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71–057 2012

PROMOTING BROADBAND, JOBS, AND ECONOMIC 

GROWTH THROUGH COMMERCIAL SPECTRUM 

AUCTIONS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMUNICATIONS AND 

TECHNOLOGY 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

JUNE 1, 2011 

Serial No. 112–53 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

JOE BARTON, Texas 

Chairman Emeritus 

CLIFF STEARNS, Florida 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

Vice Chairman 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

BRIAN P. BILBRAY, California 

CHARLES F. BASS, New Hampshire 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

EDWARD J. MARKEY, Massachusetts 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

(II)

(III) 

SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY

GREG WALDEN, Oregon 

Chairman 

LEE TERRY, 

Vice Chairman 

CLIFF STEARNS, Florida 

JOHN SHIMKUS, Illinois 

MARY BONO MACK, California 

MIKE ROGERS, Michigan 

BRIAN P. BILBRAY, California 

CHARLES F. BASS, New Hampshire 

MARSHA BLACKBURN, Tennessee 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

BRETT GUTHRIE, Kentucky 

ADAM KINZINGER, Illinois 

JOE BARTON, Texas 

FRED UPTON, Michigan, ex officio 

ANNA G. ESHOO, California 

EDWARD J. MARKEY, Massachusetts 

MICHAEL F. DOYLE, Pennsylvania 

DORIS O. MATSUI, California 

JOHN BARROW, Georgia 

DONNA M. CHRISTENSEN, Virgin Islands 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., NEW JERSEY

BOBBY L. RUSH, Illinois 

DIANA DEGETTE, Colorado 

JOHN D. DINGELL, Michigan 

HENRY A. WAXMAN, California, ex officio 

(V) 

C O N T E N T S 

Page 

Hon. Greg Walden, a Representative in Congress from the State of Oregon, 

opening statement ................................................................................................ 1 

Prepared statement .......................................................................................... 3 

Hon. Anna G. Eshoo, a Representative in Congress from the State of California, opening statement .................................................................................... 4 

Hon. Lee Terry, a Representative in Congress from the State of Nebraska, 

opening statement ................................................................................................ 5 

Hon. Marsha Blackburn, a Representative in Congress from the State of 

Tennessee, opening statement ............................................................................ 6 

Prepared statement .......................................................................................... 6 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 7 

Hon. Edolphus Towns, a Representative in Congress from the State of New 

York, prepared statement .................................................................................... 100 

WITNESSES

Todd Schurz, Chief Executive Officer, President, and Director, Schurz Communications, Inc. .................................................................................................. 8 

Prepared statement .......................................................................................... 11 

Answers to submitted questions ...................................................................... 119 

Burt Ellis, President, Titan Broadcast Management ........................................... 32 

Prepared statement .......................................................................................... 34 

Answers to submitted questions ...................................................................... 128 

Christopher Guttman-Mccabe, Vice President, Regulatory Affairs, CTIA—The 

Wireless Association ............................................................................................ 38 

Prepared statement .......................................................................................... 40 

Answers to submitted questions ...................................................................... 133 

Michelle P. Connolly, Associate Professor of the Practice, Department of Economics, Duke University ..................................................................................... 44 

Prepared statement .......................................................................................... 46 

Answers to submitted questions ...................................................................... 137 

Dean Brenner, Vice President, Government Affairs, Qualcomm Incorporated .. 52 

Prepared statement .......................................................................................... 55 

Answers to submitted questions ...................................................................... 151 

Harold Feld, Legal Director, Public Knowledge .................................................... 61 

Prepared statement .......................................................................................... 63 

Answers to submitted questions ...................................................................... 155 

SUBMITTED MATERIAL

Articles by Radio Ink, May 27, 2011, submitted by Mr. Kinzinger ..................... 102 

Letter of April 6. 2011, from 112 economists to President Obama, submitted 

by Mr. Walden ...................................................................................................... 105 

Letter of May 31. 2011, from 10 groups representing minority interests, 

submitted by Mr. Walden .................................................................................... 111 

Letter of May 31. 2011, from 33 IT equipment innovators, submitted by 

Mr. Walden ........................................................................................................... 114 

(1) 

PROMOTING BROADBAND, JOBS, AND ECONOMIC GROWTH THROUGH COMMERCIAL 

SPECTRUM AUCTIONS 

WEDNESDAY, JUNE 1, 2011 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 12:03 p.m., in room 

2123 of the Rayburn House Office Building, Hon. Greg Walden 

(chairman of the subcommittee) presiding. 

Members present: Representatives Walden, Terry, Stearns, 

Bilbray, Blackburn, Scalise, Latta, Guthrie, Kinzinger, Eshoo, Matsui, Barrow, Rush, DeGette, Dingell, and Waxman (ex officio). 

Staff present: Caroline Basile, Staff Assistant; Ray Baum, Senior 

Policy Advisor/Director of Coalitions; Nicholas Degani, FCC 

Detailee; Neil Fried, Chief Counsel, Communications and Technology; Debbee Keller, Press Secretary; Carly McWilliams, Legislative Clerk; Andrew Powaleny, Press Assistant; David Redl, Counsel, Telecom; Charlotte Savercool, Executive Assistant; Alex Yergin, 

Legislative Clerk; Roger Sherman, Democratic Chief Counsel; 

Shawn Chang, Democratic Counsel; Jeff Cohen, Democratic FCC 

Detailee; Sarah Fisher, Democratic Policy Analyst; Phil Barnett, 

Democratic Staff Director; and Alex Reynolds, Democratic Legal Intern. 

OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON 

Mr. WALDEN. I would like to call the Subcommittee on Communications and Technology to order, and begin our hearing on ‘‘Promoting Broadband, Jobs, and Economic Growth Through Commercial Spectrum Auctions,’’ and welcome all of our witnesses who are 

here today. 

Spectrum legislation presents a tremendous opportunity to promote wireless broadband to spur economic growth, to create jobs, 

and generate significant revenue for the American taxpayer. This 

hearing will focus not only on how we might advance our goals by 

auctioning currently available spectrum, but also how we might 

create a marketplace where licenses can voluntarily return spectrum for broadband in exchange for a share of auction proceedings. 

The communications industry in America is in a time of massive 

change. Americans’ voracious appetite for mobility has made wireless service an overwhelmingly popular way for Americans to stay 

2 

connected. In fact, nearly one in four Americans has cut the cord, 

as it were, relying solely on wireless for their voice communications 

needs. Similarly, wireless is the fastest growing area of broadband 

connectivity. The convenience of mobility that moved us towards 

wireless voice is having the same effect in the broadband arena. 

Last week we had our hearing on public safety spectrum, and I 

continue to have concerns that reallocating the D block rather than 

auctioning it may be a mistake. The Advanced Wireless Services 3 

spectrum is another block already available for auction, although 

many believe it would best be paired with spectrum currently occupied by federal users. All of this spectrum needs to be part of the 

discussion. 

Another avenue for consideration is voluntary incentive auctions, 

something that both the FCC’s National Broadband Plan and the 

President’s budget identify. Current license holders, such as some 

television broadcasters and satellite operators, might be willing to 

relinquish spectrum and use the auction proceeds to fund operations of new innovative ventures. For example, the DTV transition 

has allowed broadcasters to transmit in high-definition and add additional over-the-air channels. Additional funding could help pay 

for expanded mobile, Internet, and even broadband offerings. We 

can, and should, act to preserve and promote this important service. 

I support incentive auctions. But any incentive auction in which 

a licensee forfeits spectrum rights must be voluntary. This is not 

only good spectrum policy, it is good economic policy. Incentive auctions help match willing buyers and willing sellers. If a broadcast 

station values its spectrum more than a potential wireless 

broadband provider is willing to pay, the station will not be forced 

off the air. However, as Mr. Ellis will attest in his testimony today, 

there are broadcasters interested in participating in incentive auctions. 

This opportunity for broadcasters presents opportunities for our 

Nation’s economy, as well. Broadcasters who agree to surrender 

their licenses through an incentive auction, or those who choose to 

only return a portion of the license and channel share with another 

broadcaster, could provide the U.S. government with the opportunity to re-auction their licenses to wireless providers who desperately need additional spectrum to meet consumer demand. 

Those auctions will generate revenue for the Treasury for debt reduction. Moreover, they will help create badly needed jobs. Build 

out of wireless networks is an infrastructure project that requires 

the labor of Americans across a broad cross-section of geography, 

education, and skill levels. And of course increased wireless 

broadband will boost productivity and create new and innovative 

lines of business. 

The wireless industry’s track record for innovation is second-tonone. But wireless is not the sole venue for innovation. As we move 

forward with additional changes to the broadcast television service, 

we should work with broadcasters to identify regulations that are 

hindering additional innovation within their service. Over-the-air 

broadcasting remains a vital and important part of the communications infrastructure of America-fostering its innovation is in everyone’s interest. 

3 

I remain confident that a properly crafted incentive auction can 

benefit broadcasters, whether they participate or not, as well as 

wireless providers, the U.S. Treasury, and the American economy. 

So today’s hearing is designed to help explore how the auctions can 

be structured to ensure a positive outcome for everyone involved. 

I thank the witnesses for their participation today. I look forward 

to your testimony and your responses to the questions that our 

subcommittee has. 

[The prepared statement of Mr. Walden follows:] 

PREPARED STATEMENT OF HON. GREG WALDEN

Spectrum legislation presents a tremendous opportunity to promote wireless 

broadband, spur economic growth, create jobs, and generate significant revenue for 

the American taxpayer. This hearing will focus not only on how we might advance 

our goals by auctioning currently available spectrum, but how we might also create 

a marketplace where licensees can voluntarily return spectrum for broadband in exchange for a share of the auction proceeds. 

The communications industry in America is in a time of massive change. Americans’ voracious appetite for mobility has made wireless service an overwhelmingly 

popular way for Americans to stay connected. In fact, nearly one-in-four Americans 

has ‘‘cut the cord,’’ relying solely on wireless for their voice communications needs. 

Similarly, wireless is the fastest growing area of broadband connectivity. The convenience of mobility that moved us toward wireless voice is having the same effect 

in the broadband arena. 

Last week we had our hearing on public safety spectrum, and I continue to have 

concerns that reallocating the D block rather than auctioning it may be a mistake. 

The Advanced Wireless Services 3 spectrum is another block already available for 

auction, although many believe it would best be paired with spectrum currently occupied by federal users. All of this spectrum needs to be part of the discussion. 

Another avenue for consideration is voluntary incentive auctions- something that 

both the FCC’s National Broadband Plan and the President’s budget identify. Current license holders, such as some television broadcasters and satellite operators, 

might be willing to relinquish spectrum and use the auction proceeds to fund operations or new innovative ventures. For example, the DTV transition has allowed 

broadcasters to transmit in high-definition and add additional over-the-air channels. 

Additional funding could help pay for expanded mobile, Internet, and even 

broadband offerings. We can, and should, act to preserve and promote this important service. 

I support incentive auctions. But any incentive auction in which a licensee forfeits 

spectrum rights must be voluntary. This is not only good spectrum policy, it is good 

economic policy. Incentive auctions help match willing buyers and willing sellers. If 

a broadcast station values its spectrum more than a potential wireless broadband 

provider is willing to pay, the station will not be forced off the air. However, as Mr. 

