Wireless & Spectrum Policy

The most pressing challenge in wireless telecommunications policy is transferring spectrum from inefficient legacy operators like federal agencies to the commercial sector for consumer use.

Reflecting high consumer demand for more wireless services, in early 2015 the FCC completed an auction for a small slice of prime spectrum–currently occupied by federal agencies and other non-federal incumbents–that grossed over $40 billion for the US Treasury. Increasing demand for mobile services such as Web browsing, streaming video, the Internet of Things, and gaming requires even more spectrum. Inaction means higher smartphone bills, more dropped calls, and stuttering downloads.

My latest research for the Mercatus Center, “Sweeten the Deal: Transfer of Federal Spectrum through Overlay Licenses,” was published recently and recommends the use of overlay licenses to transfer federal spectrum into commercial use. Purchasing an overlay license is like acquiring real property that contains a few tenants with unexpired leases. While those tenants have a superior possessory right to use the property, a high enough cash payment or trade will persuade them to vacate the property. The same dynamic applies for spectrum. Continue reading →

The FCC is being dragged–reluctantly, it appears–into disputes that resemble the infamous beauty contests of bygone years, where the agency takes on the impossible task of deciding which wireless services deliver more benefits to the public. Two novel technologies used for wireless broadband–TLPS and LTE-U–reveal the growing tensions in unlicensed spectrum. The two technologies are different and pose slightly different regulatory issues but each is an attempt to bring wireless Internet to consumers. Their advocates believe these technologies will provide better service than existing wifi technology and will also improve wifi performance. Their major similarity is that others, namely wifi advocates, object that the unlicensed bands are already too crowded and these new technologies will cause interference to existing users.

The LTE-U issue is new and developing. The TLPS proceeding, on the other hand, has been pending for a few years and there are warning signs the FCC may enter into beauty contests–choosing which technologies are entitled to free spectrum–once again.

What are FCC beauty contests and why does the FCC want to avoid them? Continue reading →

Many readers will recall the telecom soap opera featuring the GPS industry and LightSquared and the subsequent bankruptcy of LightSquared. Economist Thomas W. Hazlett (who is now at Clemson, after a long tenure at the GMU School of Law) and I wrote an article published in the Duke Law & Technology Review titled Tragedy of the Regulatory Commons: Lightsquared and the Missing Spectrum Rights. The piece documents LightSquared’s ambitions and dramatic collapse. Contrary to popular reporting on this story, this was not a failure of technology. We make the case that, instead, the FCC’s method of rights assignment led to the demise of LightSquared and deprived American consumers of a new nationwide wireless network. Our analysis has important implications as the FCC and Congress seek to make wide swaths of spectrum available for unlicensed devices. Namely, our paper suggests that the top-down administrative planning model is increasingly harming consumers and delaying new technologies.

Read commentary from the GPS community about LightSquared and you’ll get the impression LightSquared is run by rapacious financiers (namely CEO Phil Falcone) who were willing to flaunt FCC rules and endanger thousands of American lives with their proposed LTE network. LightSquared filings, on the other hand, paint the GPS community as defense-backed dinosaurs who abused the political process to protect their deficient devices from an innovative entrant. As is often the case, it’s more complicated than these morality plays. We don’t find villains in this tale–simply destructive rent-seeking triggered by poor FCC spectrum policy.

We avoid assigning fault to either LightSquared or GPS, but we stipulate that there were serious interference problems between LightSquared’s network and GPS devices. Interference is not an intractable problem, however. Interference is resolved everyday in other circumstances. The problem here was intractable because GPS users are dispersed and unlicensed (including government users), and could not coordinate and bargain with LightSquared when problems arose. There is no feasible way for GPS companies to track down and compel users to use more efficient devices, for instance, if LightSquared compensated them for the hassle. Knowing that GPS mitigation was unfeasible, LightSquared’s only recourse after GPS users objected to the new LTE network was through the political and regulatory process, a fight LightSquared lost badly. The biggest losers, however, were consumers, who were deprived of another wireless broadband network because FCC spectrum assignment prevented win-win bargaining between licensees. Continue reading →

Congressional debates about STELA reauthorization have resurrected the notion that TV stations “must provide a free service” because they “are using public spectrum.” This notion, which is rooted in 1930s government policy, has long been used to justify the imposition of unique “public interest” regulations on TV stations. But outdated policy decisions don’t dictate future rights in perpetuity, and policymakers abandoned the “public spectrum” rationale long ago. Continue reading →

Adam and I recently published a Mercatus research paper titled Video Marketplace Regulation: A Primer on the History of Television Regulation And Current Legislative Proposals, now available on SSRN. I presented the paper at a Silicon Flatirons academic conference last week.

We wrote the paper for a policy audience and students who want succinct information and history about the complex world of television regulation. Television programming is delivered to consumers in several ways, including via cable, satellite, broadcast, IPTV (like Verizon FiOS), and, increasingly, over-the-top broadband services (like Netflix and Amazon Instant Video). Despite their obvious similarities–transmitting movies and shows to a screen–each distribution platform is regulated differently.

