Spectrum Challenges Ahead for the FCC

November 16, 2021

Written by Caio Castro
CATEGORY: Exclusives

“The federal government looks out for consumers in a thoughtful way. And the agencies implement the statute as written by Congress. So Congress gets to decide the broad policy directions and the agencies implement those directions,” explained Michael O’Rielly, former commissioner of the FCC between 2013 and 2020. “A regulator makes sure that certain things are not unfairly-competitive or anti-competitive.”

This is the status quo, but let us delve into a bit of history. The Telecommunications Act of 1996 was the first significant overhaul of United States telecommunications law in more than sixty years, amending the Communications Act of 1934.

The Act, signed by President Bill Clinton, represented a major change in American telecommunications law, since it was the first time that the Internet was included in broadcasting and spectrum allotment.

The goal was to “let anyone enter any communications business – to let any communications business compete in any market against any other.” The legislation’s primary goal was deregulation of the converging broadcasting and telecommunications markets.

So what worked and what wasn’t anticipated?

“What worked really well that those things all came about. Everybody’s in each other’s marketplace, they compete pretty well. A lot of the provisions in the Act of 1996 still stand the test of time, other provisions don’t [like] media ownership and some wireless provisions,” O’Rielly said.

“[But] They probably weren’t aware as to how hard it would be to get in local markets and how easy it would be to getting them in the long-distance market, and how the long-distance market became a commodity and disappeared before our very eyes. And the second part is the development of the internet. Nobody at the time knew the expansive role that the internet was going to take.”

The FCC is responsible for managing and licensing the spectrum for public safety, fixed and mobile wireless services, broadcast, television, radio, satellite, and other services. In licensing, the Commission promotes efficient and reliable access to the spectrum for commercial and non-commercial use as well as a variety of innovative applications.

So, what is a spectrum license? It can be thought of a 3D piece of property, the first two dimensions covering some part of the US territory, like latitude and longitude on a map, and the third dimension moving up into the radio frequency spectrum.

Depending on the terms, a license holder generally has the right to undisturbed use of that part of the spectrum over the license area.

At the start of the cell phone industry, spectrum licenses were allocated based on “comparative hearings”. The FCC would grant the licenses based on its evaluation of applications from interested users – often referred to as “Beauty Contests”. As the industry grew and the profitability of such licenses induced more entrants, the comparative review became contentious and unworkable.

Comparative review was replaced by lotteries. Multiple applicants submitted expressions of interest and the award was made randomly.

Things started to change with auctions, according to the former FCC commissioner, and for the better. Auctions are still used to define the companies that get the right to operate a given frequency range.

However, there were some challenges to overcome in 3G and 4G regarding spectrum allocation.

“In both 3G and 4G, there was no easy spectrum band to date, everything’s taken, allocated,” O’Rielly said.

“You can understand [the problem] by comparing it to land. Let’s say the land had every single inch already occupied, but some of it was used inefficiently. Part of the FCC’s job is working with other federal agencies and determine: ‘Are you using the spectrum the most efficient way you can? Can we open up this band for new wireless?’ That’s what happened in 3G and 4G. In 4G, we opened up new bands by moving people out and reallocating the bands for other purposes. That’s why in the C-Band auction 5G became so easy, because you had a willing seller,” O’Rielly said.

License holders in the United States historically have been government agencies, such as the Department of Defense, NASA, satellite, broadcast, television and radio stations. More recently, prominent users of spectrum licenses have been mobile telecommunications companies which use the spectrum for their wireless networks. By 2020, the had FCC raised over $136 billion in auctions. In 2020, the C-Band auction generated $80 billion.

4G technologies were successfully deployed in the US bringing new services. “I see two things here: The first part is that we picked the right [4G] standard. We let the industry pick the right standard. The second part is that we didn’t know that 4G was going to open up the expansive role of the internet and unleash a new industry segment that hadn’t existed before,” O’Rielly observed.

Today, there is momentum by mobile network operators to deploy 5G. Several companies are innovating and creating new applications and services ranging from smart farming, smart cities, smart manufacturing, smart transportation, and healthcare. What is needed to be successful?

“We talked earlier on about what the FCC does. Well, it creates an environment for the private sector to succeed. In 5G that means removing barriers to entry, make sure that the permitting process and approval process are actually logical, because you have to go throughout the nation and try and build out a network,” the former commissioner explained.

“On the market side and on the provider side is: ‘How do we make the vertical successful? How do we deal with companies that weren’t part of this? It’s no longer about a wireless ecosystem, it’s about an everything ecosystem. Are there new barriers that we weren’t anticipating before? And spectrum. The United States needs more 5G mid-band spectrum.”

Mobile operators will continue to use current low-band 4G LTE cellular frequencies (600–2300 MHz) for 5G. The benefit of the low-band frequencies is that they travel long distances and will continue to be used for widespread coverage, especially in rural and outlying suburban areas.

With 5G deployments, Cellular carriers are also expanding coverage and increasing data speeds by adding mid-band or “sub-6Ghz” frequencies (2500–6000 MHz) and high-band or “millimeter wave” frequencies (24–60 GHz).

“The industry really wanted these high bands – 24GHz, 26GHz, 39GHz. They [industry] thought they could do an awful lot of good things. These bands have proven not to be the holy grail to 5G, but they are going to be an important component at the right time,” O’Rielly said.

For even higher frequencies, the FCC is still just scratching the surface. The US Government showed its support for this in 2019 when the FCC opened the 95 GHz to 3 THz frequency range for experimental use and by reserving selected bands for new applications. This FCC action creates new opportunity for innovation and greenfield deployment for 6G.

“How do we look to the higher bands? How do we look above hundred gigahertz? We started with Spectrum Horizons. And I think those bands are starting to get more examined, you’re getting more collaboration. That’s setting the stage for 6G,” the former commissioner said.

Even though there are many challenges to overcome, O’Rielly is excited about what the world and life would be like in 2030.

“I think robotics are going to explode, AI is going to explode, machine learning. I think we’ll see a wireless connectivity explosion where everybody’s connected all of the time. At every point you’ll be connected and it’s not all about your phone. It’s going to be about new technologies and everything talking to each other very seamlessly. I look forward to that universe.”

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