Select Spectrum to host EBS and BRS Lease Auction in October 2015

EBS license holders can monetize longstanding spectrum holdings and rural/suburban/metropolitan fixed and mobile broadband commercial ventures can be stimulated with this annual Spectrum Lease Auction.

This October, Select Spectrum, LLC will host a clearinghouse style auction to facilitate the matching of EBS and BRS Spectrum holders with interested lessees of this spectrum.  As our nation struggles with lack of spectrum to carry mobile and fixed wireless broadband signals, this auction will attempt to unlock the potential of often unused or little used spectrum in the 2.5 and 2.6 GHz bands.  The auction will be a great opportunity to pair educational and government entities, who are the license holders, with wireless broadband providers who are interested in leasing this spectrum.  This is a great way to use our nation’s finite spectrum resources more efficiently, earn money for our educational institutions and provide more spectrum for broadband delivery.

Historically, in 1963 the FCC authorized the Instructional Television Fixed Service band.  These 20 microwave TV Channels were made available to be licensed to local credit granting educational institutions.  However, in the late 1970’s the FCC recognized that many ITFS licensees lacked the technical expertise and/or financing means to effectively use their spectrum holdings.  Thus the FCC authorized “leasing excess capacity” as a way to more effectively use this spectrum.  EBS leases were often combined with Multichannel Multipoint Distribution Service (MMDS) licenses to provide a service typically known as “wireless cable”.  In 2003, the FCC begin repurposing ITFS and MMDS spectrum for wireless broadband service and subsequently renamed the bands EBS and BRS.  Craig McCaw’s Clearwire became the largest commercial operator to lease EBS spectrum.  Clearwire later sold to Sprint.

Two-way, mobile and fixed data services, including Internet access are allowed uses of EBS and BRS spectrum.  The licenses are subject to FCC Part 27 rules.  4G, LTE and WiMAX products are available by a variety of manufacturers to build wireless broadband networks in these bands.  Although at least 5% of the spectrum capacity must be reserved for educational use, the remaining 95% can be leased to commercial operators.

Spectrum auctions have become popular in recent years to license new allocations of mobile and fixed wireless broadband spectrum.  These auctions have typically been dominated by large mobile commercial operators such as Verizon, AT&T, T-Mobile, Sprint, Dish Networks and others. For the most part, smaller local and regional wireless broadband providers have all but been locked out of these auctions because of price and geographic market size.  This fall’s auction is different than spectrum ownership auctions.  This auction as previously stated, is a clearinghouse auction to bring license holders and commercial operators together, to facilitate “leases” of exclusive “Geographic Service Areas” (“GSA”).  Each GSA is typically a 35 mile radius cell.  In many cases, one or more sides of the resulting circle are lopped off to avoid overlap with neighboring GSA licenses. The relatively small size of each GSA license should attract a larger field of potential bidders.

Below is the Post Transition Band Plan for EBS (red) and BRS (Blue and Green) channels.

Many educational license holders are only vaguely familiar with their spectrum holdings.  Many of these licenses were issued 50 years ago.  Newer employees are either unaware of the holdings or are not knowledgeable or skilled in spectrum leasing procedures.  Therefore, much of this spectrum remains dormant and often requests to lease the spectrum licenses are ignored.  The Spectrum Lease Auction essentially provides a “show me the money” incentive to the educational institutions to stimulate reaction to lease spectrum to commercial operators. In other words, the auction will make it easy for the educational institutions to find the best lease offer for their spectrum assets.

The 2015 Spectrum Lease Auction will offer:

1. EBS licenses not subject to an existing lease
2. EBS licenses where the existing lease will expire soon
3. EBS leases to purchase (from an existing lessee)
4. BRS licenses for lease or sale

Participation in the spectrum lease auction if free of charge.  Only winning bidders and ultimately successful lessees have financial obligations.  Contact one of the agents to apply.