The television industry is in the news frequently because of problems exacerbated by the disparate regulatory treatment. The Time Warner Cable-CBS dispute last fall (and TWC’s ensuing loss of customers), the Aereo lawsuit, and the Comcast-TWC proposed merger were each caused at least indirectly by some of the ill-conceived and antiquated TV regulations we describe. Further, TV regulation is a “thicket of regulations,” as the Copyright Office has said, which benefits industry insiders at the expense of most everyone else.

We contend that overregulation of television resulted primarily because past FCCs, and Congress to a lesser extent, wanted to promote several social objectives through a nationwide system of local broadcasters:

1) Localism
2) Universal Service
3) Free (that is, ad-based) television; and
4) Competition

These objectives can’t be accomplished simultaneously without substantial regulatory mandates. Further, these social goals may even contradict each other in some respects.

For decades, public policies constrained TV competitors to accomplish those goals. We recommend instead a reliance on markets and consumer choice through comprehensive reform of television laws, including repeal of compulsory copyright laws, must-carry, retransmission consent, and media concentration rules.

At the very least, our historical review of TV regulations provides an illustrative case study of how regulations accumulate haphazardly over time, demand additional “correction,” and damage dynamic industries. Congress and the FCC focused on attaining particular competitive outcomes through industrial policy, unfortunately. Our paper provides support for market-based competition and regulations that put consumer choice at the forefront.

The FCC is set to vote later this month on rules for the incentive auction of spectrum licenses in the broadcast television band. These licenses would ordinarily be won by the highest bidders, but not in this auction. The FCC plans to ensure that Sprint and T-Mobile win licenses in the incentive auction even if they aren’t willing to pay the highest price, because it believes that Sprint and T-Mobile will expand their networks to cover rural areas if it sells them licenses at a substantial discount.

This theory is fundamentally flawed. Sprint and T-Mobile won’t substantially expand their footprints into rural areas even if the FCC were to give them spectrum licenses for free. There simply isn’t enough additional revenue potential in rural areas to justify covering them with four or more networks no matter what spectrum is used or how much it costs. It is far more likely that Sprint and T-Mobile will focus their efforts on more profitable urban areas while continuing to rely on FCC roaming rights to use networks built by other carriers in rural areas. Continue reading →

The Mercatus Center at George Mason University has released a new working paper by Daniel A. Lyons, professor at Boston College Law School, entitled “Innovations in Mobile Broadband Pricing.”

In 2010, the FCC passed net neutrality rules for mobile carriers and ISPs that included a “no blocking” provision (since struck down in FCC v. Verizon). The FCC prohibited mobile carriers from blocking Internet content and promised to scrutinize carriers’ non-standard pricing decisions. These broad regulations had a predictable chilling effect on firms trying new business models. For instance, Lyons describes how MetroPCS was hit with a net neutrality complaint because it allowed YouTube but not other video streaming sites on its budget LTE plan (something I’ve written on). Some critics also allege that AT&T’s Sponsored Data program is a net neutrality violation.

In his paper, Lyons explains that the FCC might still regulate mobile networks but advises against a one-size-fits-all net neutrality approach. Instead, he encourages regulatory humility in order to promote investment in mobile networks and devices and to allow new business models. For support, he points out that several developing and rich countries have permitted commercial arrangements between content companies and carriers that arguably violate principles of net neutrality. Lyons makes the persuasive argument that these “non-neutral” service bundles and pricing decisions on the whole, rather than harming consumers, expand online access and ease non-connected populations into the Internet Age. As Lyons says,

The wide range of successful wireless innovations and partnerships at the international level should prompt U.S. regulators to rethink their commitment to a rigid set of rules that limit flexibility in American broadband markets. This should be especially true in the wireless broadband space, where complex technical considerations, rapid change, and robust competition make for anything but a stable and predictable business environment.


In the rapidly changing world of information technology, it is sometimes easy to forget that experimental new pricing models can be just as innovative as new technological developments. By offering new and different pricing models, companies can provide better value to consumers or identify niche segments that are not well-served by dominant pricing strategies.

Despite the January 2014 court decision striking down the FCC’s net neutrality rules, it’s an issue that hasn’t died. Lyons’ research provides support for the position that a fixation on enforcing net neutrality, however defined, distracts policymakers from serious discussion of how to expand online access. Rules should be written with consumers and competition in mind. Wired ISPs get the lion’s share of scholars’ attention when discussing net neutrality. In an increasingly wireless world, Lyon’s paper provides important research to guide future US policies.

Sprint’s Chairman, Masayoshi Son, is coming to Washington to explain how wireless competition in the US would be improved if only there were less of it.

