Spectrum 101 Bryan Tramont NARUC November 13, 2007

What is Spectrum?

3 Electromagnetic spectrum is the range of all possible electromagnetic radiation. The radio spectrum is that subset of the electromagnetic spectrum that can be used for the transmission of communications. Radio waves of different lengths are usually identified by their frequency and can be employed for different purposes.

Why Does the Government Regulate Spectrum Use?

5 1899: Marconi at America’s Cup 1910: “Etheric bedlam” – light regulation ensues –“The claim has been made that any precise regulation of radio communication, in view of the undeveloped stage of the art, will necessarily retard the progress of science and diminish the usefulness to mankind of the invention.” Senate Report 1912: Titanic sinks

6 Why Does the Government Regulate Spectrum Use? Radio Act of ’s: Broadcast growth –60 stations (Mar. 1922) to 564 (Oct. 1922) Cracks in the regulatory regime –Hoover v. Intercity Radio (D.C. Cir. 1923) –U.S. v. Zenith Radio Corp. (N.D. Ill 1926) Radio Act of 1927 (FRC) Finally, Communications Act of 1934

Who is in Charge of Spectrum?

8 Independent Agency Commercial Licenses State and Local Public Safety

9 Who is in Charge of Spectrum?

10 Who is in Charge of Spectrum? Part of Administration Federal Government Users Interdepartment Radio Advisory Committee

11 Who is in Charge of Spectrum? Todd Sedmak Karl Nebbia Meredith Attwell Baker James Wasilewski Clifton Beck / Tony Calza John M. R. Kneuer Kathy Smith Bernadette McGuire-Rivera Eric R. Stark Al Vincent

12 Who is in Charge of Spectrum? U.N. Specialized Agency Hosts World Radiocommunications Conferences (“WRC”) Responsible for: –International harmonization –Satellite prioritization Organization –Secretary General –Radiocommunication –Standardization –Development

How is Spectrum Currently Used?

14 Current Domestic Spectrum Use 7% Federal Government - only 30% Non-Federal (Commercial, State & Local) - only 63 % Shared

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16 Spectrum: Up Close SDARSAWS2.4 GHz

How is Spectrum Use Determined?

18 How is Commercial Spectrum Use Determined? Allocation Service and Technical Rules Rights Distribution

19 Allocation Broad categories of uses: Fixed, Mobile, Satellite, etc. Designed to group like uses with like uses – limit interference Usually consistent with International Regime (esp. for Satellite) –Broader government actors responsible for international process (FCC, NTIA, State, Defense) –Harmonization also promotes economies of scale –Roaming Allocation – (traditionally an OET function)

20 Service and Technical Rules More specific rules of the road Economic Policy – traditionally many rules created to generate public policy goal: spectrum cap, ownership restrictions, use restrictions, build out requirements Interference Policy – drives many technical rules; power limits, coordination requirements Social Policy – E911, CALEA, foreign ownership

21 Rights Distribution Originally allocation and service rules that were highly prescriptive and dictated outcome of rights distribution – NO LONGER Lots of choices and approaches contemplated by the FCC –Everyone can use? –First-come, first-served? –Everyone gets a cut? –Beauty contest? –Lottery? –Auctions? –Others? Dominant policy paradigms are auction of property rights and the Commons

What’s All this About Licensed vs. Unlicensed?

23 Rights Distribution Today Two Main Schools of Thought –Property Rights (Lawyer’s Dream) Exclusive use rights, protection from interference –Commons (Engineer’s Dream) Shared use, must accept interference Titanic Struggle – not really partisan –Property Rights – incumbent licensees, some new entrants –Commons – technology companies, some new entrants, grassroots

24 Rights Distribution Today: Property Rights Model If no mutually exclusive applications, give it away (site- based, etc) If mutually exclusive, then auction, unless… § 309(j) –Exemptions for: Public Safety International Satellite Noncommercial Educational Broadcasters

25 Rights Distribution Today: Commons Risk of Tragedy of the Commons Bands generally allow for low power transmissions with no interference protection Traditional “junk” bands – baby monitors, garage door openers, etc. Part 15 – regulates these devices – –Rules since 1938 –New bands in 1989 –Current boom Three main bands today – MHz – MHz –5 GHz White Spaces

What is 700 MHz?