When valuing spectrum, the typical unit of measurement is called MHz-POP.  A MHz-POP is the spectrum bandwidth in Megahertz times the population living in the area covered by the license.  A normal EBS license is 22.5 MHz.  In an example GSA of 100,000 population, the total MHz-POP would be 2,250,000.  Bidders would set the price of the lease during the auction depending on location and demand.  If a historical price of $0.04/MHz-POP is used in this assumption, the term value of the lease will be $108,000.  Offers may be higher or lower.

Once the spectrum lease auction is complete, winning bidders will be matched with license holders.  The two parties will commence to negotiate a lease satisfactory for both parties.  Negotiables of the lease may be term in years, payment terms, inflation correction, initial date of lease, right of first refusal and other variables. Once the lease is consummated, the lessee will make an upfront payment to Select Spectrum from which commissions will be deducted.  The balance will then be paid to the EBS license holder.

Leasing spectrum licenses is another method of obtaining rights to licensed spectrum.  The lease is basically financed by the license holder, who agrees to accept monthly or annual payments from the lessee in return for the rights to use the spectrum license for a period of time.  While most auctions require large amounts of capital to compete for the purchase of large geographical blocks of spectrum, the lease auction will be attractive to competitive local and regional broadband providers.  This may be due to the smaller size of GSA’s, license importance to  local providers versus nationwide providers, lower cost of entry, automatic inherent lease financing, higher power limits and less interference.

Historically, nationwide providers  have deployed first in areas with high population densities. Often times these nationwide providers ignore the rural low density areas of the country, even though they have purchased the licenses.  This EBS lease auction process will attract a large contingent of rural wireless broadband providers called WISPs.  WISP operations cover a major portion of the rural and suburban areas of the United States using primarily unlicensed spectrum.  These operators are normally smaller, local or regional operations.  The oldest WISP operation started in the late 1990’s and the largest operator operates in portions of 16 states.  Therefore, a WISP operator in rural Kansas, may value a local EBS license higher than a nationwide provider.  Either way, the more bidders participating in the auction, the more accurate the spectrum lease valuations will be for the license holder.

For more information, contact a bidder’s agent:

Rick Harnish at rharnish@fibertothefarm.com or call 260-307-4000. 

Liz Creekmore at liz@intelpath.com or call 312-841-9188

EBS License Holders can contact Robert Finch at rfinch@selectspectrum.comor call 703-635-2686.

The Ultimate Pipe Dream

Wouldn't it be great if everyone had unlimited bandwidth to every home, business and farm, every smart phone, tablet, camera or machine in this country; enough bandwidth that everyone could download or upload as much content as they could watch, listen to or read.  After all, isn't that the idealistic goal of an Open Internet?  Can you imagine the opportunity and innovation which could happen, if everyone had this ability?  The Internet has turned into a wealth of information unlike anything our world has ever seen.  The opportunities are boundless, or are they?

Is this just a pipe dream for the United States?  How about Nigeria, Tibet, Ecuador, Thailand and all other countries?  What barriers stand in our way to achieve this goal?  The first thing that comes to mind is politics and corporate domination of today’s political landscape.  Can you imagine a time when the people elected to office, went to their nations’ capital intent on serving their constituents. Imagine if they could actually perform their public service duties without undue influence from party leaders and corporate lobbyists? I can’t think of a time in my lifetime.  Unfortunately, this ability never existed, nor will it.  Therefore, it’s definitely a pipe dream, but oh, wouldn't it be great.

I grew up on a rural Indiana farm and operated the farm with my father for nearly 20 years.  Although we sold the farm some 10 years ago, I still watch the agriculture industry.  In the last 10 years, land, fertilizer, chemicals, seed, fuel and equipment costs have tripled.  Why you ask?  Consolidations eliminated competition.  The resulting large corporations raised prices at alarmingly fast paces and used profits to lobby Congress, insuring future legislation sides with their best interests in mind. 

