Anthony J. Pennings, PhD

WRITINGS ON DIGITAL ECONOMICS, ENERGY STRATEGIES, AND GLOBAL COMMUNICATIONS

Auctioning Radio Spectrum for Mobile Services and Public Safety

Posted on | December 17, 2017 | No Comments

The breakup of AT&T in the 1980s created new opportunities for new companies to emerge and offer new services, including wireless or mobile telecommunications. Wireless systems lacked the spectrum or infrastructure for broadband and telcos were restricted by their “common carrier” status from carrying content at the time. Government policy needed to address the issue of supplying the public’s radio spectrum to private carriers to enhance the nation’s telecommunications abilities, its e-commerce or “m-commerce” opportunities as well as the ability to protect the public safety and respond to disasters.

Since the 1970s, the Federal Communications Commission (FCC) had segmented the spectrum to provide two analog cellular licenses in about 500 geographically separated areas. One was traditionally given to the Bell system (later to each of the Baby Bells) and another was awarded in each area by lottery. The second license was often subject to various speculation schemes, creating thousands of “cellionaires” and driving up the costs of mobile telephony. Additional costs were added by the high prices the Bell companies charged for interconnecting the wireless portion to the larger public-switched network.

In 1991, President Clinton signed the Emerging Telecommunications Technology Act to release radio spectrum to the private sector. Previously, cellular offered its services with only 50 MHz of spectrum. The Act allocated 200 MHz to be released over a 10-year period for a variety of wireless offerings such as PCS (Personal Communications Services). PCS emerged in recognition of the necessity to expand mobile services beyond car phones on roads and highways to a wider array of antennas that would serve more sophisticated services and extended mobility. A plan in Washington D.C. emerged to privatize parts of electromagnetic spectrum.[1]

The Omnibus Budget Reconciliation Act of 1993 had a rider that allowed the FCC to auction off the public’s radio spectrum. Exercising his privilege as Vice-President, Gore broke the Senate tie and sent it on to the President to be signed. The legislation, which was the first bill to balance the budget in 30 years, gave the FCC the authority to privatize the wireless spectrum. On July 25, 1994, the Federal Communications Commission commenced Auction No. 1,
netting some $617 million in winning bides by selling ten Narrowband Personal Communications Services (N-PCS) licenses used for paging services. The subsequent auction in March 1995 raised $7.7 billion for the US Treasury as companies like Air Touch and AT&T procured valuable licenses to provide wireless services. Consequently, wireless communications prices went down and services expanded.

Technological advances led to a new generation of (2G) digital wireless in 1990. But it was still offered over circuit-switched networks meaning that each conversation still needed its own channel and was slow to connect. TDMA (Time Division Multiple Access) was becoming the standard in the US while GSM (Global System for Mobile Communications) was used in Europe and PDC (Personal Digital Communications) was dominant in Japan and used packet-switching technologies.

Soon, 2.5G standards provided faster data speeds with the use of data packets, known as General Packet Radio Service (GPRS). The new standards provided 56-171 Kbps of service and allowed Short Message Service (SMS) and MMS (Multimedia Messaging Service) services as well as WAP (Wireless Application Protocol) for Internet access. An advanced form of GPRS called EDGE (Enhanced Data Rates for Global Evolution) was used for the first Apple mobile phone and considered the first version using 3G technology. For a history see my previous post on wireless generations.[3]

In 2008, the FCC auctioned licenses to use portions of the 700 MHz Band for commercial purposes. Mobile wireless service providers have since begun using this spectrum to offer mobile broadband services for smartphones, tablets, laptop computers, and other mobile devices. The electromagnetic characteristics of the 700 MHz Band gives it excellent propagation to penetrate buildings and obstructions easily and to cover larger geographic areas with less infrastructure (relative to frequencies in higher bands).

By July 1, 2009, the U.S. Government raised $52.6 billion in revenues by licensing electromagnetic spectrum.

More recently public auctions of spectrum have been used to support the development of First Net, a nation-wide network for public safety and disaster risk reduction. The FCC raised $7 billion in spectrum auction to fund the network at the 700 MHz. Concluded in January 2015, the spectrum auction raised nearly $45 billion.

Notes

[1] From “Administration NII Accomplishments,” http://www.ibiblio.org/nii/NII-Accomplishments.html. October 25, 2000.
[2] Hundt, R. (2000) You Say You Want a Revolution? A Story of Information Age Politics. New Haven: Yale University Press.
[3] Pennings, A. (2015, April 17). Diffusion and the Five Characteristics of Innovation Adoption. Retrieved from https://apennings.com/characteristics-of-digital-media/diffusion-and-the-five-characteristics-of-innovation-adoption/

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AnthonybwAnthony J. Pennings, PhD is Professor and Associate Chair of the Department of Technology and Society, State University of New York, Korea. Before joining SUNY, he taught at Hannam University in South Korea and from 2002-2012 was on the faculty of New York University. Previously, he taught at St. Edwards University in Austin, Texas, Marist College in New York, and Victoria University in New Zealand. He has also spent time as a Fellow at the East-West Center in Honolulu, Hawaii.

Category: mobile technologies, telecom policy and net neutrality

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    Professor at State University of New York (SUNY) Korea since 2016. Moved to Austin, Texas in August 2012 to join the Digital Media Management program at St. Edwards University. Spent the previous decade on the faculty at New York University teaching and researching information systems, digital economics, and strategic communications.

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