Ellis will attest to in his testimony, there are broadcasters interested in participating in an incentive auction. 

This opportunity for broadcasters presents opportunities for our nation’s economy, 

as well. Broadcasters who agree to surrender their licenses through an incentive 

auction-or those who choose to only return a portion of the license and channel 

share with another broadcaster-will provide the U.S. government with the opportunity to re-auction their licenses to wireless providers who desperately need additional spectrum to meet consumer demand. Those auctions will generate revenue for 

the Treasury for debt reduction. Moreover, they will help create badly needed jobs. 

Buildout of wireless networks is an infrastructure project that requires the labor of 

Americans across a broad cross-section of geography, education, and skill levels. And 

of course increased wireless broadband will boost productivity and create new and 

innovative lines of business. 

The wireless industry’s track record for innovation is second-to-none. But wireless 

is not the sole venue for innovation. As we move forward with additional changes 

to the broadcast television service, we should work with broadcasters to identify regulations that are hindering additional innovation within their service. Over-the-air 

broadcasting remains a vital and important part of the communications infrastructure of America-fostering its innovation is in everyone’s interest. 

I remain confident that a properly crafted incentive auction can benefit broadcasters-whether they participate or not-as well as wireless providers, the U.S. TreasVerDate Nov 24 2008 13:56 Jun 26, 2012 Jkt 037690 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 112\112-53 060111\112-53 CHRIS
4 

ury, and the American economy. Today’s hearing should help explore how the auctions can be structured to ensure a positive outcome for all involved. I thank the 

witnesses for their participation today and look forward to your testimony. 

Mr. WALDEN. And with that, I would yield back my—I only have 

36 seconds left. I will yield back the time and will go to Ms. Eshoo 

for an opening statement. 

OPENING STATEMENT OF HON. ANNA G. ESHOO, A 

REPRESENTATIVE FROM THE STATE OF CALIFORNIA 

Ms. ESHOO. Thank you, Mr. Chairman, and good afternoon everyone and thank you to all the witnesses that are here today. I 

am looking forward to your testimony and to the Q&A. 

Today’s hearing continues our in-depth examination on spectrum 

reform. As we evaluate ways to promote broadband, jobs, and economic growth, we should be guided by, I think, a simple principle. 

Use spectrum to its maximum efficiency, and be fiscally responsible 

in the plan that we commit to. 

Thirty years ago, most Americans relied on over-the-air broadcasting as their only means for news, information, and entertainment. Then cable and satellite established an alternative vehicle 

for delivering television into the home, giving consumers access to 

hundreds of channels. 

The world is changing once again, and today, broadband is enabling a new set of programming options like Hulu, Amazon Instant 

Video, Netflix, that can be watched at home or on the go. Voluntary 

incentive auctions are one such way to address the growing demand for wireless while providing a financial incentive for broadcasters wishing to give back spectrum. 

Legislation developed in this subcommittee, I think, should incorporate feedback from impacted stakeholders and provide the FCC 

with sufficient flexibility to carry out an auction and handle the repacking process. We should also consider the significant benefits of 

dedicating spectrum for unlicensed use. Unlicensed spectrum has 

unlocked tremendous innovation, and in the coming years will 

drive the growth of smart grid, access to patient records in hospitals, and much, much more. By one estimate, unlicensed applications could generate between $16 and $37 billion per year in economic value for the U.S. economy over the course of the next 15 

years. 

The TV white sp ces and 5 megahertz band are two areas which 

I hope today’s witnesses will address. Our panel provides a broad 

range of views, and I look forward to hearing their thoughts on 

how best to structure a voluntary incentive auction while providing 

fair compensation to broadcasters who chose to relinquish their 

spectrum or must relocate as part of the repacking process. 

And with that, I will yield the balance of my time to Representative Matsui. 

Ms. MATSUI. Thank you very much, Ranking Member Eshoo, for 

yielding to me, and I would also like to thank the witnesses for 

being with us today. Thank you very much. 

We all know there is a looming spectrum crisis and we must get 

additional spectrum into the marketplace. The FCC should have 

the flexibility to structure and conduct incentive auctions that 

5 

would truly maximize the economic and social values of the spectrum. 

I also believe that comprehensive spectrum policy moving forward should offer our innovators and entrepreneurs an opportunity 

to be creative and have a forum to develop advanced technologies 

and applications. 

To help spur greater innovation, I am working on spectrum legislation that incentivizes R&D efforts and promotes unlicensed spectrum use, not only for emerging wireless technologies and applications, but also as a way to support and further advance American 

leadership in existing unlicensed technologies. It is important that 

we continue to promote policies that lead to greater innovation and 

the ever-evolving telecommunications and technology sectors. 

And with that, I yield my time to—I yield back the balance of 

my time. 

Mr. WALDEN. The gentlelady yields back the balance of the time, 

and now I would recognize the gentleman from Nebraska, the vice 

chair of the subcommittee, Mr. Terry. 

OPENING STATEMENT OF HON. LEE TERRY, A 

REPRESENTATIVE FROM THE STATE OF NEBRASKA 

Mr. TERRY. Thank you, Mr. Chairman. It is our responsibility to 

ensure that the process by which we allocate the lifeblood of wireless information delivery, spectrum, promotes the needs of 

broadband carriers while simultaneously recognizing the value of 

this spectrum to the existing license holders, not only for existing 

critical uses, but for the future innovations. This process must be 

fair, economically sound, and provide certainty and predictability to 

existing holders of spectrum licenses. By doing so, economic growth 

will lead to job creation, innovation can flourish, and critical broadcast resources will remain secure and available. 

