Spectrum: America’s Invisible Infrastructure Incentive Auctions and Broadcast Spectrum CGB State and Local Government Webinar Rebecca Hanson Senior Advisor, Broadcast Spectrum Media Bureau, FCC October 5, 2011

Overview 1.Spectrum is a key driver of the economy and deficit reduction 2.America is facing a spectrum crunch 3.FCC action to address growing need for broadband spectrum 4.Incentive auctions are a key policy tool

1. Spectrum: Economy and Deficit Reduction

Spectrum: A National Resource Spectrum is essential input to the provision of all wireless services As new uses arise, such as mobile broadband, spectrum must be shifted from historic uses Wireless is an economic engine –Consistent growth in subscribers, revenue, jobs

U.S. Wireless Industry Highlights Contributed 16% to U.S. GDP annually from 1992 to 2007 (vs. 3% growth in rest of economy) 12% job growth since 2000 (vs. 1% for U.S. economy) Capital investment over $20 billion per year “Apps” have generated $6 billion globally in 2010 alone Significant indirect economic benefits –Education, health care, energy, civic engagement

Budget Benefits from Spectrum Spectrum receipts to U.S. Treasury Over $50 billion since 1993 Over $30 billion in past 5 years Demand for spectrum remains strong

2. The Spectrum Crunch

Why the Spectrum Crunch is Important We are running out of unoccupied spectrum for broadband Without action, the spectrum crunch will mean: Higher prices for consumers, rationing Poorer service – Dropped calls – Slow texting and web browsing Lost opportunities for innovation

Mobile Broadband: More Users… Source: CTIA

PCs/Aircards consuming gigabytes per monthPCs/Aircards consuming gigabytes per month Smartphones consuming hundreds of megabytes per monthSmartphones consuming hundreds of megabytes per month Feature phones consuming tens of megabytes per monthFeature phones consuming tens of megabytes per month Mean Mobile Data Usage per User, Megabytes per Month Source: Validas …and More Usage per User

Challenge – Keeping Up with Mobile Data Growth Source: Cisco VNI; Yankee Group; Coda Research 35X growth by 2014 Projected Increase in Mobile Traffic - Analyst Forecasts

Spectrum Implications

3. FCC actions to meet broadband spectrum needs

Opportunities for New Broadband Spectrum Spectrum BandCurrent Status Wireless Communications Services (WCS) Revised rules to permit broadband uses in 25 megahertz Mobile Satellite Services (MSS)Opened proceeding to evaluate rules in MSS bands, especially S-Band LightSquared launching in L-Band Advanced Wireless Services (AWS)Working with NTIA on pairing options for AWS-3 Broadcast Television (VHF/UHF)Launching “groundwork” proceedings later this month, engaging with stakeholders Federal Spectrum (NTIA)Recent report identifies 15 megahertz for broadband, another 100 megahertz for sharing

4. Incentive Auctions: A Key Policy Tool

Incentive Auctions Most of the attractive spectrum is currently occupied today –Some allocations may not be currently used to fullest potential Incentive auctions would share auction proceeds with the current occupant to motivate voluntary relocation of incumbents –Otherwise, no incentive for current occupant to give back spectrum Modification of FCC auction authority needed from Congress –47 USC 309(j) does not permit sharing of auction proceeds –Many bipartisan bills circulating through Congress

Potential Applications of Incentive Auctions to TV Bands Excellent propagation characteristics (travels long distances, in-building penetration, wide through-put) Adjacent to 700 Band (recently auctioned for 4G LTE mobile broadband) Opportunity to strengthen television sector with cash infusion Industry poised for new approaches to station operations that are more spectrally efficient

Broadcaster Options – All Voluntary In an incentive auction, a broadcaster could: 1.Contribute one or more 6 MHz channels, in exchange for a share of auction proceeds; 2.Share spectrum with another broadcaster, in exchange for a share of auction proceeds, and stay on the air; 3.Relocate from UHF to VHF, in exchange for a share of auction proceeds, and stay on the air; or 4.Choose not to participate! Broadcaster participation in incentive auction is voluntary

Incentive Auctions Benefit All Stakeholders US economy wins –Global leadership in innovation, job creation, economic growth US consumers win –Continued advancements in wireless products and services US taxpayers win –Multiple $ billions in cash to Treasury and deficit reduction Contributing licensees win –Capital infusion to support new business models