Cable companies 35 years ago and brought to you as a Public Service by your local cable or satellite provider. Host and from time to time on the communicators we like to talk to some of the Telecommunications Associations based here in washington, discover what their Public Policy concerns are. Joining us this week is jot carpenter who is the Vice President of Governmental Affairs for ctia, the wireless association. Mr. Carpenter, what is ctia . Guest ctia is, actually, at this point an orphan acronym. Ctia is the trade association that represents the Wireless Industry. Once upon a time, it was the Cellular Telecommunications industry association, then it became the Cellular Telecommunications and internet association. And then as the industry changed, we said instead of trying to change the name, wed just become the wireless association. Were proud to represent the wireless ecosystem in its entirety from the carriers, manufacturers, hand seth vendors, the integrators and the app developers. Host so what are some of the companies you represent directly . Guest everybody from at t, verizon, tmobile on the large carrier end down to bluegrass cellular and independent Companies Like that. Network equipment Companies Like erickson, alcatellucent, handset vendors like apple and samsung and companies that stand behind them and provide things like insurance services, Network Integration services and so on. Host well, given that wide swath of the Telecommunications World that you represent, sometimes their interests arent the same, are they . Guest theyre not. Sometimes my best lobbying is getting permission to leave the office. [laughter] we spend a lot of time trying to work with our members to identify where there are issues of common interest, and thats where we go to work. Its primarily around spectrum policy, tax policy, regulatory policy, where they tend to have common interests among members and where the members diverge, we sit on the sidelines and watch. Host well, joining our conversation to talk about some of those issues is a managing editor at bloomberg bna, Paul Barbagallo. Hi, jot. Guest morning. Guest so one of the issues ctia has been involved with for many years is, as you noted, spectrum policy. Right now the fcc is preparing for two major spectrum auctions, is the aws3 auction later this year and the broadcast incentive auction in 2015. Given the recent data consumption curves, americans insatiable appetite for mobile broadband, will these two auctions taken together satisfy demand by carriers for more spectrum . Guest they will help. If you go back to when the fcc released the National Broadband plan in 2010, they called for 300 megahertz of mobile spectrum over five years and 500 megahertz of spectrum over ten years. These two auctions taken together should represent a very significant step toward those goals, a very nice down payment, if you will, but probably dont get us all the way to where we need to be. The auction thatll happen this fall, the aws3 auction, will bring 65 megahertz of spectrum to market, and the incentive auction a first of its kind reverse auction will bring additional spectrum next year, but we dont know yet how much. If we think sort of optimistically, something in the 84 megahertz range. You take those two auctions together plus the recentlyconcluded h block auction, and youre halfway to that 300 megahertz goal for licensed mobile service. So its a very significant step, but its probably not the end of the work that needs to be dope. And in 2010 ctia estimated that the mobile carriers would need about 800 megahertz of spectrum before 2020 just to keep up. Guest right. Is that number still accurate . Because as i read the recent studies from cisco and others, the, you know, demand curves are just ever increasing. So is 800 still a number that is accurate . Guest we think its still a good goal. Working, again, from the broadband plan, if you take that 150ish number from aws3, the h block, you need to figure out what comes next, that 2018, 2020 tranche, and the work to identify that spectrum needs to start right now. You referenced the sis owe pro cisco projections. They are staggering. Cisco projects that between now and 2018 the demand for mobile wireless bandwidth will increase eightfold. If you thought traffic in washington was going to increase eightfold between now and five years from now, youd say we need some new roads. Well, we face that same problem, we need more spectrum. The auctions will help. Additional Infrastructure Investment will help. New technology will help. But we probably also ought to be working at figuring out what that next tranche is after the dtv or the incentive auction. Host what do you think could be that next step . Guest well, i think its going to be a challenge in the sense that theres no prairie out there, right . Theres no virgin swath that the fcc or the ntia can say, hey, go park in this band over there. So well have to look at a combination of repurposing commercial spectrum and potentially repurposing federal spectrum as well. There are a huge number of federal users that are on old systems that are not perhaps as efficient as they could be. Moving those federal users to new, more Efficient Technology may render a spectrum dividend that could be then repurposed for commercial use, sold at auction so it not only generates an opportunity for the commercial sector to gain access to spectrum that it badly needs, but it generates an opportunity for the government to recognize revenue. Similarly in the commercial sector, looking at potentially smoothing the secondary market approval process so that you can take spectrum thats in the hands of somebody whos perhaps not using it or using it as fully as it could be used and move it more easily, more quickly into the hands of those that would value it and want to put it to a higher, better use. Host such as whom . Guest well, potentially our members. I think our guys are very interested in having an effective secondary market, so if they can identify another license holder that has spectrum that