuysBytemobile,targetsmobileoperators,”2012

57ITSA,“TheMarketforIntelligentTransportationSystemsintheU.S.andNorthAmerica,”2011

58Motorola,“Motorola’sWirelessBroadbandSolutionsareaDriv-ingForceintheGlobalAdoptionofITS,”2008

59ZDNet,“HowHealthcare’sEmbraceofMobilityhasTurnedDangerous,”January5,2012

60BergInsight,“mHealthandHomeMonitoring-4thEdition-TheseDevicesAreProjectedToGrowAtACAGROf34.6Percentto2.47MillionIn2106,”January9,2012

61MachinaResearch,“TheConnectedLife:AU.S.D4.5trillionglobalimpactin2020,”February2012

62ModernHealthcare,“WhiteHousepushesmobiletechforallfederalagencies,”May2012

63ModernHealthcare,“WhiteHousepushesmobiletechforallfederalagencies,”May2012

64U.S.DepartmentofHealthandHumanServices,“mHealhIniti-atve,”2012

65U.S.DepartmentofHealthandHumanServices,“mHealhIniti-atve,”2012

66NationalInstituteofBiomedicalImagingandBioengineering,“StoriesofDiscovery:HowNIBIB’slongtermresearchinvest-mentsyieldsdividendsforhumanhealth,”2008

67NationalInstituteofBiomedicalImagingandBioengineering,“StoriesofDiscovery:HowNIBIB’slongtermresearchinvest-mentsyieldsdividendsforhumanhealth,”2008

68eWEEK,:VerizonPreviewsRemoteMonitoring,TelehealthPlatformsatmHealthSummit,”December2011


69AT&TInc.,“AT&TForHealth,”www.att.com/gen/press-room?pid=18708,accessedSeptember2012

70TheNational,“Etisalat’scontributiontogrowthofmHealth,”March29,2012

71Gartner,“MarketTrends:MobileDataandVideoTraffic,2012,”August28,2012;CiscoVisualNetworkIndex,“GlobalMobileDataTrafficForecastUpdate,2011-2016,”February14,2012

72AndersFuruskär,JonasNäslundandHåkanOlofsson,“Edge—EnhanceddataratesforGSMandTDMA/136evolution,”1999;NokiaSiemensNetworks,“EricssonReviewno.1,LTEandWimaxTechnologyandPerformanceComparison,”March4,2007;calculationassumesspectralefficiencyofprevailing2Gand3Gtechnologiesandcellsitecountsin2004and2011,respectively

73InformaTelecomsandMedia,“WorldwideBroadbandAllianceIndustryReport2011:GlobalDevelopmentsinPublicWi-Fi,”November2011;Deloitteanalysis

74AT&TWi-FiLocations,www.att.com,June18,201275AT&T,“1.2BillionCustomerConnectionsMadeto30,000AT&TWi-FiHotSpotsin2011,”January26,2012

76GigaOM;“Wi-Firoamingwillmakemobileoperatorsconnectiv-ityproviders,”http://gigaom.com/2011/10/06/wi-fi-roaming-will-make-mobile-operators-connectivity-providers/,October6,2011

77FCC,“NationalBroadbandPlan,”pp.xi-xv,March2010;the500MHzistobeforbroadband,withthebreakdownbetweenfixed,wireless,andunlicensedusesnotspecified

78PresidentialMemorandum,“UnleashingtheWirelessBroadbandRevolution,”June28,2010

79ExecutiveOfficeofthePresident,“FactSheet:FreeingUpSpec-trumforMobileBroadband,”July20,2012

80MiddleClassTaxReliefandJobCreationActof2012,PublicLaw112-96,February22,2012

81AmbreenAli,“HousePanelMembersPressFCCCommissionerstoHoldAuction,”CQToday,July10,2012

82ExecutiveOfficeofthePresident,“FactSheet:FreeingUpSpec-trumforMobileBroadband,”July20,2012

83Deloitteinterviewwithindustryexpert,May8,201284MiddleClassTaxReliefandJobCreationActof2012,“Stream-linedWirelessFacilitiesDeployment,”May4,2012

85FCC,“NationalBroadbandPlan,”March201086FCCStaffTechnicalPaper,“MobileBroadband:TheBenefitsofAdditionalSpectrum,”Oct2010;CodaResearch,“MobileInternettrafficviahandsetsintheU.S.:Forecasts2010to2015,”March2010;CiscoVisualNetworkingIndex:“GlobalMobileDataTrafficForecastUpdate,2011–2016,”Feb2012;Deloitteanalysis

