The oft-repeated axiom “spectrum is the lifeblood of the industry” remains true today as growth of demand in wireless broadband has strained commercial wireless networks.  In acknowledging the benefits of investment into broadband, the US Government has worked to ease this “spectrum crunch” over time by reallocating certain bands of spectrum for wireless broadband. 

The spectrum crunch and the demand for wireless broadband sprectum

The demand for wireless spectrum has grown as consumers’ consumption of wireless broadband services has exploded in recent years. According to the National Broadband Plan, only 4.4 per cent of Americans had broadband access in their homes in 2000.  By 2010, this number increased to 68 per cent.  Demand for wireless broadband has grown similarly, with wireless companies deploying smart phones and other new mobile devices to give consumers connectivity on the go.  The increased consumer demand for wireless broadband has driven the wireless carriers’ need for more spectrum.  In order to keep up with this demand, the National Broadband Plan set a goal of making 500 MHz of spectrum available for wireless broadband within the next ten years.  To gain access to new spectrum, the wireless carriers often looked to the Federal Communications Commission (“FCC”) and, so far, reallocation has occurred only through a piecemeal band-by-band, service-by-service process.  Due to the limitations of this process, some spectrum may be brought to market that is not desirable or has technical characteristics limiting auction proceeds.  

Bringing AWS-3 to market

In 2007 the FCC issued a Notice of Proposed Rulemaking (“NPRM”) to relocate incumbent Fixed Microwave and Broadband Radio Service licensees (for instance, electric utilities and oil and gas companies) from the 2155-2175 MHz (“AWS-3”) band and make it available for wireless broadband.  The FCC explained that reallocation of 2155-2175 MHz would facilitate the development of wireless broadband.  Because this band was a single 20 MHz segment instead of two paired bands, the FCC issued proposals that would allow wireless carriers to utilize the spectrum differently than previous reallocations.  In 2008, the FCC added 2175-2180 MHz to the AWS-3 band to create a 25 MHz block of contiguous spectrum.  While the FCC has issued two NPRMs regarding this spectrum, it remains in the FCC’s spectrum inventory awaiting auction.  

In 2009, Congress directed the FCC to develop a plan to bring broadband internet to every American.  On March 16, 2010, FCC released “Connecting America: The National Broadband Plan.”  This plan contained a number of recommendations that would facilitate the deployment of broadband throughout the country.  One such recommendation was to make available an additional 500 MHz of spectrum to be reallocated for wireless broadband service with ten years.  The National Broadband Plan recommended the FCC, National Telecommunications and Information Administration (“NTIA”), and other government agencies work together to determine whether the 1755-1780 MHz band could be reallocated and paired with the band for auction.  Following extensive work by many interested parties, on March 31, 2014, the FCC adopted a Report and Order to pair 1755-1780 MHz with AWS-3.  This Order also created a mobile uplink band from 1695-1710 MHz, and set auction and technical rules for this updated AWS-3 band.  Auction of the updated AWS-3 band could generate significant revenues, with a portion of these revenues scheduled to go towards funding a nationwide public safety broadband network.  Pairing 1755-1780 MHz with AWS-3 also has the potential to create a global band as several other countries utilize this spectrum for wireless broadband operations, and according to the National Broadband Plan, may “bring the benefits of a global equipment ecosystem to this band.”

The National Broadband Plan’s recommended pairing of AWS-3 with1755-1780 MHz was the first step in a long process in clearing, auctioning, and deploying this spectrum.  The Broadband Plan recommended that NTIA work with the FCC to determine whether 1755-1780 MHz could be reallocated and paired with AWS-3.  NTIA, a part of the Department of Commerce, is responsible for managing federal use of spectrum.  At the behest of the White House, NTIA, in conjunction with the FCC, developed a ten-year plan for making 500 MHz of spectrum available for wireless broadband.  As part of this ten-year plan, NTIA worked on determining whether 1755-1780 MHz, as part of the larger 1755-1850 MHz band, could be reallocated for wireless broadband.  

Relocation of government incumbent users

To determine the feasibility of pairing the 1755-1850 MHz band with AWS-3, an interagency group led by NTIA examined whether government incumbent operations could be relocated without too much disruption.  A number of federal agencies utilized this spectrum including the Department of Defense (“DOD”), Department of Homeland Security (“DHS”), and National Aeronautics and Space Administration (“NASA”).  The interagency group determined that it was possible to reallocate all 95 MHz, but with some caveats.  Not all incumbent operations could be moved out of the spectrum band without putting critical operations at risk.  NTIA reported that reallocation would cost approximately $18 billion and take 10 years.  Interested industry parties, led by CTIA, asked NTIA to focus on the 1755-1780 MHz portion to determine if it could be reallocated and paired with AWS-3.

NTIA decided that it would use its Commerce Spectrum Management Advisory Committee (“CSMAC”) to work with interested parties to identify the issues and devise solutions in the 1755-1850 MHz band.  As part of this process, CSMAC created five working groups, each focusing on different incumbent operations and different portions of the spectrum band.  Each working group analyzed incumbent operations and whether they could be relocated or if not, whether spectrum sharing with commercial operations was viable.  In an effort to facilitate testing, T-Mobile applied for and received a Special Temporary Authorization (“STA”) for operations from the FCC.  The STA would allow T-Mobile to work with government incumbents to determine if spectrum sharing was possible with a commercial deployment in the same location or in the same spectrum band.  All five working groups have submitted final reports and though the CSMAC process continues, NTIA has transmitted several working group final reports to the FCC for inclusion in the rulemaking process. 

