The 3.5 GHz Tug-of-War

I’ve written a number of blogs this year that show how the current FCC is largely favoring the large carriers over small ones. The agency will soon be deciding how to handle the 3.5 GHz spectrum – and it appears that they are again likely siding with large cellular carriers over the rest of the market.

This is the spectrum that has generally been referred to as Citizen’s Band Radio, although it is not close in spectrum to the CB radios highlighted in every movie with a big rig truck. The FCC is currently reconsidering the rules adopted for this spectrum by the last FCC in 2015. The 2015 rules made this spectrum widely available to anybody who wanted to use it. The licenses for the spectrum were to be awarded for very small footprints, at the census tract – an area encompassing 2,500 to 8,000 people. The rules also gave anybody licensing a small footprint a one-year head-start over any larger company that wants to use the spectrum in the same area. This was a perceived boon for WISPs and others wanting to deploy the spectrum for rural broadband.

Small carriers want to use the spectrum because of the great operating characteristics. First, by being licensed it means less interference than using WiFi spectrum. The spectrum also can carry a signal a long distance from a tower and is less sensitive to line-of-sight issues as some other spectrum being used in rural areas.

However, these same characteristics make the spectrum attractive to the large cellular carrier for providing 4G LTE cellular broadband, and the big cellular companies want as much of this spectrum as they can get their hands on. It was lobbying by the CTIA, the lobbying arm of the big cellular companies that convinced the FCC to vote 4-1 last year to reconsider the rules for use of the spectrum.

The original FCC rules allowed for up to seven separate licenses in each census tract – with 74,000 census tracts that meant up to 500,000 separate licenses were possible. The new rules drastically reel in the number licenses. It would grant large footprint licenses in metropolitan areas and county-size licenses in the rest of rural America. There are 306 Metropolitan Statistical Areas (MSAs) and 3,200 counties – and under the new rules this reduces the number of licenses to 19,000.

Under the original rules small providers could bid for licenses that fit a small geographic foot print – a small town or a portion of a rural county. These small license areas are ideal for the business plans for rural providers like WISPs, telephone companies, electric cooperatives, cable companies, and even Internet of Thing providers. There were farming cooperatives considering the spectrum as an interference-free way to monitor smart-farm sensors.

The FCC is currently being lobbied by those on both sides of the issue. The large cellular carriers are represented by their lobbying arm, the CTIA. The smaller providers have banded together during the last few years under a loose umbrella called the CBRS Coalition. This includes many small wireless providers, but also some large corporations like Cox Communications, Edison Electric Institute, Exelon Corp., FedEx, General Electric Co., Motorola Inc., the Port of Los Angeles, Southern Linc, and Union Pacific Corp. The CBRS Coalition filed a compromise plan with the FCC that is in the middle between the old rules and the proposal from the CTIA. In a letter filed on May 9 this group asks to allow five licenses in each county and two licenses in each census tract.

We know from past experience that the spectrum owned by the big cellular companies goes largely unused in rural America. In a rural market they use a handful of the spectrum bands to support rural cellular service compared to the wide array of spectrum they use in urban areas. For various reasons the big wireless carriers seem to want to hoard spectrum rather than ever find themselves short.

In an ideal world the FCC would force big carriers to give back spectrum they never use, but we’ve never had an FCC that’s been serious about reclaiming unused spectrum. The large carriers don’t have plans to use most spectrum bands in rural areas but also don’t want to be bothered to defend their licenses – and so they fight any suggestions that unused spectrum should be returned to the FCC for use by somebody else.

We don’t know how the FCC will vote on this issue – but the fact that they opened the issue based upon a petition by the CTIA tells us their likely sentiment. So far this FCC has voted for the big carriers on every issue where there is a big company / little company tug of war. If the FCC follows their trend and votes for the CTIA petition, it will be another dagger stuck into the heart of rural broadband.

Net Neutrality in the Courtroom

Network_neutrality_poster_symbolBarely two week after the release of the FCC’s new net neutrality rules there have been two lawsuits filed asking the courts to set aside the new rules. This is one of the quickest reactions to an FCC order that I can remember.

One petition was filed by the USTelecom Association with the US Court of Appeals for the District of Columbia. This is the trade group representing Verizon, AT&T, and other large telcos and ISPs. The second was filed with the US Court of Appeals in New Orleans by Alamo Broadband, a small ISP from Texas.

The lawsuits are a bit surprising because the FCC hasn’t yet published the new rules in the federal register, meaning that they are not yet in effect. There is a good chance that these two suits will be dismissed for being prematurely filed, but there is no doubt that these and other cases will be filed once the order has been officially published. It’s rumored that the CTIA plans to file an appeal on behalf of all of the large cable companies. Challenges by the trade groups will save AT&T, Verizon, and Comcast from having to challenge the FCC directly.

As expected, the suits challenge the FCC’s authority to impose Title II regulation on broadband. USTelecom refers to this as ‘utility-style regulation’, although the FCC provided forbearance on most of the regulatory requirements that apply to telcos and CLECs.

I’m not a lawyer, but I recall a lot of dismay in the industry when the FCC decided many years ago to classify the Internet as an information service rather than as a utility. My opinion is that all they have done by this ruling is to set straight the mistake they made years ago, and that they always have had the option to regulate the Internet under Title II. But of course, the courts are going to be the ones to decide the extent of the FCC’s jurisdiction.

One thing is clear, if these lawsuits succeed the FCC is basically out of options and net neutrality will probably be dead.

The final net neutrality rules are somewhat simple and straightforward and make four distinct points:

  • No Blocking. The order says there can be no blocking of transmissions of lawful content, although the order allows ISPs to refuse to transmit unlawful material such as child pornography or copyright-infringing materials.
  • No throttling. ISPs are not allowed to slow down content. This means that everything delivered to customers must have the same priority.
  • No Paid Prioritization. While this is similar to the no throttling rule, it applies more to the network between content providers and the ISPs and means that companies can’t arrange deals that provide for preferential treatment. They might still need to pay for interconnection, but they can’t use that process to gain an advantage over other content.
  • Case-by-case challenges. The FCC took an approach similar to Canada’s net neutrality rules, and rather than lay out a lot of specific net neutrality rules they will look at specific cases in the future that are brought to their attention. I think this is a wise choice because our networks and technology can change faster than any rules, and this process will allow net neutrality rules to keep up with changes in technology.

Assuming the courts allow the current rules to stand, that last rule means that net neutrality is never going to be finished. The intent of the three major rules are pretty clear, but as the FCC hears future cases they will be crafting more detailed rulings on specific topics. So, while there are no detailed restrictions in this order, over time a body of rules concerning net neutrality will grow as the result of rulings on challenges. This means that it’s likely there will always be lawsuits floating around on net neutrality topics.

I also foresee one other danger for net neutrality. Modifying net neutrality over time on a case-by-case basis will make the whole process subject to the whim of future FCC commissioners. In recent years the FCC has tended to bend and sway with changes in the administration, and so we may suffer through conflicting rulings from different FCC commissioners. But I guess before we worry too much about this we’ll have to wait a while to see if the courts allow these rules to stand.