Wireless Spectrum Allocation: What are the Implications for

Industry Players, Policy Makers, and the

Consumer? Sara F. Leibman

Director, Federal Regulatory Affairs

November 18, 2008

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The U.S. Experience: Have Auctions Worked? First some facts….

•AWS-1 Auction Results•$13.9B (Net $13.7B) Auction Proceeds•104 Winning Bidders (57 “Designated Entities”)•$0.58 Average MHz POP•T-Mobile was top bidder, approx. $4.2B for 120 licenses

•700 MHz Auction Results•$19.2B (Net $18.96B) Auction Proceeds•101 Winning Bidders (56 “Designated Entities”)•$1.28 Average MHz POP•VZW and AT&T won lion’s share of spectrum – over 70% on MHz POP basis– VZW bid $9.36B for 109 licenses – 57% of spectrum on a

MHz POP basis– AT&T bid $6.6B for 227 licenses – 14% of spectrum on a

MHz POP basis•But … D Block left unsold•And C Block likely would have attracted much higher bids had it not been for “open access” obligations

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Lessons That Should Have Been Learned

(but may not have) •Overlaying auction with excessive conditions means:•Tepid bidder interest•Lower auction proceeds•Unsold licenses•Bankruptcies•Winners that can’t provide service•D Block Déjà Vu

•New Administration’s challenge will be how to hold market-based auctions in era of increased concentration•Spectrum caps?•Eligibility restrictions?•“Designer” auctions?

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Have Auctions Worked?

To borrow liberally from Winston Churchill . . .

•Auctions are the worst way to assign spectrum, except for all those other ways that have been tried from time to time.

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Open Access? •Wireless industry is moving toward openness•Android platform•Nokia Symbian OS•Verizon Wireless Open Development Initiative

•Clearwire •But movement is a result of competitive pressures not regulation.

•Policymakers should step back and see what happens rather than pick business plan for providers.

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Open Access ? •Single-minded open access policy ignores conflicting pressures on wireless providers.•Limited bandwidth – need to protect customers from “bandwidth hogs”

•Still-developing market for small-screen content•Regulatory and legal pressure to control content

•Aim should be to avoid schizophrenic regulation.•Protect children … but allow all applications•Prevent consumer fraud … but provision every Common Short Code request

•Improve network reliability … but don’t manage network traffic

•Spend billions of dollars at auctions … but don’t expect interference protection

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Potential Benchmarks/Lessons for Europe •To meet the dramatically growing demand for

advanced wireless services, regulators and industry must work together to ensure the allocation and efficient use of wireless spectrum.

• Making key spectrum decisions now will have a significant positive impact on business, society and consumers over the next two decades.

•U.S. experience with auctions for advanced wireless services, including the recent 700 MHz spectrum, offers valuable lessons as Europe moves forward to allocate its “digital dividend.”

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