would fit with their portfolio, they have an easy path to get that into their hands. We dont mind that theres a Regulatory Approval process, but it ought to be speedy, predictable and as short as possible. In an event last week, deputy federal chief Technology Officer tom powers said that the pcast report from july 2012 and thats president s council of advisers in science and technology their report has led to a, quote, fundamental rethinking of governments approach to spectrum. Do you agree, and what are your views on how the fcc and the ntia have responded to this report . One of the big recommendations was to open up the airwaves to more sharing. Guest i i think theres going to be continued conversation around sharing, but what i dont want to see happen is conversation about sharing crowd out a conversation about clearing. I think, ultimately, the answer is to have both, to clear spectrum whenever thats possible. We think clearing is the optimal outcome, the Gold Standard for ctias members is cleared, internationallyharmonized spectrum. And where that can be achieved, we think that ought to be the goal. We have an auction mechanism that over 20 years has proven to work very, very well. We ought to continue to go down that path wherever and whenever possible. But to the extent that its not possible to clear spectrum, we can look at sharing opportunities. There are a multitude of kinds of sharing. Some are much easier to accomplish than others. Geographic sharing is something that we do today, and we can look at it in the future as a way to work with federal users who may have a band that they occupy, but they only use in a limited part of the u. S. Geography, let the commercial sector use it where the governments not. Temporal sharing where maybe the military uses a band, but they train in it a month or two a year, and they dont use it the rest of the time. Well, could we use it when theyre not using it . I think those are sharing examples that can work for the industry. I think whats more challenging and where mr. Power and others in the administration have spent a little more time, perhaps, than we wish they had is on cognitive sharing, the idea that you would frequency hop on a realtime basis. It sounds neat, it will open up potentially lots of opportunities. The problem is theres no commerciallyscaleable Available Technology today that does that. And so as our guys go out and think about how to provide World Class Service to their consumers, the idea that they wont be in control fully of their network or their Spectrum Holdings is troubling. We dont think thats something around which you can build a business today. Could you in five years . Ten years . Fifteen years . Perhaps. But until we get there, lets focus on the things that we know work like clearing and the other sharing examples that i shared earlier. Do you have any hope for the fccs efforts to open up the 3. 5 gigahertz band for more innovative uses . Guest we do. While our focus has been on clearing and particularly clearing below three gigahertz which is the sweet spot for mobility, 3. 5 offers an interesting opportunity for small cell technology, and therell be sort of tiered access in that space. A number of our members have been very active in the proceeding, and so were very interested to see the commission sort of drive that home. Theres been good participation among our members from both the carriers and the vendor community, and we think that theres real promise there. That may be a good sharing example, if you will. Host at the national, so of broadcasters meeting in april, mr. Carpenter, gordon smith, the head of the nab, said that ours is the only industry the a spectrum auction can actually harm, and its an open question whether the fcc has balanced the aims of freeing up more spectrum and protecting the broadcasters. Guest well, it is an open question in the sense that the commission hasnt completed its rulemaking, and so were all waiting just like mr. Smiths members are waiting, our members are waiting to see what kind of rules the commissions going to put forward. I dont think theres a deliberate attempt on the part of the commission to injure the broadcast industry. The statute is structured in a way where the broadcasters participation is voluntary. No broadcaster has to participate. For those who want to participate, there are going to probably be several ways in which they can do that. They can choose to surrender their license and have it sold at auction and exit the business or move to an internetbased delivery mechanism for their content. They can channel share. And we just finished a Pilot Project in los angeles where we worked with two broadcasters, one commercial and one public, to demonstrate the validity of the channelsharing concept. Were really pleased with the results of that trial. We think it will potentially demonstrate to a large swath of the broadcast community the viability of the channel of sharing option so that channelsharing option so that they can realize some benefit from the auction even if they choose not to exit the market. And i think theres real potential there. So between the fact that the rules arent written, and its not clear yet which broadcasters are going to participate, i understand senator smiths concerns, but i think he ought to withhold final judgment until he sees what the rules are and he hears from his own members and others in the broadcast industry what their reaction to the order might be. Host Paul Barbagallo. And as you noted, jot, ctia undertook a study recently in which two broadcast stations shared the same six megahertz channel. And the results were quite positive. For broadcasters. And quite clearly, it showed that broadcasters can share and, certainly, hd. What do you see as the resistance now potentially for broadcasters sharing . Is it based on the results of the study . Is it financial in nature only . Or is, or are there some other issues that guest so, paul, its a good question, but its ard to generalize in the sense hard to generalize in the sense that every market