Agriculture is similar to many other industries, I chose to use agriculture as an example,  because of my experience.  Is this evolution good?  In many ways it is.  Farms have become larger, gained many economies of scale and adopted high levels of technology.  These factors have greatly improved efficiency and production levels.  But gone are many family farms, like my family’s farm. They were lost in this rapid evolution.

I was an early adopter of technology.  I probably had the first computer (IBM-AT); first satellite market delivery service (Dataline); first PDA (Apple Newton), and the first GPS enabled combine in my county.  I even had the first Broadband connection to my house and farm office, which I installed in 2000; three years after I started a Wireless Internet Service Provider (WISP) business in 1997.  That’s right; I was both the customer and provider of my Broadband service.  Why do I tell you this?  I was an entrepreneur, a person understood the opportunities the Internet provided and even more so, the power of Broadband.  I’m not unlike many other entrepreneurs around the globe, who wouldn't take “no Broadband available” for an answer.  We recognized our communities needed Broadband, even if the large dominant phone and cable companies wouldn't provide it. So, we invested our own time and money to build it ourselves.

As a founding board member of the Wireless Internet Service Provider Association (WISPA) and was Executive Director until my tenure ended last December,  I know the industry well.  It's an industry of entrepreneurs, innovators and caring members of the communities they serve.  It’s an industry where the sharing of information is the norm, regardless of competition.  WISPA isn't just a trade association, it’s a vibrant community.  It’s a national community of operators, manufacturers, distributors, consultants and many other segments of the industry, who work together each day. They seek and share better ways to provide Broadband service.  It’s their mission to provide the best possible Broadband and customer service they possibly can to their clients.  In my mind, Wisps are America’s Broadband Heroes.  They take Broadband where it has never gone before, yet Wisps often ignored by many inside the beltway.

Many Wisps are now deploying fiber in their communities.  Combining fiber and wireless technologies, they are building efficient and affordable hybrid networks.  They understand the technologies and they know when to use each method to economically advance the bandwidth capabilities in their service areas.  

Where there is a Wisp, there is a way!  Oh, did I forget to say, Wisps are building infrastructure without hardly a dime of government subsidies.  The Wisp industry has recently been noticed and because of TitleII regulations, will soon become Common Carriers, regulated by the FCC. Your guess is as good as mine on the final outcome of these monumental new requirements and added responsibilities.

I have also witnessed the same consolidation happen to telecommunications, which happened in agriculture. Our government turned a blind eye to large mergers and allowed companies like AT&T, Verizon and Comcast to get larger and larger.  Why not?  They were funding politicians’ campaigns, passing out bribes, free vacations, etc.  In return, the politicians granted large subsidies and sponsored legislation; often written by corporate telecom lawyers.  Much of this legislation benefited these large companies and worked to eliminate competition.  The more corporate promises were made, the more funding was funneled their direction. Profits soared.  Why build fiber to every home, when they could buy spectrum with this money; which led to our virtual duopoly in the cellular industry today.

Don’t get me wrong, I love my mobile service and can’t imagine life without it today.  However, competition has all but been eliminated, causing prices to soar.  Spectrum auctions have become a joke.  Nearly all spectrum auction competition has been eliminated by seemingly unlimited pocketbooks of Verizon, AT&T and now Dish. It seems are few limits on how much spectrum the large companies can buy. There is no “use it or lose it” regulations and little incentive to strive for efficient use of the spectrum they purchase. Is this our future?  I hope not!  Spectrum is a finite public resource and should not be allowed to be warehoused by large private telecom companies.

I've watched the recent Net Neutrality debate with great interest.  I have observed the hatred the American public has for large cable and phone companies.  I've watched public interest groups sway the public to support Net Neutrality and stake claim to 4 million comments.  The reality is many commenters did not understand the difference between Net Neutrality and the final TitleII overreaching government regulatory rules used to achieve an Open Internet.  I  personally support No Blocking, No Throttling, No Paid Prioritization and the transparency rules.  I believe most ISPs do also. It's my belief these four principles are the core of Net Neutrality.  However, I do believe these core principals of Net Neutrality could have been accomplished without imposing TitleII regulation on the entire ISP industry.

