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The July 29, 2007 Issue Provided by System Dynamics Inc.
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700 MHz: Unrealistic Expectations

WCA conferences always include a large dose of United States public policy, and the recent conference in Washington (see WCA 2007: Beyond Technology) was no exception. The third day included a general session and four breakout sessions on the upcoming 700 MHz auction.

We have been watching 700 MHz from a distance for some time, and WCA was a great opportunity to better understand what's going on in Washington. Not surprisingly, the spectrum debate has been heavily politicized. After the conference, Google weighed in with an offer to bid in the auction if specific conditions are attached.

The good news is that the long-awaited 700 MHz auction will take place soon. The bad news is that the end result will almost certainly not be as beneficial for personal broadband as many had hoped.

Background on 700 MHz

On the surface, the topic appears to be setting the auction rules for the reallocation of a block of spectrum previously used for television broadcasting. Below the surface, many other issues permeate the pre-auction positioning and debate regarding who should get the spectrum and for what use:

  • Allocating spectrum for broadband services for public safety, especially during major emergencies
  • Providing additional spectrum for future 3G and 4G wireless services
  • Enabling insurgent broadband carriers to get spectrum to compete with the incumbent wireless carriers
  • Supplying spectrum so that a wireless "third pipe" to the home can compete with the incumbent wireline broadband providers
  • Providing "open access" so that consumers can connect any device to any Internet application and content

The USA "700 MHz Band" consists of the spectrum from 698-806 MHz. This band was previously assigned to UHF television channels 52-69, and is now being used as a temporary broadcast digital television (DTV) band during the phase-out of analog television. By law, the reallocated band is divided between commercial and public safety wireless services. Of the total of 108 MHz, 24 MHz is allocated for public safety, and 6 MHz for guard bands, leaving 78 MHz for commercial services. The FCC previously auctioned 18 MHz of the commercial spectrum, leaving 60 MHz for the upcoming auction.

Lower 700 MHz Bandplan --> Click for larger picture

The FCC long ago divided the 700 MHz band into two sections: the "Lower 700" and the "Upper 700". The Lower 700 MHz Bandplan (shown above) reassigns TV channels 52 through 59 in five blocks. Blocks A, B and C are each 12 MHz (paired 2 x 6 MHz); D and E are unpaired 6 MHz.

Upper 700 MHz Bandplan (original) --> Click for larger picture

The original Upper 700 MHz Bandplan (shown above) shows the reassignment of TV channels 60 through 69. It reserved 24 MHz for Public Safety (only the lower Public Safety band is shown in this FCC drawing) with two paired blocks of commercial spectrum: C is 10 MHz (2 x 5 MHz), D is 20 MHz (2 x 10 MHz). 6 MHz is distributed across four guard bands to protect the assigned Public Safety bands.

In 2002 and 2003, the FCC auctioned two blocks of Lower 700: block C (paired 2 x 6 MHz) and block D (unpaired 6 MHz). The legislation establishing the reallocation of the 700 MHz band did not set a firm date for the end of analog television. The moving target for the DTV transition limited the auction winners' use of the band since analog TV is still being broadcast on those channels in some markets, and the FCC repeatedly delayed auctioning the remainder of the band pending a firm date for "clearing" the band.

Federal legislation in 2005 set a firm date of February 17, 2009 for the end of the DTV transition period, and required the FCC to begin auctioning the remaining spectrum no later than January 28, 2008, and deposit the proceeds by June 30, 2008. The FCC is now moving quickly to plan and execute this auction. It is expected to publish the auction rules by the end of this month to give potential bidders time to plan for the auction.

The 700 MHz band is "prime territory" for broadband wireless. 700 MHz would provide much wider coverage than the 1800 to 3600 MHz more typically used for licensed wireless services--signal propagation at 700 MHz is much better and the new band allows high transmit power. Wireless carriers--both incumbents and potential insurgents--have been watching this band for more than a decade.

Two Flavors of Spectrum Allocations

Wireless spectrum can be paired or unpaired. Paired spectrum allocates two distinct and equal frequency bands, one assigned to "downlink" from the base station to mobile devices, and the other to "uplink". In contrast, unpaired spectrum provides a single band used for both downlink and uplink. A technique called frequency division duplex (FDD) is used for two-way communications in paired spectrum, and time division duplex (TDD) is used for unpaired spectrum.

Voice traffic is inherently symmetric, and very well suited to paired spectrum. Broadband services tend to be highly asymmetric (for example, web surfing has much more traffic downstream toward the user than upstream toward the Internet). So unpaired spectrum would make more efficient use of the available spectrum--broadband services in paired spectrum will waste much of the spectrum assigned to uplink. WiMAX, the leading candidate for next-generation broadband wireless services, supports both paired FDD and unpaired TDD, but most WiMAX development and deployments have used unpaired TDD.