is a little different, each broadcast portfolio might look a little difference. But in general, you know, youll have some broadcasters who just say, look, the incentive auction is not for us. We view our longterm business as being in the broadcast business. Its where weve been, its where we are, its where well be. And our expectation always has been therell be a subset that just choose not to participate under any suckers. Any circumstances. But we do think for some independent stations, potentially some public stations that are chronically challenged on the funding side the ability to channel share and realize potentially significant infusion of capital into the business and not suffer any degradation of their signal, no impact on their consumers, their viewers is president ially very attractive. And so that channelsharing pilot that we held in los angeles demonstrated to us you can support multiple hd signals, up to three on one six megahertz swath, you can do two and four standard definition signals, you can do one hd and up to seven standard definition signals. So depending on what kindp h broadcasters are participating, what kind of programming theyre offering to end users, it gives them a lot of options. Given that the incentive auction is by statute the broadcast incentive auction onetime deal, i think theres a lot of reason for them to think about participating depending on what kind of rule the commission structures. They may be able to put their license in it doesnt hit the right financial there are hold, they dont have to sell, they dont have to share. But it gives them options to think about moving forward. Host jot carpenter, with the potential of new Net Neutrality rules coming on line via the fcc or standards, i should say i guess, should those apply to the Wireless Industry as well . Guest peter, i dont think so. The old rules recognized something that we thought was very important which is that wireless is different. And so the rules that were struck down by the court had always contemplated that while wireless would be subject to the same sort of transparency obligations that other broadband providers were, the unique nature of the wireless business, the fact that its not only competitive, but it has a fundamentally different architecture, shared architecture, more limited bandwidth necessitated different treatment of wireless. So we werent subject to sort of nondiscrimination obligations that applied on the wire line side. Now that the commission is in a position after the d. C. Circuits decision to go back and take a fresh look at those things, we hope theyll continue to recognize that wireless is, in fact, different. Not only is it different in terms of the bandwidth it can offer and the architecture of the network, its different in the sense that its robustly competitive. And so carriers do not have a marketbased incentive to do anything other than deliver an open, positive internet experience to their end users, because if you dont like what youre getting from carrier a, its not very hard to move to carrier b or carrier c or carrier d. And that much more than a rule is whats going to drive consumers to have a positive experience. Carriers have no incentive to discriminate or throttle traffic in a way that harms consumers or internet content providers. And, jot, as you know, the fcc has not only been busy setting up these spectrum auctions for the future, but theyve also been working to open up the airwaves for unlicensed wifi use. And ten years ago many people thought that wifi would be, you know, a great competitor to the licensed wireless carriers, that it would pose this great competitive threat. But carriers have been increasingly using wifi to offload their traffic. Given that this is a very clear position of the fcc that unlicensed and licensed should be a twopronged approach to spectrum policy, how do carriers view wifi . Guest i think they view it as a critical component in the spectrum portfolio that they use to provide service. I think, paul, you hit it on the head. Ten years ago it was a different view. Ten years ago it was very much the view that there was a licensed crowd, and there was an unlicensed crowd, and never should the two meet or mix. Theres been a real evolution in thinking over the last decade. Carriers see wifi as an integral part of their strategy to manage their licensed services. They want to get spectrum back into service as quickly as possible, so the faster you can offload traffic including by using wifi the better off youre going to be. And so we look at that recent order from the fcc, and we absolutely applaud what the commission did. Its a great example of unlicensed in the right place. The five gigahertz band is not a place thats hospitable to licensed mobile service, provocation characteristics of the band are really not ideal for the kinds of things we do on the licensed side. But theyre ideal for unlicensed. So as a complement to licensed service ors its really very helpful to have additional unlicensed spectrum available, sort of a classic washington thing, right . You want to get two people fighting, and you sit back and watch. So there are a lot of people who want to stir the pot by saying its licensed or unlicensed. Well, no, its actually both. And our concern is its simply each in its proper place where we can clear and provide opportunities below three gigahertz for licensed service. We think that makes the most sense. Above three we probably think you ought to be looking at unlicensed. And over time as Technology Evolves that demarcation point may slide a little, but in general what we want is to have access to both. And we go back to the broadband plan, we talked about 300 for mobile service, presumably licensed with, i think, the delta between the 300 and the 500 really being in the unlicensed space. Were very happy to have both. And with the new wifi standard coming online and this tranche of airwaves holding enormous potential for wifi applications, 5. 1 gigahertz band, is there a fear that wifi can pose a competitive threat to licensed