I disagree with the FCC’s final decision to use TitleII regulations to manage the Internet.  I believe forbearance promises of many sections in the regulations create great uncertainty for the ISP industry and future investment.  I believe the legal costs for ISPs and the American taxpayers will be outrageous.  Smaller ISPs, which often provide the only Broadband access to a great part of rural America, will most likely see risks outweighing rewards in the low margin business of rural Broadband. I also believe the regulatory compliance burdens will also cause severe economic impact for smaller providers. Who is going to provide Broadband to rural Americans if small providers exit the industry?

I was particularly dismayed by the Commission’s omission and dismissal of the IRFA (Initial Regulatory Flexibility Analysis) requirement.  An IRFA is designed to study the economic impact on small entities by the policies and rules proposed in the Notice.  When it was apparent the IRFA requirement was not included in the notice, at least three trade associations representing small ISPs, wrote a letter to Chairman Wheeler to request a hearing to examine the significant economic impact on small Broadband providers.  As far as I know, the Chairman did not respond to the request and no such hearing was held. The sheer fact the IRFA requirement was ignored predicts this agency's lack of concern and support for small Broadband providers.

So now we have a situation at hand.  An FCC order has been passed, surely to be challenged in court.  This will cost the American taxpayers millions of dollars and years to resolve.  More importantly, it will inject further uncertainty into the ISP industry.  Imagine how much Broadband infrastructure could be built with this money in the meantime.   Why was it so important for the FCC to ram ahead with regulations which should have been created by Congress in the first place?  Was it because of the current Congressional standoff between political parties?  Was it because content providers used their lobbying clout to sway public and political opinions?  Whatever the reason, the American consumers and small ISP companies will be the victims of this premature action by the FCC.

In conclusion, why did I title this post, The Ultimate Pipe Dream?  Well, because although politicians and regulators agree the need for ubiquitous fast unlimited Broadband for all Americans is essential. They've clumsily slowed this process by imposing a strict TitleII regulatory regime on the very industry that builds the infrastructure. They've created uncertainty in the marketplace.  They've also slowed innovation by inserting government oversight in the process.  To achieve the Ultimate Pipe Dream, the government needs to create fair opportunities to build fast interstate data highways.  They need to remove barriers, instead of creating more. ISPs should get incentives to build the best Internet system in the world, instead of being water-boarded with regulations.  Let’s remove “Pipe” from the title and achieve “The Ultimate Dream” together, as quickly as possible.

Is it Time to Invest In Rolling Billboards?

Is your service vehicle fleet getting old and worn out?  Does your fleet represent your company image well?  Are you paying your employees or contractors a monthly fee to drive their own vehicles? 2015 may be an excellent time to evaluate the true cost of your rolling fleet and compare it to the cost of replacing it with new vehicles.  Consider raising the professional image of your company?

If your service vans are 10 years old, there is a good chance gas mileage is between 10 and 15 mpg, maybe less than that!  If you were to update to new vehicles, you could improve your gas mileage at least 10 mpg.  Assuming your mileage per van is approximately 2200 miles per month that is a savings of $284/month.  Wouldn’t you rather put this savings to work for your company than blow it out the exhaust pipe?

I recently visited WisperISP and was impressed with their new service vehicle fleet.  As I thought about it, I decided to ask Nathan Stooke, the CEO to provide me with his financial justification for this fleet refresh.  Thank you Nathan and the entire WisperISP team. Isn't the 2015 Nissan service van below beautiful?

Have you considered wrapping your vans with your company logo and information?  A full body wrap is calculated in the cost breakdown below.  If you think of your fleet as rolling billboards for your company, you could legitimately shave $200 off of your marketing budget per van!  

Potential and current customers notice vehicles with attractive artwork.  Their eyes are drawn to it.  They also notice old junk vehicles sitting in their driveway.  Which would you rather have representing your company?  How do you think your new customers regard your company when a junk vehicle comes to install their new service?  How about an attractive vehicle?