87FCCStaffTechnicalPaper,“MobileBroadband:TheBenefitsofAdditionalSpectrum,”Oct2010

88TheJevonsParadoxholdsthattechnologypermittingmoreefficient use of resources causes an increase rather than a de-creaseintheuseofthoseresources.RobertMichaels,“EnergyEfficiencyandClimatePolicy:TheReboundDilemma,”EnergyResearchInstitute,July2012;seealsoPeterHuberandMarkMills,“TheBottomlessWell:TheTwilightofFuel,theVirtueofWaste,andWhyWeWillNeverRunOutofEnergy,”Chapter7,“TheParadoxofEfficiency,”2005

89CTIA,“WirelessIndustryIndicesReport–Mid-Year2011Re-sults,”November2011;IBISWorld,“WirelessTelecommunica-tionsCarriersinU.S.,”December2011

90CreditSuisseEquityResearch,“WirelessTowerInitiation,”p.104,March15,2012;DeutscheBankEquityResearch,“CrownCastleIncorporateInitiationofCoverage,”p.22,June3,2005;Deloitteanalysis

91NTIA,“UnitesStatesFrequencyAllocationChart,”October201192NTIA,“NTIAFactSheetonSpectrumandTimetable,FastTrackEvaluation,”June2012

93TheMiddleClassTaxReliefandJobsCreationActrequirestherepurposingof15MHzoffederalspectrumwithintheband1675-1710MHzforcommercialuse.Section6401.

94U.S.DepartmentofCommerce,“SecondInterimProgressReportontheTen-YearPlanandTimetable,”October,2011

95U.S.DepartmentofCommerce,“SecondInterimProgressReportontheTen-YearPlanandTimetable,”October2011;FCC,“NationalBroadbandPlan,”March2010;GigaOM.com,“AT&Twantstoteachanoldspectrumbandnewtricks,”June29,2012;FCCNews,“FCCproposes40MHzofadditionalspectrumformobilebroadband,”March21,2012;NationalJournalTechDailyDose,“McDowell:Auctionswilllikelyyieldlessspectrumthanestimated,”April17,2012;Deloitteanalysis

96FCCStaffTechnicalPaper,“MobileBroadband:TheBenefitsofAdditionalSpectrum,”October,2010;U.S.DepartmentofCom-merce,“PlanandTimetabletoMakeAvailable500MegahertzofSpectrumforWirelessBroadband,”October,2010;Deloitteanalysis

97FCC,“CommentsbeforetheFederalCommunicationsCommis-sionintheMatterofAccelerationofBroadbandDeployment:ExpandingtheReachandReducingtheCostofBroadbandDeploymentbyImprovingPoliciesRegardingPublicRightsofWayandWirelessFacilitySiting,”WCDocketNo.11-59,p.15,July18,2011

98FCC,“CommentsbeforetheFederalCommunicationsCommis-sionintheMatterofAccelerationofBroadbandDeployment:ExpandingtheReachandReducingtheCostofBroadbandDeploymentbyImprovingPoliciesRegardingPublicRightsofWayandWirelessFacilitySiting,”WCDocketNo.11-59,p.15,July18,2011

99FCC,“PetitionforDeclaratoryRulingbeforetheFederalCom-municationsCommissionintheMatterofPetitionforDeclara-toryRulingtoClarifyProvisionsofSection332(c)(7)(B)toEnsureTimelySitingReviewandtoPreemptunderSection253StateandLocalOrdinancesthatClassifyAllWirelessSitingPropos-alsasRequiringaVariance,”pp.13-36,July11,2008;Deloitteanalysis

http://www.att.com/gen/press-room?pid=18708

http://www.att.com/gen/press-room?pid=18708

http://www.att.com


100ScottThomasson,“EncouragingU.S.InfrastructureInvestment,”PolicyInnovationMemorandum17,CouncilonForeignRela-tions,April2012

101 www.infrastructurerportcard.org102PaulKirby,“LocalitiesAskSupremeCourttoReviewTowerRul-

ing,”TelecommunicationsReports,July15,2012103HowardBuskirkandBryceBaschuk,“PCASTSeesSpectrum

SharingasCrucialtoMeetingU.S.BroadbandNeeds,”Telecom-municationsReports,July23,2012;TheNTIAadministratorisquotedassaying,“Theoldmethod”ofclearingspectrumforexclusiveusebycarriers“justisn’tsustainableanylonger.”TheFCCchairmanisquotedassaying,“inordertokeeppacewithournation’sbroadbanddemands,wealsoneedtodevelopnewtools to supplement the old ones. Spectrum sharing is one such tool.”