This hearing is a great opportunity for us to learn more about 

how to best structure this process. Any spectrum auction must be— 

must account for several important factors. First, we must ensure 

that we are not coercing existing license holders into giving up 

spectrum they wish to continue to utilize. If and when existing 

holders do choose to participate in either an auction or reallocation, 

not only must we compensate them fairly and be consistent with 

the spectrum’s value to the existing holder; any repacking of spectrum should be done in such a way that the consumer’s access to 

critical information and resources is not adversely affected by interference or signal degradation. 

With these goals in mind, I look forward to working with my colleagues in crafting solutions. Our witnesses today here bring much 

expertise from across stakeholder community, and I look forward to 

listening and learning from then here today. 

I yield back. 

Mr. WALDEN. Mr. Stearns, do you have comments? 

Mr. STEARNS. Thank you, Mr. Chairman. I will just take a little 

over a minute. 

Last October, the FCC estimated that a spectrum deficit approaching 300 megahertz is likely by the year 2014, not very far 

away. Simply the benefit of releasing additional spectrum is unlikely to provide $100 billion to the Treasury, not a very small figVerDate Nov 24 2008 13:56 Jun 26, 2012 Jkt 037690 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 112\112-53 060111\112-53 CHRIS
6 

ure, in fact. So I think we should, Mr. Chairman, act quickly to 

draft legislation that provides the FCC with authority to conduct 

commercial auctions so that by 2014 we will not face this crisis of 

shortage. 

We know that the convergence of the smartphones and tablets 

and TVs and broadband is continuing onward, and we see that day 

to day. They continue to guzzle up the broadband. So the demand 

for these devices is increasing, and we need to get more spectrum. 

I would like to emphasize that the incentive auctions is the way 

to go, so it is truly voluntary, and when broadcasters are repacked, 

they should be able to maintain the same service areas that they 

originally held, and be compensated for switching channels. 

So I look forward to our testimony, and I think everybody on the 

panel should provide some recommendation of what type of flexibility the FCC should have. Should Congress specify to the FCC on 

how to do the auction, or should the FCC be unfettered? I think 

that is the key question we have today. 

I thank you, Mr. Chairman, for the opportunity to have my opening statement. 

Mr. WALDEN. Mr. Latta or Mr. Guthrie, do you have any comments? 

Mr. LATTA. Thank you very much, Mr. Chairman, I appreciate it. 

Just real briefly, I thank you very much for having these hearings today. I recently introduced legislation for a voluntary incentive auction, and the revenue sharing, and we are looking at the 

jobs and the technology out there that we can be moving forward. 

Also, additional revenue then to the Treasury to reduce the deficit. 

I applaud you for the hearings today. Thank you. 

Mr. WALDEN. Thank you. Mrs. Blackburn, do you have an opening statement you wanted to share? 

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A 

REPRESENTATIVE FROM THE STATE OF TENNESSEE 

Mrs. BLACKBURN. Thank you, Mr. Chairman. I do, and I will submit my full statement for the record. 

I just wanted to say, I think that when it comes to spectrum that 

we have to make some bold, tough decisions. I think one thing that 

we should all be focusing on a bit is the FCC has demonstrated 

that what they call a spectrum deficit approaching 300 megahertz 

is likely by 2014. We need to be looking at that and be serious in 

how we go about approaching this and resolving that need for spectrum. 

I was visiting with someone last week and they were talking 

about how we will soon have 1 trillion devices attached to the 

broadband, and why it is so important for us as we look at the use 

of the spectrum to think in terms of how we accommodate whether 

it is through the line or wireless, all of the use that is coming toward us. 

So I thank you for the hearing, and I yield back. 

[The prepared statement of Mrs. Blackburn follows:] 

PREPARED STATEMENT OF HON. MARSHA BLACKBURN

Thank you, Mr. Chairman. 

Policymakers must make bold, tough decisions on spectrum. 

7 

Congress should allow for auctions and repackaging so commercial broadband can 

facilitate capital investment, job growth, and deficit reduction. 

Instead of underutilizing spectrum to serve a diminishing number of Americans, 

Congress should put spectrum to its most efficient use. 

Consumer demand for mobile broadband has exploded. Everyone agrees that we 

are facing a spectrum crisis. 

The FCC has demonstrated that ‘‘a spectrum deficit approaching 300 megahertz 

is likely by 2014, and that the benefit of releasing additional spectrum is likely to 

exceed $100 billion.’’ 

Inaction is too costly. Let’s focus our spectrum policy on what Americans are asking for—more opportunities, jobs, and deficit reduction. 

I look forward to today’s testimony. 

Mr. WALDEN. Thank you. All time is expired for opening statements—no, we go to Mr. Waxman. I almost did that again, I am 

sorry. Mr. Waxman? 

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. WAXMAN. Thank you, Mr. Chairman. 

Since April 12, the Communications and Technology subcommittee has held three hearings on the spectrum policy. Last 

week, we focused on public safety spectrum and needs for public 

safety spectrum, while this week we will examine how we might 

make additional spectrum available for commercial broadband 

through incentive auctions. I am pleased that Chairman Walden 

and Ranking Member Eshoo are working together to focus the subcommittee’s attention on spectrum matters. 

Smart spectrum policy can help improve public safety, promote 

broadband, create jobs, and reduce the deficit. I know members on 

both sides of the aisle recognize what a rare opportunity we have 

to accomplish several important policy goals by enacting legislation 

in this area. 

