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Commission Document Attachment

DOC-316527A5

STATEMENT OF

COMMISSIONER JESSICA ROSENWORCEL

Re:
Expanding the Economic and Innovation Opportunities of Spectrum Through Incentive
Auctions
, Notice of Proposed Rulemaking (September 28, 2012)
Wireless services are revolutionizing the way we live and work. The number of devices
using our airwaves is increasing at astounding speed. But this is more than the proliferation of
wireless phones and tablet computers. Consider that within the next decade machine-to-machine
devices communicating wirelessly may number as high as 50 billion. The much-vaunted Internet
of Things is around the bend, and the ways we connect, communicate, and conduct our
commerce will never be the same.
So today, at the direction of a forward-thinking Congress, the Commission embarks on
the complex but critical task of conducting wireless incentive auctions. Incentive auctions are a
new tool that Congress provided this agency to address the near-term demands on our airwaves.
If we get them right, we will facilitate the voluntary return of spectrum from commercial
licensees and promote its efficient reuse. If we get them right, we will ease congestion on our
airwaves and expedite development of new wireless services and applications. And if we get
them right, we will drive digital age innovation, spur job creation, and grow the wireless
economy.
Past is prologue. But history matters, and I believe a brief recitation of where we have
been with wireless auctions will help us understand where we are going.
For nearly two decades, the Commission’s path-breaking spectrum auctions have led the
world. The agency has held more than 80 auctions; it has issued more than 36,000 licenses; and
it has raised more than $50 billion for the United States Treasury. The Commission’s
simultaneous multiple round ascending auctions have been a model for governments and
commercial wireless providers across the globe.
We are now again poised to be the world’s pioneer. We have an opportunity to show
how this new kind of auction—incentive auctions—can facilitate the smart and efficient use of
our wireless resources. The right mix of law, economics, and engineering will yield not only
more spectrum, but more consumer opportunity to benefit from a growing range of wireless
services that will enhance our commercial and civic life.
Today’s Notice of Proposed Rulemaking is merely the start. Big choices and hard work
lie ahead. Yet going forward, I believe that there are four central building blocks to a successful
incentive auction: simplicity, fairness, balance, and public safety.
Simplicity is key. Incentive auctions are an undeniably complex undertaking. But at
every structural juncture, I believe that a bias toward simplicity is crucial. Simplicity will yield
more interest in the opportunities these auctions provide for broadcasters, and in turn, this will
yield more spectrum. Station owners operating small- and medium-sized businesses should be
able to understand their options without hiring high-priced auction experts. Auction design is

one component, but outreach to this community to explain this process is another. As a result, I
have encouraged the Chairman to develop material that describes in straightforward terms the
proposed auction process and highlights for stakeholders the most relevant portions of what we
produce today. I am convinced that the agency should also engage in more direct outreach
through workshops here and outside of Washington. I believe that the Chairman shares my
concerns and I thank him for committing to this kind of material and outreach.
Fairness is essential. This is especially true with regard to the treatment of broadcasters
that do not participate in the auction. Fairness demands that we consider how to accomplish
repacking by minimizing unnecessary disruption and maximizing the ability of the public to
continue to receive free over-the-air television. We must be faithful to the law, which requires
efforts to preserve the coverage area and population of each licensee, as well as coordination
along the border with Mexico and Canada. At the same time, we ask that broadcasters make a
fair assessment of the opportunities this auction provides the industry. By offering incentives to
share channels and incentives to relocate from the UHF to VHF band, this auction can mean new
resources for broadcasters to develop new programming and deploy new services. These are
propositions that can strengthen broadcasting, by providing new models for station ownership,
by providing new funding sources for local content, and by providing new ways to use
technology to make efficient use of our airwaves. Fairness also requires notice. So as I have
said before, I would ask that the agency develop a timeline for all of its upcoming auctions.
Balance is necessary. Heading into this auction, the Commission has a hefty task. It
must balance Congressional mandates with the intricacies of auction design. It must balance a
range of industry concerns, and it must consider how consumers will benefit from the choices we
make. This is challenging to do, as these interests are intertwined and if we are honest, at times
in tension. As a result, we need a holistic approach. The sum is greater than the parts. None of
the three legs of this endeavor—the reverse auction, the repacking, or the forward auction—can
stand on its own. For instance, the interference rules we consider will not only impact broadcast
services, but also how much spectrum will be available for auction, which in turn will impact the
revenues raised.
Balance also requires attention to licensed and unlicensed use of spectrum. The former
provides reliability and interference protection; the latter provides low barriers to entry and
promotes the efficient use of limited resources. Good spectrum policy requires both. As noted
above, the Commission’s prior auctions for licensed spectrum have yielded more than $50 billion
in revenue. But it is important to keep the broader economic picture in mind. If you have ever
used a Wi-Fi connection to get online, a television remote control to turn on the game, or a
garage door opener when you head home, you have benefited from the use of unlicensed
spectrum. In fact, unlicensed spectrum generates between $16-37 billion annually for the U.S.
economy. Moreover, unlicensed spectrum is an important tool for relieving congestion on
commercial wireless networks. Today, more than one-third of data traffic is offloaded onto Wi-
Fi networks. To this end, I am pleased that the Commission asks how to best utilize unused
spectrum in the current broadcast television bands for unlicensed operations. In our increasingly
mobile and connected world, a balanced approach that includes both licensed and unlicensed
spectrum is the key to unlocking the full economic benefits of wireless broadband.

Finally, public safety is fundamental. We must remember that in the Middle Class Tax
Relief and Job Creation Act, incentive auctions are part and parcel with enhancing public safety.
This legislation has purposes that are broader than those tasked to this agency. The auction
revenues the Commission raises are designated to support the first nationwide, interoperable,
wireless broadband public safety network. After far too many years, we are at long last
beginning to address the 9/11 Commission’s call to enable communications connectivity among
local, state, and federal first responders. The auction revenues also contemplate funds for public
safety research, support for next generation 911 service, and deficit reduction. We cannot
divorce the choices this agency makes in developing these auctions from the broader purposes in
this legislation and the public safety needs of the American people.
So these are the values that will inform my thinking about these auctions. Simplicity will
yield more spectrum opportunity. Fairness is essential in our treatment of broadcasters. Balance
is required in our approach to the law and the mix of licensed and unlicensed opportunities. And
public safety is fundamental. But of course, we also need to remember that it is consumers who
must emerge as the real beneficiaries of this auction. As President Obama has stated,
“expand[ing] wireless broadband access will trigger the creation of innovative new businesses,
provide cost-effective connections in rural areas, increase productivity, improve public safety,
and allow for the development of mobile telemedicine, telework, distance learning, and other
new applications that will transform Americans’ lives.” Amen. Let’s get to work.
Thank you to the many individuals throughout the agency who contributed to this effort,
in the Wireless Telecommunications Bureau, in the Media Bureau, in the Office of General
Counsel, the Office of Engineering and Technology, and on the Incentive Auction Task Force.

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