After buying Sprint last year for $21.6 billion, he has floated plans to buy T-Mobile. When antitrust officials voiced their concerns about the proposed plan’s potential impact on wireless competition, Son decided to respond with an unusual strategy that goes something like this: The US wireless market isn’t competitive enough, so policymakers need to approve the merger of the third and fourth largest wireless companies in order to improve competition, because going from four nationwide wireless companies to three will make things even more competitive. Got it? Me neither. Continue reading →

In December, Reps. Upton and Walden announced that they intend to update the Communications Act, which saw its last major revision in 1996. Today marks the deadline to submit initial comments regarding updating the Act. Below is my submission, which includes reference to a Mercatus paper by Raymond Gifford analyzing the Digital Age Communications (DACA) reports. These bipartisan reports would largely replace and reform our deficient communications laws.

Dear Chairman Upton,

As you and Rep. Walden recently acknowledged, U.S. communications law needs updating to remove accumulated regulatory excess and to strengthen market forces. When the 1934 Communications Act was passed, there was a national monopoly telephone provider and Congress’s understanding of radio spectrum physics was rudimentary. Chief among the Communication Act’s many flaws was giving the Federal Communication Commission authority to regulate wired and wireless communications according to “public interest, convenience, and necessity,” an amorphous standard that has been frequently abused. If delegating this expansive grant of discretion to the FCC was ever sensible, it clearly no longer is. Today, eight decades later, with competition between video, telephone, and Internet providers taking place over wired and wireless networks, the public interest standard simply invites costly rent-seeking and stifles technologies and business opportunities.

Like an old cottage receiving several massive additions spanning decades by different clumsy architects, communications law is a disorganized and dilapidated structure that should be razed and reconstituted. As new technologies emerged since the 1930s—broadcast television, cable, satellite, mobile phones, the Internet—and upended existing regulated businesses, the FCC and Congress layered on new rules attempting to mitigate the distortions.

Congressional attempts at reforming communications laws have appeared regularly ever since the 1996 amendments. During the last such attempt, in 2011, the Mercatus Center released a study discussing and summarizing a model for communications law reform known as the Digital Age Communications Act (DACA). That model legislation—consisting of five reports released in 2005 and 2006—came from the bipartisan DACA Working Group. The reports addressed five areas:

1. Regulatory framework;
2. Universal service;
3. Spectrum reform;
4. Federal-state jurisdiction; and
5. Institutional reform.

The DACA reports represent a flexible, market-oriented agenda from dozens of experts that, if implemented, would spur innovation, encourage competition, and benefit consumers. The regulatory framework report is the centerpiece recommendation and adopts a proposal largely based on the Federal Trade Commission Act, which provides a reformed FCC with nearly a century of common law for guidance. Significantly, the reports replace the FCC’s misused “public interest” standard with the general “unfair competition standard” from the FTC Act.

Despite the passage of time, those reports have held up remarkably well. The 2011 Mercatus paper describing the DACA reports is attached for submission in the record. The scholars at Mercatus are happy to discuss this paper and the cited materials below—including the DACA reports—further with Energy & Commerce Committee staff as they draft white papers and reform proposals.

Thank you for initiating discussion about updating the Communications Act. Reform can give America’s innovative technology and telecommunications sector a predictable and technology-neutral legal framework. When Congress replaces command-and-control rules with market forces, consumers will be the primary beneficiaries.


Brent Skorup
Research Fellow, Technology Policy Program
Mercatus Center at George Mason University


Digital Age Communications Act (DACA) Working Groups Reports.


Raymond L. Gifford, The Continuing Case for Serious Communications Law Reform, Mercatus Center Working Paper No. 11-44 (2011).


It’s encouraging to see more congressional movement in repurposing federal spectrum for commercial use. This week, a bill rewarding federal agencies for ending or moving their wireless operations passed a House committee. The bipartisan Federal Spectrum Incentive Act of 2013 allows agencies to benefit when they voluntarily give up their spectrum for FCC auction.

In the past, an agency could receive a portion of auction proceeds but only to compensate the agency for relocating its systems. Agencies complained, sensibly, that this arrangement does little to encourage them to give up spectrum. Federal agencies had to go through the hassle of modifying their wireless equipment and sharing spectrum with another agency but were left no better off than before. In some cases, the complications with sharing spectrum made them worse off, so there was risk of downside and no upside.

This House bill provides that an agency can keep 1% of auction proceeds in addition to relocation costs. With this additional carrot, the hope is, agencies will be more willing to modify their equipment and make room for mobile broadband carriers.

The bill is a good start but I think it’s a little too restrictive. A one percent claim on auction receipts seems insufficient to induce dramatically improved agency participation. Given how poorly federal agencies use spectrum, Congress should be doing much more to force agencies to justify their spectrum usage. Additionally, how agencies can use that 1% benefit seems too limited. The bill allows the funds to be used 1) to offset sequestration cuts, and 2) to compensate other agencies if they agree to share spectrum. Some journalists are reporting that agencies can use the funds to expand existing programs but I don’t see that language in the proposed bill. It wouldn’t be a bad idea, though, to have fewer restrictions on the payments since it would likely increase agency participation.

Further Reading:

See my Mercatus paper on the subject of repurposing federal spectrum.