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The Return on Our Investment of Spectrum

November 5th, 2009 by Blair Levin - Executive Director, Omnibus Broadband Initiative

When you’ve been a Wall Street analyst for the past 8 years, as I have, you think a lot about how to get the best return on invested assets.  In my return to the FCC, I’ve found that the same question is relevant, particularly as to our nation’s spectrum.  Of course, our “return” is different—we don’t just think about maximizing profit, we think about providing important public benefits.  But still, it’s the question the broadband team asks each day: how can we maximize the return on our most valuable assets to their owners—all of the American people? 

Recently, I’ve seen a lot in the press about our efforts to consider the best way to maximize the benefits on spectrum.  Much of this chatter was triggered by a recent study submitted through the Consumer Electronics Association (CEA).  The study suggested that broadcasters own licenses to approximately $62 billion worth of spectrum, but only extract $12 billion of value from that spectrum.  In different hands, the study argues, that spectrum could be worth an extra $50 billion which in turn would drive an extra $500 billion to $1.2 trillion dollars of economic activity. Not everybody agrees with the study, though, and Communications Daily reports that some broadcasters and broadcasting trade groups, including the NAB and MSTV, are preparing to commission their own research that takes into account a different range of factors than did the CEA study. 
We welcome this as great news.  As the record indicates, spectrum is a key input for broadband, but we know that it also has other uses of great economic and social importance.  So we welcome a robust debate about how we can best allocate spectrum—both to maximize economic growth, but also to maximize the public good.  We look forward to the NAB findings. 
Beyond the study, there have been reports about conversations I’ve had with broadcasters about spectrum.  I’m not in the practice of publicly discussing details of private discussions—I want to ensure that every party is as candid as possible in helping us determine the best strategy to move America forward— but I do want to clear up a few details.   
These conversations originated from a few broadcasters, who recognized that they had more spectrum than they needed to deliver an economically efficient bitstream.  We started discussing whether there could be a market-clearing solution that allowed them to monetize their extra spectrum, while allowing us to maximize the public good.  This is the driver behind our discussions: we want the country to use most effectively one of its most valuable resources, while increasing optionality of those broadcasters who recognize that they’re not maximizing returns for their shareholders.  We recognize that not all broadcasters would make the same choice but our goal is to determine if there is a mechanism that will attract the interest of a critical mass. 
I don’t know if we will succeed in our efforts to allow broadcasters that option, but I do know that if we didn’t try, it would be a disservice to citizens and stakeholders on all sides of the equation.

 

You Can’t Coach Height: A Winning Spectrum Strategy

October 29th, 2009 by Blair Levin - Executive Director, Omnibus Broadband Initiative

Football analogies may be in poor form in Washington, D.C. these days as the Washington Redskins flounder.  But when I think about one of the biggest challenges we face in meeting the broadband needs of this nation - lack of available spectrum for mobile broadband --  I think of Doug Flutie.

Doug Flutie was a quarterback in both the Canadian and National Football Leagues.  Flutie was a great quarterback.  He had a lot of great attributes.

But he was 5' 10".  And while he had some great moments, let's face it, he was destined to be a star… in Canadian football.  He had a career very different from that of 6'2' Joe Montana, 6'4' Tom Brady, or 6'5' "Big Ben" Roethlisberger of Pittsburgh.

The point is this: Unless we get more spectrum, we as a country are destined to be the Doug Flutie of mobile broadband.

Spectrum is like height.  If you don't have it, it's pretty hard to be in the big leagues. As they say, you can't coach height.

Now it's not an exact analogy.  Technology and other capital inputs can help overcome the lack of spectrum.

But let's not kid ourselves.  Lack of spectrum will mean that our mobile service will be more expensive and of a poorer quality than if we had more of it.  And that's very bad news unless we figure out a way to solve that problem.

Why?  Mobile broadband is going to be the fastest growing segment in communications ecosystem. The 75,000 iPhone applications show us a huge pent up demand to do things to do things based on where you are, to do things no matter where you are.

And AT&T projects that by 2018 mobile data traffic expand by a factor of 250 to 600.

This is potentially a fantastic story for America.  It's the story of an America where citizens have access to information everywhere, and where entrepreneurs have the opportunity to reach consumers in ways never before possible, were no one has to be a prisoner of geography.

And, this story becomes even greater as we enter the era of pervasive computing, where devices and machines of every kind become "smart" by virtue of the wireless connections to the Internet.

But none of this can happen without spectrum.

The wireless industry says we need 800 Mhz more. How much is in the pipeline now?  50 MHz. And it's not very good spectrum for mobile broadband.

Moreover, it takes an average of 6 to 13 years to clear spectrum.  For example, in the Clinton years we sold about 198 Mhz. During the last administration, we sold about 276 MHz.

What does that mean?

A few years ago, the Congressional Research Service concluded that "American competitiveness in advanced wireless technology may be constrained by the limited amount of exploitable bandwidth that is available."