Assuming your old fleet has some rather high repair bills throughout the year, we can estimate your annual maintenance costs at $2400/year; your experience may vary.  Replacing these vehicles gains an additional $200 in maintenance savings.

Below is WisperISPs evaluation of their 2015 Nissan NV200 Compact Cargo van purchase decision.  This evaluation does not include trade-in or resale value of their current fleet.

	Current Vehicles	New Vehicles
Base Price		$22,865 (Includes BlueTooth, Cruise and Remote Entry)
Sales Tax		$2015
Shelving Package		$2500
Ladder Rack		$975
Wrap		$2560
Total		$28,355
		Add: Vehicle supplies i.e. ladders, consumables, etc.
Monthly Expenses (Estimated)
Insurance	$50	$120
Fuel	$484 (10 mpg @ 2200 miles)	$200 (2200 miles per week)
Maintenance	$200	$50
Monthly Payments (60 months)	$0	$413
Total Monthly Expense	$734	$783
Total Additional Expense		$50 extra cost

(These assumptions based on compact minivan pricing, other vehicles will vary.)

Add to this 0% financing for 60 months and extended warranty programs and it just makes good business sense. 

Whether you decide to update your vehicles on a rolling schedule or all of them this year, you will be amazed at how much new business you can acquire marketing your business with your fleet of vehicles.  

Additionally, encourage employee pride! If they are driving “junk” today, they probably have a tendency to do “junk” work.  By investing in new vehicles, chances are it prompt them to do “quality” work on the job.  Install technicians are often the first face your customer interacts with in person; make sure the impression made is a good one.  Don't let vehicle breakdowns hamper your install schedule.  That is a first impression you cannot afford to make these days.

When I Found My Why

-Feb 20, 2015

When I found my why, I found my will.
When I found my will, I found my way.
When I found my way, I found my wings.
When I found my wings, I take flight to win.

The Gig Is Up!

Are current proposed regulations a multi-faceted strategy
to eliminate competition and control the Internet?

When one steps back and looks at various legislative and regulatory changes, either in the pipeline or have already been passed, certain dilemmas become evident.  It appears the lobbying forces and supporting think tanks are on the verge of a legal Internet takeover in cooperation with the US government.  While many people, associations and companies support or criticize individual bills and regulatory actions, most seem to be ignoring the bigger picture.  Well, the gig is up!  In this post, I will feature multiple regulatory or legislative vehicles.  Individually, these actions may seem harmless and/or for the benefit of consumers, however, when taken multi-laterally in context, it is evident the impacts on consumers and competition are dramatically compounded.  

If we look back in the last 25 years of the Internet evolution, one can see numerous volleys by large corporations and the government to eliminate small ISPs.  Thankfully, these attempts tended to be one shot at a time and the smaller more nimble providers were able to adapt to the changing environment rather quickly.  It now appears a new strategy to eliminate competition has emerged.  Gone is the single shot musket.  It has been replaced by a Gatling gun, firing repeated volleys of regulation and legislation until only the strongest and best financed broadband incumbents remain.

Am I fear-mongering?  Maybe.  Creating a mountain from a mole hill?  Maybe.  I just can’t allow myself to observe the current regulatory environment and what I foresee as a critical junction in the evolution of the Internet, competition and our future free market economy and remain silent.

Below, I will highlight some of the important national policy issues I see at this time.  Are these shots from the Gatling gun related?  Are they just a coincidence? Or a strategic ruse developed deep in a dark conference room of an industry think tank?  Maybe I’m crazy or maybe I’m just observant.  Hopefully, I make suggestions below that strike a chord with influential people who define our nation’s future telecom and spectrum policy.

The issues include NetNeutrality, USF/CAF transitioning, Stalling the update of the Communications Acts of 1934 and 1996, Redefining Definition of Broadband, Unlicensed Spectrum, Spectrum Auctions, and Increasing Competition by Eliminating Public Broadband Laws.

