Increasing Spectrum Efficiency Through the Secondary Market

With the release of the National Broadband Plan, there have been many discussions about what needs to be done in order to accommodate the need for additional spectrum given the finite supply of resources. While we are taking steps in the right direction as far as reallocating additional spectrum for commercial use through the radio spectrum inventory act, these bands are slated to be released over the next 10 years – in which time, the already overwhelming demand for bandwidth is expected to surpass the amount of spectrum available. However, these numbers do not necessarily take into account the inefficiency of existing spectrum use. In a recent interview with the Wall Street Journal, FCC Chairman Genachowski said, “We’ve got to work on spectrum policies that generate greater efficiency. For example, creating new and better markets for secondary markets in spectrum…Literally trading spectrum.”

At Spectrum Bridge, we understand the importance of utilizing a secondary market to help increase the efficiency of existing spectrum resources – there simply is not enough bandwidth for all of the applications consumers utilize on a day-to-day basis. In an effort to help bring more spectrum to the market and help to solve the spectrum scarcity issue, we filed a proposal with the FCC recommending two alternatives to the existing process of auctioning off licensed spectrum.
• The FCC lists the spectrum on an on-line secondary market exchange at the current market value, allowing for competitive bidding.
• The FCC proceeds with an auction as proposed, raising the minimum bid to the fair market value. Once the auction is completed, list all unsold licenses on an online secondary market exchange to allow for competitive bidding.

Both of these alternatives would promote access to unused and underutilized spectrum, consistent with the National Broadband Plan recommendations.

What’s the difference between holding a spectrum auction and placing it on an electronic exchange?

As the FCC stated in the NBP, “The goal of the FCC’s current secondary market policies is to eliminate regulatory barriers that might hinder access to, and permit more efficient use of, valuable spectrum resources.” While the auction process has been in place for many years, it is not necessarily the most efficient way to transact spectrum. The existing process hinders the creation of a competitive marketplace that an online exchange can address. In many cases, valuable spectrum resources that are auctioned off are not efficiently utilized after purchase, but may sit idle until the next spectrum auction. By taking spectrum off of the auction block, and placing it directly in front of buyers on an electronic spectrum exchange, a larger, more competitive buying pool is created.

To read our comments to the FCC regarding maximizing spectrum efficiency through the use of a secondary market for spectrum, click here.

- Joe Hamilla, COO

Spectrum Bridge replies to FCC’s NOI on Wireless Innovation and the National Broadband Plan

With the ratification of the FCC Chairman, commissioners and other key personnel complete, the commission has embarked on a series of inquiries to determine the policy and direction the FCC will take over the next four years. One NOI (pdf) on Investment and Innovation was atypical, referencing Spectrum Bridge by name when discussing secondary markets. Because of the unique areas of interest contained in this NOI (pdf), we felt compelled to provide our insight to the commission. In our response, we addressed several key points:

• Accurate, Complete Spectrum Databases are Necessary for Efficient Spectrum Acquisition
• The TV White Space Database Can Lead to Dynamic Spectrum Allocation
• The Commission should educate the market, in part, through website enhancements that highlight the capabilities of spectrum coordination and secondary markets, as well as provide references to companies that are involved
• Much of the innovation in the wireless industry comes from small companies or those outside the wireless industry, neither of which can compete in a high stakes auction for large swaths of spectrum against entrenched incumbents
• There is no reason that a secondary market would devalue spectrum as an asset –it is just as likely to improve the value
• Spectrum Bridge urged the Commission to foster wireless innovation by facilitating the development of a vibrant and dynamic secondary spectrum market

For the full text of our NOI response please click here (pdf).

Nearly 100 companies provided input and insight to the FCC on this NOI, many of whom supported our overall objectives and some, including Verizon and CTIA, specifically referenced examples of how Spectrum Bridge is taking a leadership position and making the secondary market for spectrum in to a reality.