So the challenge over the next 110 days we have to develop a National Broadband Plan is to understand the tough trade-offs, come up with creative options, and produce a plan that can truly help deliver all the fantastic opportunities that mobile broadband can provide. Touchdown!

Mid-Term Review

September 28th, 2009 by Blair Levin - Executive Director, Omnibus Broadband Initiative

Blair LevinIt's mid-term review time for the broadband team:  on Tuesday, with 141 days left to go before the deadline to deliver a National Broadband Plan to Congress, we're providing the Commission with a major status report on the plan.

We still have a lot of work to do.  But with all of the data we've gathered in our workshops and hearings, in the record, and in our own research, we think we have a pretty good handle on the status of broadband in the U.S.  We'll be laying out some specifics of what we have found out about broadband speeds, spectrum and fiber resources, the increasing cost of digital exclusion, and the benefits to the economy and to individual citizens that broadband can provide.  We'll look at the adequacy of the tools available to promote robust, universal broadband -- tools such as universal service.  We'll be fielding questions about all of this and seeking guidance from the commissioners about whether we're on the right track in our examination as we proceed toward developing recommendations for the plan.  We also want the public to weigh on the facts and analysis we will present so we can make adjustments now, while we are still at a relatively early point in the process, rather than later, after decisions have been made.

We're eager to build upon the work we've done thus far and establish policy recommendations that can result in a high-performance America, fueled by broadband.  Join us in the Commission room Tuesday or online to help us take stock of where we are in our plan to reach that vision.

Numbers

September 28th, 2009 by Blair Levin - Executive Director, Omnibus Broadband Initiative

Blair LevinWhen our Staff Workshops started, some critics immediately concluded that the nature of the participants demonstrated that the FCC just listens to communications industry giants. If we're going to be criticized now (which we undoubtedly will be) the numbers suggest we may be in danger of the critique that we haven't heard from enough industry giants.  So far, academics have comprised over 13 percent of all participants at the workshops, followed by consumer and public interest groups (9.3%).  The largest industry group was equipment makers, comprising a little over 8% of the participants, followed by alternative wireless services at nearly 6 %.

This past week, we had our first field hearings, with more coming.  They will certainly tip the scales again - toward the public.

Our goal for these workshops and hearings was to gather new data and fresh insights so we could break out of Beltway policy stalemates.  I think we are doing that.  But we recognize that all the workshops, field hearings and other efforts to gather input will only pay off if we can put together a coherent, comprehensive program to address the concerns Congress discussed in the authorizing legislation.  That is not easy, as it requires doing more on limited resources; always difficult math.  So while the numbers from our workshops suggest the way we are approaching things, the numbers that we really have to stay focused on are those about broadband deployment and adoption.

Participant Type

Number Represented

Percentage Represented

 

Academic

31

13.14%

 

Consumer & Public Interest

22

9.32%

 

Equipment

20

8.47%

 

Other*

17

7.20%

 

Minority

15

6.36%

 

Alt wireless

14

5.93%

 

Government - Federal

13

5.51%

 

Government - Local

14

5.93%

 

Think Tanks

13

5.51%

 

Wireless

12

5.08%

 

ILEC

10

4.24%

 

Web

9

3.81%

 

Government - State

8

3.39%

 

Content

7

2.97%

 

Disabilities

7

2.97%

 

Cable

6

2.54%

 

Fiber

6

2.54%

 

CLEC

3

1.27%

 

Finance

3

1.27%

 

Government - International

3

1.27%

 

Satellite

3

1.27%

 

Total Represented

236

 

*Other - Consists of multiple, publishing, other, retail, legal & health care categories

The Limits of Philosophy

September 11th, 2009 by Blair Levin - Executive Director, Omnibus Broadband Initiative

Blair LevinMy old friend Randy May recently criticized our staff workshops as focusing too little on  regulatory philosophy.  But that, I told him, was by design.

Randy was kind enough to say the workshops have been a useful exercise in involving more people and compiling data.  But I'm afraid his suggestion that we focus foremost on philosophy would have doomed our effort to deliver a comprehensive broadband plan to Congress by Feb. 17, 2010.

Why?  Congress, for starters, told us to devise a plan that will connect every unconnected home.  So if you were trying to solve that problem, where would you start?  With philosophy or facts?

Obviously, you need the facts.  We need to know how many homes are unconnected, where they are, what the technological options are for connecting them, the cost.  Staff got a lot of helpful facts from our workshops, and is busy gathering additional data on this and many, many other questions right now.

Before too long, we will deliver facts and options to the Comissioners, and it will be time to begin discussing philosophical issues, such as the appropriate role of the public sector.  But to do so now would cut off critical fact-gathering.  Moreover, fact-gathering based on a particular regulatory philosophy could effectively blind us to the importance of information that is right before our eyes.

So step back, Socrates.  There's method in our madness.

For my more complete thoughts on this subject, read the speech I gave at Randy's conference celebrating the publication of a new book he just edited on "New Directions in Communications Policy."