104FCC,“NationalBroadbandPlan,”pp.79,85,March2010105J.ArmandMusey,“BroadcastingLicenses:OwnershipRights

andtheSpectrumRationalizationChallenge,”p.13,ColumbiaScienceandTechnologyJournal,March2012

106CommunicationsActof1934,PublicLawNo.416,48Stat.1064(1934),sec.301,1934

107JoelBrinkley,“DefiningVision,”1998108KrystilynCorbett,“TheRiseofPrivatePropertyRightsinthe

BroadcastSpectrum,”p.46,DukeLawJournal611,1996;HowardShelanskiandPeterHuber,“AdministrativeCreationofPropertyRightstoRadioSpectrum,”p.41JournalofLawandEconomics,1998

109Forinstance,thepurposeCongressdefinedfortheTelecommu-nications Act was to promote competition and reduce regula-tion(TelecommunicationsActof1996,PublicLawNo.104-104,1996).ThefirstitemintheFCC’sNationalBroadbandPlanistoprotectandencouragecompetition(FCC,“NationalBroadbandPlan,”p.xi,March2010).

110Deloitte,“Theimpactof4Gtechnologyoncommercialinterac-tions,economicgrowth,andU.S.competitiveness,”p.5,August 2011

111JoshLerner,“BoulevardofBrokenDreams:WhyPublicEffortstoBoostEntrepreneurialismandVentureCapitalHaveFailed–andWhattoDoAboutIt,”2009;WilliamBaumol,RobertLitan,andCarlSchramm,“GoodCapitalism,BadCapitalism,andtheEconomicsofGrowthandProsperity,”2007

112PhoneScoop,“AVisualGuideto700MHz-BandPlan,”2012;Wired,“FCCAuctionEnsuresOpenAccess: IfinNameOnly,”February2008

113ArsTechnica,“FCCsets700MHzauctionrules:limitedopenaccess,nowholesalerequirement,”July2007

114FCC,“FifteenthAnnualReportandAnalysisofCompetitiveMarketConditionsWithRespecttoMobileWireless,IncludingCommercialMobileServices,”p.162,June2011

115DigitalCommunities,“Whyisthe2.5GHzEducationalBroad-bandService(EBS)SpectrumImportanttoU.S.RegionsandCommunities?,”January2011

116JayEttaTucker,GovernmentAccountabilityOffice,“Telecom-munications:OptionsforandBarrierstoSpectrumReform,”TestimonybeforetheCommitteeonCommerce,Science,andTransportationoftheUnitedStatesSenate,March14,2006

117GovernmentPerformanceandResultsActof1993,PublicLawNo.103-62,107Stat.285,1993

118OMBCircularNo.A-11,“Preparation,Submission,andExecu-tionoftheBudget,”Part6–PreparationandSubmissionofStrategicPlans,AnnualPerformancePlan,andAnnualProgramPerformanceReports,July2010;GAO,“Agencies’StrategicPlansUnderGPRA:KeyQuestionstoFacilitateCongressionalReview,GAO-GGD-10.1.16,”1997

119GAO,“SpectrumManagement:NTIAPlanningandProcessesNeedStrengtheningtoPromotetheEfficientUseofSpectrumbyFederalAgencies,”April2011

120 112thCongress,S.455,2011;Inits2010NationalBroadbandPlantheFCCsaidthatitshoulddevelopastrategicspectrumplanandupdateifeverythreeyears(recommendation5.3,p.81).

121HowardBuskirk,“FCCLookingatBandplanChangesNeededinaBroadbandWorld,”CommunicationsDaily,July17,2012

122HighTechSpectrumCoalition,“HTSC:PlanNeededtoTransi-tionGovernmentSpectrumforMobileBroadband,”May14,2012;thesignatoriesrepresentedtheCTIA,theHighTechSpectrumCoalition,theInformationTechnologyCouncil,andtheTelecommunicationsIndustryAssociation

123RysavyResearch,“TheSpectrumImperative:MobileBroad-bandSpectrumanditsImpactsforU.S.ConsumersandtheEconomy;AnEngineeringAnalysis,”March16,2011

124StefanHalper,“TheBeijingConsensus:HowChina’sAuthori-tarianModelWillDominatethe21stCentury,”2010;MartinJacques,“WhenChinaRulestheWorld:TheEndoftheWest-ernWorldandtheBirthofaNewOrder,”2011;ArvindSub-ramanian,“Eclipse:LivingintheShadowofChina’sEconomicDominance,”2011