On March 20, 2013 then FCC Chairman Julius Genachowski sent a letter to NTIA announcing the FCC’s intention to auction 1755-1780 MHz as early as September 2014.  Driving this timeline was Congress’ requirement that certain spectrum be auctioned by February 2015: AWS-3 and 15 MHz of spectrum identified by NTIA and the FCC for auction.  In November 2013, NTIA reported that DOD, which had a number of operations in the 1755-1780 MHz band, agreed to work with the National Association of Broadcasters in the relocation process.  Under this agreement, DOD would move its incumbent operations from 1755-1780 MHz to 2025-2110 MHz and work with broadcasters who utilize this spectrum for remote news-gathering operations.  Relocation of incumbent operations from 1755-1780 MHz is expected to cost approximately $3.5 billion.  NTIA expressed its support for the agreement, explaining that the agreement would remove the need to displace non-federal incumbents in the 1755-1780 MHz band.

FCC moves forward to reallocate spectrum for mobile broadband

On March 31, 2014, the FCC adopted its Report and Order setting rules for the auction and operations of a paired 1755-1780 MHz/AWS-3 spectrum band.  The FCC’s Order divides AWS-3 into two sub-bands.  The first sub-band is comprised of one 5 MHz block (“A1 Block”) and one 10 MHz block (“A2 Block”) of spectrum in the 1695-1710 MHz band.  This sub-band is authorized for mobile uplink operations.  Both the A1 Block and A2 Block are licensed on an Economic Area (“EA”) basis.  The second sub-band is made up of four blocks of paired spectrum.  There are three 5 MHz paired channel blocks: (1) 1755-1760 MHz paired with 2155-2160 MHz (“G Block”); (2) 1760-1765 MHz (“H Block”);  and (3) 1765-1770 MHz paired with 2165-2170 MHz (“I Block”).  The G Block is licensed on Cellular Market Area (“CMA”) while the H Block and I Block are licensed by EA.  The fourth block in the second sub-band is 1770-1780 MHz paired with 2170-2180 MHz (“J Block”).  This is also licensed by EA.  The FCC also requires that AWS-3 operations are interoperable with operations using 1710-1755 MHz paired with 2110-2155 MHz (“AWS-1”). 

Due to its propagation and penetration characteristics, AWS-3 spectrum may not be as valuable as the 600 MHz spectrum that will be auctioned off next year in the Broadcast Incentive Auction.  In a filing with the FCC, T-Mobile estimated that auction proceeds for the paired 1755-1780 MHz/AWS-3 could be as high as $9.4 billion.  However, there has been a recent trend for wireless carriers to acquire spectrum above 1 GHz.  Verizon purchased a large portion of AWS spectrum in several transactions with cable companies.  AT&T worked to change the operational rules for WCS spectrum and purchased the vast majority of it.  Sprint purchased Clearwire, gaining access to Clearwire’s 2.5 GHz spectrum.  While higher-band spectrum does not propagate or penetrate walls as well as lower-band spectrum, it is better suited for high capacity operations.  The FCC is also working on updating its spectrum screen, one of the tools it uses to analyze wireless transactions.  Several parties have proposed giving different bands of spectrum weighted values, allowing companies to hold more spectrum above 1 GHz.   

Potential international benefits of AWS-3/1755 pairing

Once the spectrum is auctioned, the winners of the auction may begin to develop devices and gain some advantage from a global economy of scale.  One recent example of the advantages of a globally-harmonized spectrum band is the Sprint-SoftBank transaction.  Last year SoftBank, a Japanese telecommunications provider, purchased 80% of Sprint and cited Sprint’s 2.5 GHz spectrum as one reason for the purchase.  The 2.6 GHz spectrum used by SoftBank in Japan is part of the 2.5 GHz band used by Sprint in the United States.  The 2.6 GHz band is also used for mobile broadband in China, Korea, and India.  Wireless carriers in these countries who utilize this spectrum for mobile broadband are working together to develop devices and equipment.  While the AWS-3 band is not yet globally harmonized, the first steps towards harmonization have already begun.  According to a filing by 4G Americas, a 1755-1780 MHz/AWS-3 pairing would align with 3GPP Band Class 10, a band class that a number of countries in Central and South America have allocated for mobile broadband.  As more countries adopt 3GPP Band Class 10, wireless operators along with chip and device makers will begin to focus on it, bringing down costs.        

Conclusion

The 1755-1780 MHz spectrum band has long been targeted as a prime location for wireless broadband operations.  After years of work to determine whether, and at what cost, government incumbent operations could be moved out of the 1755 band, the FCC is scheduled to auction it in late 2014.  While a few issues still remain, the FCC’s auction of this spectrum may help to create a global spectrum band and create economies of scale for devices that access 1755/AWS-3 spectrum.

Christiaan Segura is an associate with Keller and Heckman. He practices in the area of telecommunications, assisting corporate clients and trade associations with various legal and regulatory matters including those before the Federal Communications Commission.  He graduated from the University of Pennsylvania in 2005 and received his J.D. from Pennsylvania State University – Dickinson School of Law in 2010. He can be contacted by email at Segura@khlaw.com.