NetNeutrality:

                Selling Point:  Insure content providers enjoy a free unlimited highway to consumers by instituting Title II regulation on ISPs.

                Reality 1:  After years of a government “hands off” approach to the Internet, the United States government is set to become the Internet’s regulatory monarchy.  The free, unregulated Internet marketplace, where innovation has flourished; will begin to disintegrate as we know it. 

        Reality 2:  Regulatory burdens created by Title II regulation are predicted to inhibit future investment.  ILECs, accustomed to this regulatory regime, will fare better than smaller providers which have not been previously burdened by Title II encumbrances.  Competition will decrease.

        Reality 3:  Title II regulation will increase consumer Internet cost once Phase II CAF (Connect America Fund) taxes are added to everyone’s bill. 

        Reality 4:  Legal challenges to NetNeutrality and Title II rules will create a windfall for telecom attorneys. 

        Reality 5:  With the increase litigation risks brought on by NetNeutrality, comprehensive Internet insurance will become mandatory for nearly all companies with a presence on the Internet, ISP or not.  This will increase insurance expenses and force companies to raise prices to survive.

        Reality 6:  As with most over-burdensome government regulations, corporations will seek less restrictive environments to conduct business.  This will cause exporting of many US jobs.

        Reality 7:  Decreased competition will result, slowing innovation, increasing consumer cost and decreasing provider motivation to provide higher grade services to consumers.

        Solution:  Protect consumers by outlawing paid prioritization and blocking websites by ISPs by amending Section 706 to do so.  This should be a first step.  Step 2 should be modernizing the Communication Act. Do not regulate the Internet under Title II.  Title II is a sled hammer solution for a rubber mallet problem.  We cannot afford to be so reckless. 

        Risk Summary:  Over regulation will decrease competition and this slow broadband deployment and service improvement.  Consumer demand for an open Internet will be inhibited by lack of competition and slow adoption of network improvements due to burdensome and costly regulations and thus will compound litigation risks.

USF/CAF:

                Selling Point:  The dramatic rise of IP (Internet Protocol) and the decline of POTS based infrastructure (phone lines), have caused USF (Universal Service Fee) tax revenues to decline.  It is evident; revenues created by USF taxes should be shifted to broadband Internet users in the form of CAF (Connect America Fund) taxes in order for the program to survive.  The National Broadband Plan outlined a three step plan to accomplish this transition.  Phase 1, accomplished in 2011, created funding opportunities to expand broadband access to unserved rural Americans.  A Mobility Fund was also established to stimulate mobile broadband service to unserved areas.  Phase II, yet to be accomplished shifts the revenue base to broadband connections.

                Reality 1:  Funds collected from the outgoing USF program provided funding for Phase 1 CAF programs.  To qualify for funding, providers need to be an ILEC or an ETC (Enhanced Telecommunications Corporation).  ILECs therefore have dominated CAF and Mobility Fund disbursements thus far.

                Reality 2:  Antiquated statutory policy created in the Communication Acts of 1934 and 1996 badly needs to be amended or completely rewritten.  Incentives need to be created to reward all telecommunication entrepreneurs investing in advanced broadband infrastructure regardless of the transport medium. 

                Reality 3:  Telephone companies have enjoyed a distinct financial advantage from government subsidies over other forms of ISPs.

                Reality 4:  With the dawn of Internet Protocol, telecommunications is no longer limited to phone companies.  IP networks can and are built by nearly anyone.  Services such as voice, video, teleconferencing and many, many new services created every year are nothing more than applications running on IP networks and should be treated as such.

                Reality 5:  Goals outlined in the Telecommunication Act of 1996 are still valid and just.  The funding mechanism is changing.  

