The FCC plans to vote this month on its plans to auction off spectrum currently held by local TV broadcasters to support development of a national wireless broadband system. That despite concern that few broadcasters will volunteer to give back their licensed spectrum. (Authorizing legislation requires that any spectrum return be voluntary, and that stations who do must share in auction returns). It remains unclear how much spectrum will become available, and how quickly.
Several recent reports from Europe also suggest that a rush to auction might not be a good idea, for different reasons.
In one, the Dutch government agency responsible for telecom and spectrum use announced that only five companies had registered to participate in the auction. The agency didn't divulge the entrants, but those following the auction expressed doubts that the group included any new entrants (some of the spectrum to be auctioned is reserved for new entrants only). Also, a recent auction of 4G spectrum by France generated only $3.45 billion, significantly below early expectations, and barely above what it indicated would be the minimum target. Recently, spectrum auctions have rarely approached stated expectations and goals in terms of revenue generation. Operators are finding that the increased competition and unexpected costs in building the infrastructure (mostly from local opposition to tower construction) are cutting profit potential, particularly when economies aren't performing well. This has kept bids low.
There are other issues reflected in a recent announcement from the UK government that it will be scrapping its initial plans for a fast national broadband wireless service similar to that envisioned by the FCC. While there were strong initial bids for licenses in urban and suburban areas, there was minimal interest in serving the more rural third of the country, despite heavy subsidies. In addition, they found that service roll-out was taking much longer than expected in urban areas, largely due (again) to local concerns and "red tape". One approach being considered is to rewrite the regulations so that operators don't need to go through any local planning process, a proposal that is, not surprisingly, generating a lot of concern politically. Further, many of those supporting broadband access are concerned that the rural systems may be subpar, using older cheaper equipment and lines, and that even in urban areas delays can mean that designs and projects may not utilize the most current technologies in a rapidly changing field.
What's happening in Europe and elsewhere raises the possibility that if the FCC rushes to set standards and undertakes auctions before the actual spectrum has been secured, it could well result in both reduced auction revenues and poorer system design and infrastructure once implemented. In uncertain economic times, the potential value of spectrum falls - and is further devalued if the spectrum you're buying won't be available for several years. On the other hand, the history and tradition of telecomm innovation is that technological capabilities increase rapidly, while also becoming less expensive. If auction plans include commitments to design, delays between auction and implementation can lock operators into older, less capable and more expensive systems.
So let's hold off on the auction until the spectrum is in hand.
Sources - FCC to vote on auction of unused broadcasting spectrum, TelecomEngine
Dutch spectrum auction attracts five participants, Telecom Engine
French government rasies $3.45 billion in 4G auction, Telecom Engine
UK government scraps planning regulations for superfast broadband, Telecom Engine