27 What is 700 MHz? 108 MHz ( MHz) Allocated to Broadcast, Mobile and Fixed Services. –Occupied by broadcasters (TV Channels 52-69) –24 MHz already licensed to commercial interests –24 MHz to Public Safety –62 MHz to be auctioned (2 MHz returned from original auction) 2005 DTV Transition and Public Safety Act –Firm DTV Transition Deadline – 02/17/09 –Auction 60 MHz – no later than 01/28/08 –Auction proceeds must be deposited into DTV Fund – no later than 06/30/08 –$10 billion in auction proceeds dedicated to DTV converter box program, public safety interoperability, US Treasury etc.

28 What is 700 MHz? Auction Scheduled for Jan. 24, MHz to be auctioned in 5 spectrum blocks covering various geographic areas –Lower 700 A – 12 MHz – 176 EA licenses –Lower 700 B – 12 MHz – 734 CMA (MSA/RSA) licenses –Lower 700 E – 6 MHz – 176 EA licenses –Upper 700 C – 22 MHz – 12 REAG licenses (Open Platform) –Upper 700 D – 10 MHz – nationwide license (public/private)

29 What is 700 MHz?

30 Mixture of License Areas

MHz: New Requirements Upper C Block –Open Platform for Devices and Applications: “No block, no lock” –Combinatorial Bidding Upper D Block –Commercial/Public Safety Partnership –Must Reach Network Sharing Agreement –Extensive FCC Oversight

32 Auction Rules Minimum Reserve Prices - Lower A Block – $1.8 Billion - Lower B Block – $1.4 Billion - Upper C Block – $4.6 Billion - Upper D Block – $1.3 Billion - Lower E Block – $900 Million Anonymous Bidding Package Bidding for Upper C Block Contingent Subsequent Re-auction –Impact on anti-collusion quiet period –Prisoner’s dilemma

MHz Timeline Petition for ReconSep. 24, 2007 Auction ApplicationsDec. 03, 2007 Upfront PaymentsDec. 28, 2007 Mock AuctionJan. 18, 2008 Auction BeginsJan. 24, 2008 Auction Complete est.Mar. 07, 2008* Down Payments est.Mar. 21, 2008* (20% total) Long-form Applications est.Mar. 21, 2008* Final Payments est.Apr. 04, 2008* PN Announcing Long- est.Apr. 11, 2008* Form Applications Money to DTV’s Public-Jun. 30, 2008 Safety Trust Fund * Assumes no re-auction required.

What is the Competitive Impact of Wireless?

35 What is the Competitive Impact of Wireless?

36 What is the Competitive Impact of Wireless Voice Services? Minutes of Use –1995: 31.5 Million –2000: Billion –2005: 1.26 Trillion –2007: 1.95 Trillion Annualized (CMRS) Capital Investment –1995: $5.6 Billion –2000: $9.9 Billion –2005: $19.8 Billion –2007: $23.6 Billion Direct CMRS Carrier Jobs –1995: 61,000 –2000: 159,000 –2005: 225,000 –2007: 257,000 Revenue Per Minute –1995: $0.43 –2000: $0.18 –2005: $0.07

Common Acronyms

38 Common Acronyms AMPS – Advanced Mobile Phone Service ARPU – Average Revenue Per Unit AWS – Advanced Wireless Service ATC – Ancillary Terrestrial Component BRS – Broadband Radio Service CDMA – Code Division Multiple Access CMRS – Commercial Mobile Radio Services CTIA – The Wireless Association DBS – Direct Broadcast Satellite EBS – Educational Broadcast Service EDGE – Enhanced Data Rates for GSM Evolution EV-DO – Evolution-Data Only GPS – Global Positioning System GPRS – General Packet Radio Service GSM – Global System for Mobile Communications HSPDA – Highspeed Downlink Packet Access iDEN – integrated Digital Enhanced Network ITU – International Telecommunications Union LMDS - Local Multipoint Distribution Service MDS – Multipoint Distribution Service MOU – Minutes of Use MSS – Mobile Satellite Service MVDDS – Multichannel Video and Data Distribution Service MVNO – Mobile Virtual Network Operator NTIA – National Telecommunications and Information Administration OFDM – Orthogonal Frequency Division Multiplexing PCS – Personal Communications Services SDARS – Satellite Digital Audio Radio Service SMR – Specialized Mobile Radio SMS – Short Message Service TDMA – Time Division Multiple Access UMTS – Universal Mobile Telecommunications System WLAN – Wireless Local Area Networks WRC – World Radio Conference

39 Bryan N. Tramont Wilkinson Barker Knauer, LLP 2300 N Street, NW Suite 700 Washington, DC P: F: