Table of Contents
One of the most pressing issues on incoming FCC Chair Brendan Carr’s plate is the stalled spectrum allocation program, which has paralyzed the FCC and hamstrung the industry since early March 2023. At the heart of the impasse is a decades-old internal power-sharing agreement between the FCC and the NTIA that has likely reached a breaking point.
Why are we discussing spectrum policy? Why should the CPaaS industry care? Isn’t this just politics? I’ll answer these questions and explain why wireless spectrum policy matters to everyone. There will be broad generalizations; the goal is to provide context without drowning in an ocean of historical nuances and technical details.
One Spectrum, Two Brokers
Wireless spectrum has existed since the dawn of the cosmos. The Cosmic Microwave Background (CMB), in fact, serves as proof of the big bang theory. Because spectrum is a natural resource, it is owned by the people and licensed by the government to ensure equitable use. In the US, it is managed by the FCC for commercial and non-governmental use and by the NTIA for federal needs, including defense.
The FCC and NTIA divide the “lanes” of spectrum between themselves, but this unique power-sharing arrangement has frustrated FCC chairs for decades, including Bill Kennard, Ajit Pai, Jessica Rosenworcel—and now likely Brendan Carr.
Since 1994, the FCC has used auctions to allocate spectrum to carriers willing to pay top dollar for the best allocations. These auctions have netted the US Treasury over $266 billion, with the largest (Auction 107) generating $80 billion.
In 2022, the FCC and the NTIA signed a memorandum of understanding to improve coordination. However, tensions persist. The FCC seeks to expand commercial use to support 5G deployments, while the NTIA wants the ability to “take back” spectrum for national security purposes. The FCC argues this uncertainty hinders innovation, while the NTIA—and the United States Navy—believe it balances national defense with commercial needs. Congress has proposed solutions, but none have become law.
Current Solutions
Efforts to address the FCC/NTIA conflict have taken three forms. One proposed extending the FCC’s authority through 2026, maintaining the current framework. Others suggested more balanced agreements, such as time-based triggers to reallocate spectrum from federal to commercial use. These failed due to political deadlock and competing priorities between national security and innovation.
At first glance, this seems like a solved problem—spectrum is licensed, not owned, so the government can reclaim it when needed. Yet effective coordination between the FCC, NTIA, and other agencies like the FAA remains elusive. Without clearer policies, both innovation and security are at risk.
Sidebar: The First Spectrum Auction
The FCC’s spectrum auction is game theory at its finest. Typically, auctions of this kind involve sealed bids, with the contract awarded to the highest bidder. However, on the advice of Stanford Professor Paul Milgrom—who would later earn a Nobel Prize for this work—the FCC implemented its first spectrum auction in August 1994.
The rules were straightforward: First, the nation was divided into fifty-one zones, and a bidder could obtain one license at most per zone. Second, all bids were open, meaning every bidder (or player) knew what every other bidder was willing to pay. Third, there were successive rounds of bidding until no bidder was willing to bid higher. And fourth, a bidder could switch their bid to adjoining zones to improve coverage, for example, or respond to a rival’s bid.
Such radical transparency made decision-making challenging for bidders. When all bids are public, the focus shifts to understanding the bidder’s intentions, long-term plans, and financial ability to execute those plans. Bidders face a critical choice: compete to win or withdraw and focus on another zone. “The highest bidder in an auction of this kind often suffers,” says Peter Bernstein, “from what is known as the Winner’s Curse—overpaying out of a determination to win.”
The first significant auction netted the US Treasury over $7.7 billion (equivalent to $15 billion today). This model was so successful that it has been adopted by federal agencies around the world. It remains the foundation of FCC spectrum policy today.
Need Bandwidth? Well, Do You Have Spectrum?
Think about how bandwidth hungry our cell phones have become. The more we share videos, photos, and livestreams while talking and texting on the move, the more bandwidth they need. Without available spectrum, these data-sucking applications (messaging included) simply wouldn’t function. Put another way, your laptop may still have an ethernet port, but your phone never did. It’s your primary personal connected device, and it has to work wirelessly wherever you go.
Gone are the days when voice and SMS used separate channels. Today everything relies on data connections. With the advent of the RCS revolution, SMS will be relegated to a dialup-like fallback. In this future, with higher quality of service (QoS) expectations, even minor bandwidth downgrades could cause significant disruptions to the customer experience. We already live in a world where a website loading in more than one second is considered slow. Soon our messages not delivered instantly will be equally unacceptable.
Bandwidth challenges aren’t new. When the iPhone launched, data caps became a major complaint. Steve Jobs defended AT&T, highlighting the importance of spectrum. AT&T attempted to solve the issue by using a new bandwidth that could penetrate walls—but the supposed “extra capacity” was depleted in just three days.
Messaging Is Data
Messaging and voice account for less than 3% of total bandwidth usage, yet they are the most visible proxies for a carrier’s QoS. A lack of bandwidth not only impacts consumers’ quality of access but also disrupts businesses that rely on these connections. Imagine a future where RCS is the messaging standard and SMS becomes the fallback due to insufficient bandwidth. This is why every CPaaS player must care about bandwidth availability—it’s as much an infrastructure and policy issue as it is a messaging challenge. Addressing this now is critical to meeting future demands and ensuring uninterrupted communication.
Carr’s Position on Spectrum Conflict
Brendan Carr has been a vocal advocate for renewing the FCC’s spectrum allocation mandate. He has called for both urgent and long-term legislative solutions, stating, “Kicking the can down the road is no longer an option . . . That is not an acceptable outcome to me.”
Carr acknowledges the competing priorities between national defense and commercial innovation; however, he argues that the White House must lead the effort to establish a centralized spectrum coordination process and push the necessary reforms through Congress.
Finally
Brendan Carr has a reputation for being dynamic, affable, and an expert in telecom policy. He understands infrastructure. At the Wireless History Foundation dinner, Carr demonstrated his easy rapport with industry leaders when he stopped to catch up with former FCC Chair Ajit Pai at our table.
Like his former boss, Carr also enjoys climbing radio towers to showcase the hard work of building ground-up infrastructure. He famously scaled a 2,000-foot guyed tower—tall enough to require ground-anchored cables to prevent it from swaying. If politics is about powerful imagery, the climb was a strong statement about the criticality of wireless infrastructure to American innovation. But spectrum auction authority is as much about policy as it is about politics.A former Wiley Rein attorney who clerked for an appeals court judge and cut his teeth as an FCC staffer working on spectrum policy, chair-designate Carr also understands the intricacies of policymaking. With the executive and legislative branches under the same party, he has the opportunity to remove the spectrum logjam. Resolving this issue will pave the way for global wireless technology leadership.