Spectrum Arithmetic Fails the "Good for Broadband" Test

Let's first get to our bottom line. As Barry West stated clearly in his WCA talk, "For high speed data transmission to have reasonable costs, you have to go to a wider channel." And in our view that is the crux of the problem of the way the 700 MHz spectrum is being divided up. Broadband data would ideally use wide channels of unpaired spectrum. Instead, the present FCC band plan favors paired rather than unpaired spectrum and narrow rather than wide channels--it is optimized for yesterday's voice rather than tomorrow's data.

The FCC plan allocates 66 MHz of the commercial spectrum to paired and only 12 MHz to unpaired (a 5:1 paired to unpaired ratio), and further divides the unpaired 12 MHz into two 6 MHz blocks. The paired spectrum is mostly in 6 MHz pairs (one pair is 10 MHz). Only half of the total spectrum in each block can be used to carry downlink traffic--the vast majority of the traffic for most Internet applications. Today's wireless technologies will probably average no better than 3 bits per Hertz, so a 6 MHz block--paired or unpaired--might be capable of carrying 18 Mbps on the downlink. Because of the range of the 700 MHz band, this could cover hundreds of square miles and tens of thousands to millions of homes depending on population density. Simple arithmetic shows that the amount of bandwidth available to each home is best measured in kilobits per second -- that's fine for voice service, but hardly broadband by anyone's definition.

By comparison, the typical cable system today carries more than 100 6 MHz channels over a combination of fiber and coaxial cable serving about 500 homes; most of those channels are still devoted to analog television today, but that will go away quickly once analog television goes off the air in less then two years. Fiber to the home (FTTH) could carry even more bandwidth to each home. Anyone who thinks that 700 MHz is magically going to transform broadband communications hasn't done the math.

Aside from 700 MHz, there's already a lot of higher-frequency bandwidth allocated to cellular voice and wireless broadband services. The United States currently has nearly 300 MHz of licensed paired spectrum already auctioned for cellular services: 208 MHz in the existing cellular bands, plus 90 MHz in the new AWS-1 band auctioned in the summer of 2006. The US has also auctioned about 200 MHz of unpaired spectrum in the 2.3 MHz (WCS) and 2.5 MHz (BRS) bands. These higher frequencies don't cover as wide a range as 700 MHz, but there's a lot available.

We came away from the 700 MHz discussions at WCA rather dismayed by the absence of public policy leadership in the United States. A rational "top down" analysis of the spectrum requirements would conclude that broadband wireless needs unpaired spectrum, allocated in large blocks and licensed on a national basis to encourage widespread deployment. Instead we have tiny blocks of paired spectrum to be auctioned in a fragmented fashion, with the FCC rushing to start the auction and put the money in the bank.

Anyone who had hoped that the 700 MHz auction would create an opportunity for new entrants to challenge the entrenched wireless carriers, or to provide wireless competition to wireline broadband, will probably be severely disappointed. There's too little spectrum, of the wrong kind, in too small blocks, fragmented into small geographical areas. The clever application of technology and innovation may help, but the laws of physics remain. The draft rules favor the existing cellular carriers--who already own lots of unused spectrum--to buy more spectrum for their existing voice services, and then warehouse it until they need it.

Frontline, Google, the FCC and Open Access

More Safety for Citizens or Land Grab?

There is now a very vocal debate about the bidding rules and the approach for deploying wireless services for public safety. Many proposals favor reconfiguring the upper 700 MHz bandplan, especially for reallocating a portion of the public safety band for broadband wireless services.

Frontline Website shows first reponders --> Click for larger picture One of the more radical proposals, from Frontline Wireless LLC, recommends setting specific rules for the 10 MHz nationwide paired block, sharing it with the 6 MHz paired broadband public safety band with priority to public safety in an emergency. Some view the proposed approach as a clever way to fund the buildout of the public safety infrastructure, others as a cynical way to obtain 10 MHz of prime spectrum at a reduced price.

Open Access

In early July, Google asked the FCC to require the bidders for one of the paired bands to agree to several requirements, including fully open access. Subsequently, Google promised to meet the FCC's $4.6 billion reserve price if the FCC adopted four proposed auction rules covering open applications, open devices, open services, and open networks. This would be in stark contrast to today's "smart phones" which are typically locked to specific networks, applications, and content.

FCC Chairman Kevin Martin --> Click for larger pictureFCC Chairman Martin has circulated draft rules with a narrower vision for open access, in which consumers would be able to connect any device to the network and use the network for any lawful application. Martin's proposal does not require a wholesale model. And so the jockeying has gone, with each faction representing its interests. Verizon, as an incumbent, naturally is against open access and calls it "intervention in the markets".

All this positioning and debate won't go on much longer. The FCC has scheduled an open meeting on July 31, 2007 at which time they are expected to resolve many of the auction rules. At that point we should know better whether anything has changed.

All this discussion has been from a US-centric point of view, but really has much broader implications. Mobile voice services have had an enormous global impact over the past decade, and mobile broadband is likely to have a similar far-reaching effect. Assuming that countries outside the US approach the allocation of 700 MHz spectrum in a more rational and purpose-driven way--as many have with cellular and some already have with broadband--the US may well end up with its own systems which are useless in the rest of the world. That will be a shame.