Incentive auctions are not the only element of smart spectrum 

policy that we need to address. We also should consider how to utilize federal spectrum resources better, how to encourage spectrum 

sharing, how to maximize spectrum efficiency across all spectrum 

bands, and how to balance our mix of licensed and unlicensed spectrum. But authorizing the FCC to conduct incentive auctions, that 

should be the foundation of our spectrum policy efforts. This is a 

concept that has bipartisan, bicameral support. At the Energy and 

Commerce Committee, Representatives Barrow and Latta have 

both introduced measures that would grant the FCC the ability to 

conduct incentive auctions. It is also backed by economic experts. 

In April, more than 100 prominent economists with varying political perspectives wrote to President Obama to endorse incentive 

auctions as a good way to repurpose spectrum while minimizing 

transaction costs. Notably, these economists believe that Congress 

should give the FCC great flexibility to design appropriate auction 

rules to maximize the benefits of incentive auctions. They note that 

in 1993, Congress took the then-controversial step of authorizing 

spectrum auctions and allowing the FCC flexibility to design how 

spectrum auctions should work. The result was a huge success. 

Since Congress authorized spectrum auctions, the increase in 

consumer welfare has been dramatic, and the economic benefits to 

8 

our Nation substantial. The system implemented by the FCC has 

been replicated around the world. 

As we move forward towards authorizing incentive auctions, and 

I hope we will do so soon, we need to be wary about limiting the 

FCC’s flexibility to design an efficient auction. We should take full 

advantage of the FCC’s world-class expertise on auction design, 

and give the Agency the ability to work with auction experts to set 

up the best possible incentive auction. We should not micromanage 

the Agency in this area. 

I recognize some are concerned about whether we can ensure 

that incentive auctions are truly voluntary. I remain confident that 

we can find a way to avoid unfairly disadvantaging broadcasters in 

this process, and I appreciate that broadcasters’ stated willingness 

to work with us to figure this out. Broadcasters provide vital services that should not be interrupted or degraded. Our job should not 

be to focus on the specific legislative language that would provide— 

our job should be to focus on the specific legislative language that 

would provide assurances to broadcasters that they are not being 

forced to sell spectrum in the voluntary auction. 

We have an excellent panel today. I look forward to hearing testimony from them. Thank you, Mr. Chairman, for recognizing me for 

this opening statement. 

Mr. WALDEN. Thank you, Mr. Waxman. We look forward to working with you and others on both sides of the aisle on this issue. 

Now I think all members have had a chance for opening statements, so we will now go to start with Mr. Todd Schurz, who is 

the Chief Executive Officer, President, and Director of Schurz Communications, Incorporated. We look forward to your testimony, and 

thank you for coming today. 

You may want to push that microphone button, and just for everybody on the panel, these microphones, for those in broadcasting, 

you actually have to work very closely. If they float away we don’t 

hear as well, and then the little button should light up, I think. 

Then the little boxes in front of you should light up and tell you 

as your time is running out, you will get a yellow and then a red, 

and then I can’t tell you what happens after that. It is not pleasant. 

STATEMENTS OF TODD SCHURZ, CHIEF EXECUTIVE OFFICER, 

PRESIDENT, AND DIRECTOR, SCHURZ COMMUNICATIONS, 

INC.; BURT ELLIS, PRESIDENT, TITAN BROADCAST MANAGEMENT; CHRISTOPHER GUTTMAN-MCCABE, VICE PRESIDENT, 

REGULATORY AFFAIRS, CTIA—THE WIRELESS ASSOCIATION; 

MICHELLE P. CONNOLLY, ASSOCIATE PROFESSOR OF THE 

PRACTICE, DEPARTMENT OF ECONOMICS, DUKE UNIVERSITY; DEAN BRENNER, VICE PRESIDENT, GOVERNMENT AFFAIRS, QUALCOMM INCORPORATED; AND HAROLD FELD, 

LEGAL DIRECTOR, PUBLIC KNOWLEDGE 

STATEMENT OF TODD SCHURZ 

Mr. SCHURZ. Thank you very much. Good afternoon, Chairman 

Walden, Ranking Member Eshoo, and members of the subcommittee. My name is Todd Schurz, and I am the President and 

CEO of Schurz Communications, based in Mishawaka, Indiana. I 

9 

am testifying today on behalf of the National Association of Broadcasters. 

Schurz Communications began broadcasting in 1922, which 

makes me a fourth generation broadcaster. Today, we have 10 televisions stations and my company has a presence in 14 States, including Michigan, California, Florida, Georgia, and Pennsylvania. 

The beauty of television broadcasting is its one-to-many architecture. For high demand programming, like the Super Bowl, there is 

no limit to how many viewers can tune in. The same programming 

delivered on a broadband system would overload the network. The 

transition to digital television has thrown open the doors of opportunity and innovation. Whereas in analog, I can only provide a single stream of programming; today with digital, I can provide that 

same programming in high definition, and at the same time, offer 

additional multicast channels and mobile DTV. 

Hundreds of broadcasters are taking advantage of new multicast 

opportunities, providing viewers with niche foreign language programming, religious programming, emergency local weather information, and even high school sports. The Bounce TV network recently launched by majority owners Martin Luther King, III and 

Andrew Young is the country’s first broadcast network aimed at African American audiences. It is set to debut this fall on many 

multicast channels. 

Going digital has also delivered on the promise of mobile television. With mobile DTV, viewers can tune in to live local news, 

emergency information, weather, sporting events, or entertainment 

programs from the convenience of their car, at the beach, wherever 

they may be. Today, over 70 stations are offering mobile DTV service, and hundreds more are moving forward with the nationwide 

rollout of mobile DTV. 

Since the digital television transition, our company has added 

local news in high definition, multilingual newscasts, and expanded 

weather programming in our Tornado Alley stations. All of this is 

available for free. 

