Research & Commentary: Wireless Spectrum Sales

Published June 28, 2012

Wireless communications have improved the lives of millions of people across the United States and the world. However, the rapid expansion of wireless services has brought growing pains: The electronic spectrum on which most communications are broadcast is a limited resource that is quickly filling up. 

The most significant issue in spectrum regulation today is the proposed sale of advanced wireless broadcast spectrum rights by cable television providers SpectrumCo (which consists of cable providers Comcast, Time Warner Cable, and Bright House) and Cox Communications to Verizon Wireless, a company providing wireless services. 

The $3.6 billion deal would give Verizon broadcast spectrum in the 1700 MHz range, ideal for mobile broadband and covering more than 80 percent of the U.S. population. This would open up to the market a wide band of unused spectrum, which is not as fully utilized in the United States as in other countries. According to the Technology Liberation Front, British consumers have 3.5 times the available spectrum as Americans, and the Japanese have around two times as much. 

This growing spectrum shortage has emerged primarily because of the slow issuance of new spectrum by the Federal Communications Commission through competitive auctions and Congress’s indecision over allowing voluntary transfers of broadcast spectrum already owned by broadcasters such as SpectrumCo. 

Opponents of the spectrum sale argue it would reinforce what they claim is a wireless duopoly between AT&T and Verizon. They say it would create a noncompetitive environment where each company would avoid direct completion with the other. 

Proponents say the sale would increase competition in the wireless market and free up a large amount of spectrum the cable companies are not using. The new deal also would give cable providers an infusion of capital through the spectrum sale and allow them to purchase access to Verizon’s wireless network on which to launch their own products and services. 

The following articles examine wireless spectrum auctions, the growing spectrum crunch, and the Verizon/SpectrumCo sale from multiple perspectives. 

Let’s Make a Deal: Broadcasters, Mobile Broadband, and a Market in Spectrum
In this panel discussion moderated by Adam Thierer, then-president of the Progress & Freedom Foundation, the speakers take a look at the future of spectrum policy in America and, in particular, consider what the future holds for the broadcast spectrum and broadcast spectrum holders, as well as those in the mobile broadband sector who want more spectrum. 

DC Must Adopt Sense of Urgency for Impending Spectrum Crunch
Writing in the Heartlander, John Stephenson, director of the Communications and Technology Task Force at the American Legislative Exchange Council, assesses the government’s failure to address the wireless spectrum crunch and identifies its political and economic effects. 

FCC’s Broadband Plan Brings Spectrum Shortage to Light
The Heartlander digital magazine reports on the Federal Communications Commission’s National Broadband Plan and the arguments over opening up more spectrum for wireless broadband. The FCC’s plan assumes the spectrum is being wasted by the traditional broadcast television industry, and there is much disagreement over how to use and distribute the available spectrum. 

Congress Mandates FCC Spectrum Auctions
The Heartlander reports on a mandate, contained in the bill passed by Congress on February 17 to extend payroll-tax cuts and unemployment benefits, that the Federal Communications Commission conduct auctions of wireless spectrum for commercial use. 

Verizon/SpectrumCo: What’s the Deal?
Kara Novak of Public Knowledge discusses the opposition to the Verizon/SpectrumCo deal and opponents’ belief that if the FCC allows such transactions to go forward the companies will find collusion easier than ever and consumers will pay the price. 

‘Spectrum Crunch’ Tied to FCC’s Actions
The Heartlander reports on the Verizon/SpectrumCo spectrum sale and quotes several telecom experts on how the spectrum crunch is largely a result of FCC mismanagement of that resource. 

Competition, Convergence, and the Verizon-Cable Deal
Digital Liberty examines the Verizon/SpectrumCo deal and its effects on competition in wireless services, observing, “The move frees up spectrum desperately needed for consumers, increases competition in the wireless industry, and emphasizes just how much ‘anytime, anywhere’ is the future of TV and content consumption.” 

Freeing Spectrum Frees Consumers
In a letter to FCC Chairman Julius Genachowski, the Taxpayers Protection Alliance argues allowing wireless companies to bid on spectrum leads to better services for consumers. “The move will increase competition in the mobile market, give consumers more choices in wireless providers, and expand access to affordable mobile services,” the alliance states.

House Democrats Urge Scrutiny of Verizon-Cable Deals
Juliana Gruenwald of National Journal reports on congressional Democrats’ opposition to the SpectrumCo deal. These opponents called on federal regulators to “closely scrutinize Verizon Wireless’ bid to buy spectrum from and enter into marketing agreements with a group of cable firms, saying the deals could threaten the competitive goals of the 1996 telecommunications act.” 

Free Market Groups Urge FCC to Approve Verizon/SpectrumCo Deal
Several free-market groups appeal in a letter to FCC Chairman Julius Genachowski to allow the sale of spectrum from SpectrumCo to Verizon. “The Verizon-SpectrumCo deal presents a rare opportunity to bring new spectrum online,” the groups write. “Under it, unused spectrum ideal for 4G service that is held by cable companies would be sold to Verizon, who would in turn offer cable companies access to the spectrum, opening up a whole new market for wireless products and services. As we’ve written before and outlined in the letter, the deal is poised to increase competition, expand consumer access to wireless broadband, and continue to put downward pressure on prices.”