The FCC Rethinks Citizens Broadband at the Eleventh Hour

The FCC is having second thoughts about the auctioned "middle layer" of the planned Citizens Broadband Radio Service at 3550-3700 MHz.

You may remember how this is all supposed to work, with three categories of users. The "Incumbent Access" (IA) users, already in place in the band, will have interference protection from all the others. Least protected are the General Access (GA) users, who will contend in real time with other GA users for whatever GA spectrum is available. In between are the Priority Access (PA) users, who will bid at auction for the privilege of on-demand access (except in IA protection zones).

A "Spectrum Access System" (SAS) will assign frequencies to each user on the fly, implementing the various priorities. The SAS is still under development.

In the meantime, the FCC is taking another look at the PA auctions.

From the start, the wireless phone companies wanted PA licenses to be auctioned like their 3G and 4G spectrum: big license areas with long license terms, and a "renewal expectancy" that assures renewal if the licensee provides a certain level of service.

The rules, finalized in 2015 by the FCC, took a different tack. Users will bid for channels in each of more than 74,000 census tracts, combining these if needed to operate over larger areas. Licenses will have three-year terms with no renewal expectancy, although they can re-bid for their expiring licenses. The aim, said the FCC, is to promote innovative, low power uses. The FCC may also have had in mind that the large-area, long-term blocks the wireless phone companies wanted would be so expensive that only the wireless phone companies could afford them.

CTIA, the wireless phone company association, filed a petition for reconsideration that asked for longer license terms and a renewal expectancy. The FCC turned it down.

Less than a year later, one of the wireless phone companies and CTIA filed new Petitions for Rulemaking that largely restated their original request: big license areas, longer license terms, and a renewal expectancy. The FCC soon followed up with a Notice of Proposed Rulemaking (NPRM) that asks whether to now give the wireless phone companies what they wanted all along.

For the FCC to have issued this NPRM is strikingly unusual. In substance, the rulemaking requests are really just further petitions for reconsideration, long overdue. The FCC accepts reconsideration petitions only for thirty days after a rule is published. It strictly enforces the deadline. After that, the FCC ordinarily considers changing a recently adopted rule only to accommodate a change in circumstances, such as a technological development or a shift in users' needs. The policy promotes regulatory stability. Industry participants can plan intelligently and make investments, knowing the rules will not change early in the game.

The NPRM here is a rare exception to that policy. It does not point to any changed circumstances. To be sure, it does make good arguments in favor of the wireless companies' proposals - primarily, that they will promote investment. But these are the same arguments the FCC considered and rejected in the 2015 rules, and again in the reconsideration decision. Nothing has changed.

Well, no. One thing did change. The country had an election. It voted for an administration whose regulatory philosophy differs sharply from that of the last administration. That is all it takes for Congress or the White House to change policy, but by law, an agency must provide adequate justification for any new policy. Still, so far as we can tell from the NPRM, the only change that prompts the proposed shift in these rules is the handoff to new FCC leadership.

The wireless companies argue that a rule change now, before the first auction is announced, would not strand anyone's investment. And the rules they propose have worked well in other bands.

Is this a case where regulatory stability is just the kind of "foolish consistency" that Emerson called a "hobgoblin of little minds, adored by little statesmen"? Or do we really need a stable regulatory environment that persists across changing administrations, even if that environment may have good alternatives? And the answers to these important questions go far beyond the issues in the Citizens Broadband Radio Service.