125TheFCC,inapprovingtheVerizonWirelessandSpectrumCo/Coxspectrumtransaction,statedsimilarintentions:“Weintendto initiate a proceeding soon to review our policies govern-ing mobile wireless spectrum holdings in order to ensure that theyfulfillstatutoryobjectives,givenchangesintechnol-ogy,spectrumavailability,andthemarketplacesincethelastcomprehensivereview.Weseektoensurethatwehaverulesoftheroadthatareclearandpredictable,andpermitpartiestoincorporate any significant shifts in policy into their pre-transac-tionplanning.”SeeFCCMemorandumOpinionandOrderandDeclaratoryRuling12-95,paragraph63,August21,2012

126TelecommunicationsReports,“SpeakersRecognizeUnansweredQuestionsAboutIncentiveAuctions,”July1,2012;Telecom-municationsReports,“ExpertsCiteChallengestoCompletingRepacking,”July15,2012

127BroadcastEngineering,“NABchiefurgesFCCtomakeincentiveauctionprocesstransparent,”June27,2012

http://phonescoop.com


128AmbreenAli,“HousePanelMembersPressFCCCommissionerstoHoldAuction,”CQToday,July10,2012

129FCC,“NationalBroadbandPlan,”pg.88-92,March2010130JayEttaTucker,GovernmentAccountabilityOffice,“Telecom-munications:OptionsforandBarrierstoSpectrumReform,”testimonybeforetheCommitteeonCommerce,Science,andTransportationoftheUnitedStatesSenate,March14,2006;TelecommunicationsReports,“AT&TExecHighlightsBifurcatedSpectrumRegime,”May15,2012

131GovernmentAccountabilityOffice,“SpectrumManagement:NTIAPlanningandProcessesNeedStrengtheningtoPromoteEf-ficientSpectrumUsebyFederalAgencies,”April2011;SpectrumManagementImprovementsWorkingGroup,CommerceSpec-trumManagementAdvisoryCommittee,“ReportontheSecondQuestion,”March1,2012

132FCC,“NationalBroadbandPlan,”p.80,March2010133FCC,“NationalBroadbandPlan,”p.82,March2010134President’sCouncilofAdvisorsonScienceandTechnology,“RealizingtheFullPotentialofGovernment-HeldSpectrumtoSpurEconomicGrowth,”pg.55-56,July2012

135RandallStephenson,“SpectrumandtheWirelessRevolution,”WallStreetJournal,June11,2012

136GovernmentAccountabilityOffice,“VariousChallengesLikelytoSlowImplementationofaPublicSafetyBroadbandNetwork,”February2012

137President’sCouncilofAdvisorsonScienceandTechnology,“RealizingtheFullPotentialofGovernment-HeldSpectrumtoSpurEconomicGrowth,”pp.v-xvi,July2012


139InhisopinionontheFCC’sapprovaloftheVerizonWirelessandSpectrumCo/Coxspectrumtransaction,CommissionerPaisaidthat approving proposed private-sector spectrum transfers after aswift,yetthoroughreview“signalstotheprivatesectorthatfacilitating a secondary market for spectrum will be an agency priority.”SeeStatementbyCommissionerAjitPaiApprovinginPartandConcurringinPart,FCCMemorandumOpinionandOrderandDeclaratoryRuling,August21,2012

140FCC,“NationalBroadbandPlan,”p.83,footnote59,March2012

141Secondary markets can also be used as a complement to incentiveauctions.JohnMayoandScottWallsten,“SecondaryMarketsasComplementstoIncentiveAuctions,”GeorgetownCenterforBusiness&PublicPolicy,June2011

142President’sCouncilofAdvisorsonScienceandTechnology,“RealizingtheFullPotentialofGovernment-HeldSpectrumtoSpurEconomicGrowth,”pp.16-21,July2012

143FCC,“PreservingtheOpenInternet,25FCCRecord,”paragraph133,December23,2010;theFCChassaidthatithastheauthority to make public interest determinations when granting a license and can change license terms while the license is in ef-fect if it judges that this will promote the public interest; among the public interest goals it cites is the rapid development and deploymentofnewtechnologies,products,andservices

144JayEttaTucker,GovernmentAccountabilityOffice,“Telecom-munications:OptionsforandBarrierstoSpectrumReform,”pp.11-13,testimonybeforetheCommitteeonCommerce,Science,andTransportationoftheUnitedStatesSenate,March14,2006;observationsonapplyingmarket-basedmechanismsinthe government context

145J.ArmandMusey,“BroadcastingLicenses:OwnershipRightsandtheSpectrumRationalizationChallenge,”ColumbiaScienceandTechnologyJournal,March2012


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