The future offers additional possibility, such as data casting and 

3D TV. Broadcasters want to make sure that viewers continue to 

be the beneficiaries of broadcast innovation, and innovation is necessary for us to stay competitive with an ever-growing number of 

new competitors. 

Now remember, it was just 2 years ago that television broadcasters completed the digital television transition. As part of the 

DTV transition, television broadcasters returned 108 megahertz of 

spectrum, nearly 30 percent of our spectrum. This freed up spectrum for both public safety and new commercial wireless services. 

But as part of that give-back, the FCC repacked broadcasters 

under fewer channels, which is complex and disruptive for our 

viewers. 

Now, just a couple of years later, the FCC has returned to broadcasters, asking us to do it again and asking for another 40 percent 

of our spectrum. We are committed to being a part of the 

broadband solution, but there is only so much that the laws of 

physics will allow us to do without crippling our ability to serve our 

local communities, now and in the future. 

10 

Broadcasters have never objected to truly voluntary incentive 

auctions, but we do feel strongly that protections need to be built 

into the spectrum legislation to ensure the future competitiveness 

and viability of local television broadcasting. 

Here are four important safeguards. 

One, no broadcaster should be forced to relocate to an inferior 

spectrum band. Two, any repacking by the FCC is to protect viewers by maintaining the current reach of a broadcaster’s signal. 

Three, no station should be subjected to increased interference, and 

four, broadcasters should be held harmless from the cost of repacking. 

Importantly in the drive to advance broadband and relief network congestion, you cannot and should not focus only on the spectrum supply. There also needs to be a comprehensive examination 

of how we can capture more efficiencies from wireless carriers in 

the consumer electronics industry, including cell splitting and wifi technology, improved receivers, and—to voice over Internet protocol. We all know that the pace of technology is unrelenting, and 

tomorrow’s innovations will help solve many of the anticipated 

wireless capacity issues. 

In conclusion, we appreciate the committee’s thoughtful and deliberate approach to the spectrum issue. Remember, once we reallocate the spectrum, once broadcasters who want to continue to provide service are repacked in a harmful way, there is no going back. 

We get only one shot at this. We need to do it right to ensure that 

viewers do not lose access to the news, entertainment, and vital 

emergency programming that broadcasters provide. 

I am as excited about broadcasting’s future as we are proud of 

our heritage. Our company has no plans to return our spectrum. 

For that reason, I ask that any spectrum legislation crafted to protect our ability to continue to serve the viewers of our local communities. 

Thank you, and I would welcome any questions. 

[The prepared statement of Mr. Schurz follows:] 

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Mr. WALDEN. Mr. Schurz, thank you for your testimony, and for 

your family’s long history of serving your communities. 

Now I would like to go to Mr. Burt Ellis, who is President of 

Titan Broadcast Management. Mr. Ellis, we welcome you here 

today and look forward to your testimony as well. 

STATEMENT OF BURT ELLIS 

Mr. ELLIS. Good afternoon, Congressmen and Congresswomen. 

My name is Burt Ellis, and I am the President of Titan Broadcasting. We currently own and/or operate 13 television stations. 

The FCC would like us broadcasters to repack down to channels 

14 to 30 to free up an additional 120 megahertz of spectrum. There 

are several major problems with this proposal. 

First, there are just too many broadcast signals currently on the 

air and primarily, the top 10 to 20 markets, to repack into these 

17 remaining UHF channels. Consequently, some small number of 

television stations, 75 by my count, must be purchased and shut 

down, presumably through a voluntary incentive-based auction. 

Now if Dr. Connolly and the FCC can design a reserve auction system that is to their advantage, so be it, so long as the broadcaster’s 

decision to sell or repack is still totally voluntary. Voluntary means 

the FCC cannot set the selling price for these stations via cap, via 

percentages, or any other such valuation restriction, only via market forces. 

As the chairman said, my company is under certain circumstances willing to sell the spectrum for some of our stations. 

We are open to this consideration. However, the FCC still needs to 

repack all the remaining stations, such that the stations are not 

impaired financially or via signal. Mr. Schurz has already addressed this, so I will not rehash that, but I stand by those concerns as well. 

But finally, in my view, the FCC needs to use this whole process 

to provide a win/win for the broadcast industry and for Americans 

in general. Fortunately, the FCC and Congress does have the 

power to offer up two very powerful incentives to the industry that 

also advance the national broadband plan. 

Option number one, the FCC and Congress can either mandate 

or use their bully pulpit to convince the wireless carriers and the 

handset tablet manufacturers to incorporate mobile tuners into all 

new handsets and tablets. This would help the broadcast industry 

fast launch mobile services, and not just mobile services for personal entertainment, but also mobile services that could be the 

basis for a national emergency alert communications network. We 

have incorporated plans for just such a national emergency network into the mobile 500 rollout plans that were announced only 

yesterday. 

Now I have been told over and over and over again that this 

tuner option is DOA, but I just don’t believe it. It would seem very 

simple to me to make this a condition of the wireless companies 

participating in the spectrum auctions, as well as in the AT&T/T– 

Mobile merger approval. I am sure Qualcomm, to my left, would 

gladly make these new chips. 

Option two, the FCC can finance and facilitate the transition 

from our current 8 BSB broadcast modulation technology to OFDM. 

33 

A new OFDM broadcast standard would come with three huge advantages for the FCC, the broadcast industry, and the consumer. 

One, the FCC—OFDM would the FCC to much more densely repack broadcast stations, allowing more channels in each market to 

be used. Two, the broadcast industry—it will allow one broadcast 

channel to broadcast almost twice the current capability of 19.4 

megabits. This would enable broadcasters to support a national 

LTE-based emergency alert network. Mobile broadcasting offers the 

best and fastest means for the U.S. to create such a national emergency network. 