                Solution:   One of the previous goals of Universal Service stated, “Provide equitable and non-discriminatory contributions from all providers of telecommunication services to the fund supporting universal service programs”.  This should be amended to read as a goal of the Connect America Fund, “Provide equitable and non-discriminatory contributions from all providers of broadband services (at the current definition of broadband) to fund supporting Connect America Fund programs.  Provider disbursements shall be made in an equitable and non-discriminatory method on a tiered schedule based on Internet speed capability and capacity.”  In other words, create incentives for providers to advance Internet infrastructure reach, speed and capacity.

                Risk Summary:  Discriminatory financial incentives will increase competitive disparity.  IP technology, as previously stated has opened the doors to competition and competition should not be ignored financially by our government.

Stalling the update of the Communications Acts of 1934 and 1996:

                Selling Point:  Updating the Communication Act is not as high of a priority as NetNeutrality.

                Reality 1:  It seems the government would rather create new regulation on top of old rules than exacerbate disruptive forces which impact incumbent status quo relationships and their future.

                Reality 2:  Complex legal policy in outdated Communication Acts, allow plenty of room for legal disputes and maneuvering. 

                Reality 3:  Internet technologies are so dynamic; new government policy is outdated before the sausage is even made.

                Reality 4:  Relying on outdated Communication Act doctrine has slowed down broadband deployment and adoption by limiting subsidies to one segment of the telecom industry. 

                Solution:  As previously stated; amend Section 706 with necessary measures to satisfy current consumer protection needs and then get to work updating the Communication Act.  Leave Title II Internet regulation alone!

                Risk Summary:  Face it, the Communication Act is ancient.  A world class Internet infrastructure regulatory environment cannot be based on laws created 80 years ago.  Not updating the Communication Act would be a discredit to our nation’s future.

Redefining Definition of Broadband:

                Selling Point:  (Chairman Wheeler) “A 25 Mbps connection is fast becoming “table stakes” in 21^st century communications”

                Reality 1:  Raising the broadband speed threshold stimulates innovation by raising the bar.

                Reality 2:  Advanced wireless technologies, cable and fiber can currently reach these goals given proper network deployments.

                Reality 3:  Limited access to current and alternative funding incentives, slow progress in the quest to increase broadband speeds.

                Reality 4:  Lack of tiered speed level incentive programs open to ALL ISPs.  If we want 25 Mbps, 100 Mbps or 1 Gbps networks, we need to create funding incentives to reach these goals. 

                Reality 5:  Infrastructure obstacles such as pole attachment rights, tower approval timelines, right-of-ways access, local zoning issues and limited access to affordable contiguous spectrum; are all factors which aggravate providers’ quest to reach broadband speed goals for their customers.

                Reality 6:  Content demand and technology are outpacing broadband infrastructure delivery potentials.  Broadband improvements are frustrated by build-out limitations, financing opportunities and regulatory uncertainty.

                Reality 7: Rural demographics differ dramatically from urban demographics.  These differences change return on investment time frames immensely.  Rural areas have primarily been served by entrepreneurial WISPs, due to the low cost of entrance and associated technology.  These WISPs are now incorporating fiber technologies into their hybrid networks at an increasing rate. 

                Solution:  Create carrier neutral construction and infrastructure improvement incentives which will enhance competition, embrace entrepreneurship, speed up network improvements, lower deployment costs and ease investment risk.  Also, maintain a light regulatory touch to encourage investment in the ISP industry.

        Risk Summary:  We need to move from the historic elitist subsidy handout program to one based on performance incentives.  Money talks when incentives to receive it are specified up front.  Past broken promises should not be rewarded any longer.

Unlicensed Spectrum:

                Selling Point:  Once considered useless and interference prone, these slivers of unlicensed spectrum primarily were used for in-building Wifi and WISP entrepreneurs. Recently cable and cellular companies have embraced these limited unlicensed spectrum assets for data offloading. 

                Reality 1:  Unlicensed spectrum is the most efficiently used spectrum available when it comes to number of devices per MHz.

                Reality 2:  Unlicensed spectrum spawned great innovations due to its free availability to innovators and entrepreneurs.