It Takes a Worried Man… Sharing His Worries

September 3rd, 2009 by Blair Levin - Executive Director, Omnibus Broadband Initiative

Blair LevinA useful framework for approaching the goal of providing universal access to affordable, robust broadband is straightforward, and looks something like this:

Broadband provides lots of benefits to the economy and society, and the more widely available broadband is, the greater the benefits.

But there are costs to universal deployment that may not be immediately recouped, such as the expense of laying fiber in rural areas, acquiring rights-of-way, or clearing spectrum for wireless broadband.  And once a network is in place, low rates of adoption could delay enjoyment of the economic and societal gains.

As government policies inherently affect both the revenues and the costs of broadband, part of our job, in thinking about a national broadband plan, is to explore whether those policies should be adjusted to increase the revenues and decrease the costs of inputs associated with broadband. Simple.

Well, not exactly. While press questions following my recent speech at the Udwin Breakfast Group focused on my worries about one particular input - sufficient spectrum to accommodate our hunger for fast smart phones and 4G mobile networks - my worries are as universal as broadband should be.

I'm worried that low adoption doesn't provide sufficient incentives to build out and upgrade the wireline, cable and wireless networks that our country will need for sustainable economic growth.

I'm worried that we need funds to achieve universal broadband but that one potential source of funding - the Universal Service fund - is already stretched thin.

I'm worried that there is no way the government's existing broadband grant program can possibly meet the enthusiastic response it has received, with seven dollars of demand for every available dollar in the first round.

We are looking for creative solutions from everyone - government, think tanks, spectrum license holders, wireline providers, cable systems - that will help deliver the synergies of broadband to the entire nation. The record is clear:  there are lots of opportunities.  But to take advantage of them, we need everyone to be, shall we say, "constructively worried".  So let's be creative and find a solution together so that five years from now we don't have to worry about the ramifications of our failure to plan ahead.

Workshops By The Numbers

August 21st, 2009 by Blair Levin - Executive Director, Omnibus Broadband Initiative

As we count down the days before the National Broadband Plan is due, it's worth taking stock of who has participated so far in the staff workshops that are enlivening the Commission room in the dog days of August with an ongoing dialogue about broadband.

So, with apologies to the 12 Days of Christmas, here we go.  On the 180th day before the National Broadband Plan, our workshops had given to us:

  • 15 participants from small, disadvantaged and minority businesses
  • 12 from wireless broadband  - WISPs, WIMAX, mobile, rural and others
  • 12 governmental officials, from international to local
  • 12 from consumer and public interest groups
  • 11 from academia
  • 10 from equipment manufacturers
  • Seven from the disabilities community
  • Seven from big phone companies
  • Seven from big wireless companies
  • Six from think tanks
  • Five from fiber providers
  • Four from cable providers
  • Three from journalism, media and publishing
  • Three from rural phone companies
  • Two from competitive phone companies
  • Two from satellite
  • One each from the analyst world, legal, retail and the web
No partridge in a pear tree. And there won't be one. Unless some engineer can figure out how it can serve as a wi-fi router.

Fortune Cookies

August 18th, 2009 by Blair Levin - Executive Director, Omnibus Broadband Initiative

One of the many challenges of creating a National Broadband Plan is dinner: it's hard to get it when you're working late into the evening to meet Congress's Feb. 17, 2010 deadline to reboot broadband deployment and usage in the U.S.  So maybe there was some kind of karmic reward in two fortune cookies that staff cracked open at the end of our team's break for Chinese one night.

John Horrigan, a data guy we stole from the Pew Internet Project, pulled out a fortune that read "Statistics are no substitute for judgment."

Steve Rosenberg, a former McKinsey analyst who is helping on modeling and mapping, opened one that said "No problem can stand the assault of sustained thinking."

Both fortunes-unusual topics in my many years of opening such cookies--bode well, I think, for the National Broadband Plan.

It's true that gathering data will be key to developing a solid plan, and we're doing that as we hold weeks of staff workshops, solicit new comments on targeted subjects, and then in the fall, travel to field hearings.  Plus, there's the new local broadband data that came pouring into the FCC this spring, which we are scrubbing, slicing and dicing and soon hope to have at our fingertips.

But data means nothing if we don't exercise good judgment about what it all means. I'm confident we have assembled a great team who can cut to the chase and develop options and recommendations that are likely to produce what Congress wanted: universal, robust broadband for all Americans and a broadband platform that will enable innovators, entrepreneurs, businesses, non-profits and all levels of governments to find new solutions to our nation's problems.  And I'm confident that the FCC, Congress, and others in government will exercise good judgment when they determine how to implement those recommendations.

But that will require sustained thinking, and our broadband team is leading an assault of sustained thinking by the entire FCC on the stubborn problem of bringing broadband to unserved and underserved areas, increasing the number of Americans using broadband, and maximizing how broadband can be used to help address significant national issues.  Expect the unexpected. Nothing is pre-baked but the fortune cookies.



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Datamatrix and QR FCC Phones