April 26, 2013
The Gavel Comes Down: Auctions are Bad for Wireless Backhaul
Unless you want to return to payphones, cellular technology requires cooperatively licensed microwave backhaul to function properly. Photo credit: UggBoy / Foter.com / CC BY
Competitive licensing of fixed microwave backhaul bandwidth is a bad idea. And it should not go any further. The reasons why are laid bare in a new article in IEEE Spectrum by former electrical engineer and current telecom law firm partner Mitchell Lazarus. In general, he argues against federal spectrum auctions for microwave frequencies, and in particular for fixed microwave links. Undoubtedly, readers are familiar with the large cash bounties governments around the world have netted from competitive bidding on cellular bandwidth—first 3G and now 4G. An inference can be drawn from Lazarus’ article that some governments (i.e., the United States, the United Kingdom) had in mind a similar, if perhaps smaller, revenue enhancement through competitive auctions of microwave channels.
The problem lies in the fallacious thinking that operating fixed point-to-point wireless backhaul bandwidth is comparable to that of mobile spectrum. Whereas mobile spectrum license holders can expect to mostly—if not fully—use the frequencies for which they have paid top dollar, the same has not historically been true of license holders of microwave backhaul bandwidth. In most cases, mobile license holders have a virtual monopoly for their frequencies on a national, or at least regional, basis. Their base stations send and receive cellular phone signals omnidirectionally. They expect throughput from any and all places. So they have paid a premium to make sure no competitors are on their wavelengths causing interference.
On the other hand, U.S. holders of microwave backhaul licenses have specific destinations in mind for the operation of their point-to-point wireless networks. They only need to communicate between proverbial Points A and B. And, historically, they have only sought licenses to operate in their particular bandwidth on a particular route. They had no need to occupy all of their licensed frequency everywhere. That would be a waste. They just have to make sure they have a clear signal for the transmission paths they plan to use. To do that, before licensing, they would collaborate with other microwave users in the vicinity and a frequency-coordination firm to establish an interference-free path plan. Any conceivable network issues would usually be resolved at this stage prior to seeking a license from the Federal Communications Commission. Essentially, the FCC is just a glorified scorekeeper for fixed microwave services, passively maintaining its transmitter location license database.
But starting in 1998, with dollar signs in their eyes, governmental spectrum auctioneers started to sell off microwave frequencies in block licenses. The need for fixed microwave wireless services then was growing and has only grown fiercer with each additional iPhone and iPad that has been activated. However, access device throughput demand on one side of a base station does not necessarily fully translate all the way to the backhaul. Lazarus points out the example of now defunct FiberTower and its failure to make block microwave licenses work economically. After buying national block microwave backhaul licenses at 24 and 39 GHz, Lazarus notes, the firm resold the frequencies to Sprint and a county 911 emergency network operator. But those were the only customers. Lacking a robust enough utilization of its licensed backhaul frequencies, FiberTower had several hundred of its licenses revoked by the FCC and was forced into bankruptcy November 2012.
Subsequent auctions have attracted far fewer bidders and generated much less income for the Treasury Department. Much bandwidth has lain fallow as a result. And infrastructure buildout has stagnated.
Regulators should return the microwave backhaul licensing process to that of letting wireless transmission engineers cooperate informally among themselves, with the help of frequency-coordination firms, to arrive at fixed point-to-point wireless plans in the public interest. These are then submitted only for maintenance by the FCC or other regulators for traditionally nominal license fees—currently $470 per transmitter site for 10 years in the U.S., per Lazarus.
Forget the quixotic quest for chimerical hard currency. The commonweal demands it. You should demand it of the regulators—you can still give input regarding this scheme in some jurisdictions where it is under consideration. Clearly, the most efficient use of spectrum is to make it openly available to all because it means that every scrap of commercially useful spectrum is picked clean. We welcome your comments pro or con.