                Reality 3:  Advanced wireless technologies proven to deal with interference and spectrum reuse in unlicensed spectrum have discredited licensed spectrum holders erroneous myths.

                Reality 4:  While unlicensed spectrum does not contribute auction revenue to the nation’s treasury, it contributes to the nation’s economy and daily lifestyle in many other ways that are too intangible to calculate.

                Reality 5:  A large portion of rural America is served by the WISP industry using unlicensed spectrum and has been beginning in the mid-1990s.

                Reality 6:  School systems, electric cooperatives, oil/gas companies and many other industries have lowered telecommunication expenses by using unlicensed wireless backhaul between facilities.

        Solution: Legislation is needed to reserve 10% of all spectrum allocated for auction to unlicensed use.  As a nation, we should leverage our limited spectrum resources efficiently and not put all of our eggs in one basket.

        Risk Summary:  It is often said that the people own our nation’s spectrum resources, which are managed by the government.  Therefore, a portion of the spectrum should remain a public resource. It should not entirely be auctioned to the few companies that can afford to purchase lease rights to the limited resource.  Doing so will stifle innovation and competition.

Spectrum Auctions:

                Selling Point:  Spectrum auctions creating licensed spectrum opportunities produce windfall revenue for the nation’s treasury.  Case in Point: Recent AWS-3 auction has reached nearly 45 billion in revenue.

                Reality 1:  Cellular Market Areas and Economic Areas are geographic tracts generally too large for many potential bidders to afford.  Case in Point: AWS-3 Auction has only 80 qualified bidders.

                Reality 2:  FCC has historically avoided auctioning smaller geographic areas due to “auction complexity reasons”.

                Reality 3:  By eliminating potential bidders, potential auction revenue may be left on the table.  In other words, if a CMA were divided into census tracts, the sum total of winning bids may be larger than one large CMA with fewer bidders.

                Solution:  After 10% of a spectrum band to be auctioned has been reserved for unlicensed use (previous suggestion), 20% of the remaining spectrum should be laid out in census tracts, 40% in CMAs and 40% in EAs.  This will create entrepreneurial opportunity, competition, increase revenue and will promote efficient use of all spectrum nationwide.

                Alternatively, proposals such as the three tier access approach in the CBRS 3.5 GHz band proceeding, which incorporates Incumbent Access, Priority Access and General Authorized Access should be considered for all new spectrum allotments to be auctioned.

                Risk Summary:  A major duopoly stage has already been set by previous auctions, monopolistic ILEC profit making and evident spectrum warehousing to eliminate competitive threats.  We must be efficient with the little spectrum we have left. The American consumers should not be held hostage to a couple dominate mobile providers.

Increasing Competition by Eliminating Public Broadband Laws:

                Selling Point:  President Obama recently promoted the elimination of state laws prohibiting publicly owned broadband networks. He states his goal is to enhance competition and give communities and consumers more choice.

                Reality 1:  Government owned competition in a free market economy is disruptive.

                Reality 2:  Government owned competition is taxpayer funded.

                Reality 3:  Government owned competition is often too slow to adapt in a dynamic industry such as broadband.

                Solution:  Government owned networks, if created, should be open to wholesale private operators in an equitable fashion at a reasonable cost.

                Risk Summary:  Improved Internet infrastructure should be a goal of every community, but community owned networks should not compete against private enterprise.  Community owned networks should enhance competition between private enterprises who lease the right to ride on community network infrastructure.  Public/Private relationships can be so much more effective, profitable and current from a technology perspective than any community owned network itself.

Well there you have it.  Can you see the devastating effects these issues may have on small businesses, competition, consumer choice, consumer Internet costs, network improvements, etc?  We must embrace the changing IP environment.  We must stimulate competition.  We must use our spectrum resources wisely. We must limit regulation of the Internet.  We must create incentives rather than corporate welfare at the tax-payer expense.  Not doing so is only robbing the American consumer.