Third, to the consumer, OFDM allows broadcast signals on any 

device to be picked up by one chip. Consequently, this chip can be 

manufactured in large numbers very cheaply and can be imbedded 

in handsets, tablets, computers, and televisions. This will allow a 

seamless mobile viewing methodology. A person can watch a newscast, a ballgame, anything on their handset, then their tablet, then 

their television, in a seamless manner. They will not miss a frame 

of viewing. This is the holy grail of future mobile. This is what the 

consumer wants. 

Broadcasters have a great deal to offer, but much of the current 

thinking seems to want to relegate us to the technology trash bin. 

We want to be part of the emerging digital future. The four—soon 

to be three, maybe—major wireless carriers already control 90 percent of the available mobile spectrum. You want to sell more of our 

broadcast spectrum to these wireless guys and give us broadcasters 

the opportunity to fully compete with them on the mobile front. If 

they want to go down in numbers, let us get in the game with 

them. Do not let them close us out of the mobile—from the mobile 

consumer. 

All of us in the media business want to be in the mobile video 

business in order to survive and thrive in the future. The more 

competition is better for the consumer. The FCC needs to compensate broadcast stations to repack. By their own estimate, it will 

cost about $1 million per station, about $1 billion. For about $2 billion, $2 to $3 billion, the stations cannot only be repacked, but can 

also switch over to this new OFDM technology that can support a 

broadcast overlay for LTE, as I said. This is the time to do both, 

repack and upgrade our technology, and also mandate the mobile 

DTV chips. Then we can have a totally mobile broadband enabled 

population. 

With such a system in place, we broadcasters can and will create 

an immediately accessible mobile video network for instantaneous 

communications to all of our citizens in the event of a local, regional, or national emergency. Mobile broadcasting was the technology that worked in Japan during their crisis. The one-to-one architecture of the cellular system failed, but mobile broadcasting 

worked. 

There is a win-win agenda here. I support such. Thank you. 

[The prepared statement of Mr. Ellis follows:] 

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Mr. WALDEN. Mr. Ellis, thank you for your suggestions, your testimony, and your service. 

Now we will go to Mr. Christopher Guttman-McCabe, who is Vice 

President for Regulatory Affairs of CTIA—The Wireless Association. We appreciate your testimony today, and look forward to it. 

Thank you for being here. 

STATEMENT OF CHRISTOPHER GUTTMAN-MCCABE 

Mr. GUTTMAN-MCCABE. Sure, thank you. Good afternoon, Chairman Walden, Ranking Member Eshoo, and members of the subcommittee. On behalf of CTIA, thank you for the chance to speak 

to you today about promoting broadband, jobs, and economic 

growth through commercial spectrum auctions. CTIA believes these 

objectives are achievable, and mutually reinforcing. For that reason, we urge you to act at the earliest possible date to enact legislation that will authorize incentive auctions and allow additional license spectrum to be made available for commercial wireless use. 

Today, we are the world’s clear leader in wireless broadband. Although the United States is home to less than 5 percent of the 

world’s population and just shy of 6 percent of global wireless subscribers, the U.S. claims more than 20 percent of global high speed 

wireless broadband subscribers. This leadership helps to create a 

competitive advantage to the United States. 

But to maintain this advantage, we need to ensure that there is 

a sufficient pipeline of spectrum available to meet the exploding demand for wireless broadband services. We urge you to address this 

with dispatch. A delay puts at risk not only our world leadership 

in this critical industry, but also lost or delayed investment, innovation, and productivity that are critical to our Nation’s economy. 

The growth and the demand for mobile broadband and the corresponding need for additional spectrum has been well-documented 

both by the government and respective private sector parties. Even 

conservative estimates project U.S. mobile data traffic to grow by 

a factor of more than 20 between the end of last year and 2015. 

This demand is being driven by consumer’s migration from feature 

phone to smartphone and tablets that while employing advances in 

spectral and computing efficiency, allow consumers to demand 

more and thus strain wireless networks to an unprecedented manner. The evolution of machine to machine communications will only 

exacerbate this challenge. Efficiency gains and infrastructure investment will help, but neither will be sufficient to answer the 

challenge we face in delivering the critical infrastructure for the 

economy of the 21st century. 

The good news is that there are ways to help meet the need for 

additional spectrum. By authorizing incentive auctions and repacking the bands allocated for television broadcasting, by directing 

NTIA to facilitate access to bands currently occupied, but often underutilized by government, and by enacting improvements to the 

spectrum relocation process, Congress can provide the wireless industry with a path to help America stay ahead of its Asian and European competitors in this critical industry. 

Taking these steps will produce manifest benefits to our Nation. 

The last two auctions produced more than $32 billion for the 

United States Treasury. While I cannot project what future aucVerDate Nov 24 2008 13:56 Jun 26, 2012 Jkt 037690 PO 00000 Frm 00044 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 112\112-53 060111\112-53 CHRIS
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tions might produce, the bands discussed in my testimony have significant value and would likely be highly desired at auction. Auction revenues, however, are just one of the benefits that flow from 

facilitating the movement of spectrum to its highest and best use. 

Once spectrum is in the hands of those who value it, significant investment, entrepreneurial activity, and productivity will result. 

Since 2006, CTIA’s carrier members have been directly responsible for nearly $111 billion in network investment. Because a dollar invested in wireless deployment is estimated to result in as 

much as $7 to $10 in expanded GDP, this past investment has contributed to keeping the U.S. economy afloat during a difficult economic period. 

Going forward, wireless investment and this multiplier will be 

critical to helping create sustainable economic growth in the United 

States. Perhaps more importantly, unlocking additional spectrum 

can help to create new employment opportunities, from the forging 

of steel for new towers and the construction of additional cell sites 

to the development of new network equipment, and the writing of 

our next must-have application. Bringing spectrum to market will 

create thousands of American jobs. Some economists estimate that 

the job growth related to the investment in next generation wireless technologies could be as high as 200,000 new positions, and 

that estimate does not account for positions in adjacent fields, as 

wireless becomes a key input into areas such as healthcare, energy, 

education, transportation, and logistics. 

Enabling the next generation of service and ensuring our world 

leadership in wireless should be a national imperative. Done properly, we can make needed spectrum available for ubiquitous mobile 

broadband, treat relocated broadcasters and government users fairly, produce significant revenue for the U.S. Treasury, and help 

grow the U.S. economy. 

CTIA looks forward to working with you to achieve these objectives, and I look forward to your questions. Thank you. 

[The prepared statement of Mr. Guttman-McCabe follows:] 

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Mr. WALDEN. Thank you, Mr. Guttman-McCabe. We appreciate 

your testimony. 

We are now going to turn to Dr. Michelle P. Connolly, who is an 

Associate Professor of the Practice, Department of Economics, at 

Duke University. We look forward to your comments, Dr. Connolly, 

and thank you for being here today. 

STATEMENT OF MICHELLE P. CONNOLLY 

Ms. CONNOLLY. Thank you Chairman Walden and Ranking Member Eshoo, and other members of the subcommittee. My name is 

Michelle Connolly. I am an associate professor of The Practice at 

the Department of Economics at Duke University. I also served as 

the chief economist at the FCC from 2006 to 2007, and then again 

in 2008 to 2009. I would like to note that I was serving under a 

Republican Administration, so my support for this proposal has 

nothing to do with my political affiliation. It is simply because as 

an economist, I believe that this as a great gain economically and 

socially for our economy, and it is in that capacity that I am testifying today. 

From this perspective, when everyone is looking at policy, I want 

to make sure that the gains of choosing this new policy outweigh 

any costs to our economy and to our society, and specifically, we 

are concerned about the cost to the broadcasters, and the costs to 

the people who rely on over-the-air broadcasts. 

So when I am looking at this, I wanted to bring a little bit of 

information to the discussion. Firstly, we know that over-the-air 

viewing is done by less than—10 percent or less of the current TVviewing population, so we are talking about a small and declining 

population. Secondly, the—two of the three options that would be 

provided to broadcasters do not involve cessation of over-the-air 

broadcasting, so this would minimize any impact on television 

viewers. And thirdly, with an incentive auction, broadcasters will 

only participate if the benefits to them outweigh the costs. And to 

that extent, I think this will help minimize any costs to implementing this plan. And by costs, I mean welfare costs. 

In terms of the benefits, there has been a lot of macroeconomic 

evidence that suggests that information can lead to technology has 

a great benefit to our macroeconomy. In the late 1990s, several 

studies confirmed that between 56 to 67 percent of labor productivity growth could be attributed to information communications 

technology. And then from 2000 to 2006, that estimate was about 

38 percent. 

One thing to note is that when firm level studies have been done, 

the gains in terms of productivity are not equally spread, so gains 

in terms of productivity are specific to certain communities who are 

able to take advantage to certain industries and certain communities who are able to take advantage of broadband. That is on the 

production side. 

On the consumption side, of course, this is nothing—all the gains 

are to consumers equally and there is no region specificity to it. 

I also want to talk a little bit about incentive auctions, simply 

because this is an area that is very complicated. I still don’t understand it entirely, and I thought it might be useful to give a little 

bit of background on what is really being proposed here. 

45 

So the idea is that there would first be what economists would 

call a reverse auction for broadcasters, and in this, the FCC would 

specify certain actions that could be taken, they can discuss before, 

and the broadcasters would offer bids for being willing to undertake these different auctions, should the bid be accepted. So if the 

bid is accepted, they would be required to then undertake that action. If the bid is not accepted, they would not be required to take 

one of those three actions. And I think that this is useful for the 

broadcasters, because this is what makes it a voluntary action. 

I was asked by the committee to try and estimate a possible 

range of bids that broadcasters might make. I am smart enough to 

know that my estimate will be incorrect, but I would estimate 

based on the fact that they have these options that the range might 

be in the range of about $0.05 per megahertz POP at the low end, 

to maybe .08 megahertz POP on the high end. This is assuming 

that there is sufficient competition in the auction, and this is, I 

think, a key point. So there will be markets where there may not 

be—there might be a broadcaster in a channel that is in the key 

area that we need to have continuous spectrum. The FCC must be 

allowed to move people involuntarily out of that spectrum to another location, because otherwise, you will get holdouts. There 

won’t be enough competition. Someone knows that they are placed 

strategically, and they can bid five times their valuation in an attempt to extract that extra money because then they know if they 

don’t get their bid, they won’t be able to be moved, and then the 

whole auction will serve no purpose. 

So the reason why the FCC is requesting that after the bidding 

process occurs that they be allowed to relocate people who are still 

located in that key region, and compensate them economically for 

the cost of the move so that they aren’t burdened by that is because without that, you will not get a true auction. You will not 

get a true competition. There—even with that, there may be other 

things that might interfere with the bids, but if we don’t have that 

bidding we will get true valuation bids. There are no two ways 

about that, so I think that is a crucial thing to mention. 

The last thing is the forward option. Once this occurs, we can estimate a supply curve that we would need to generate the amount 

of spectrum, conceded spectrum that the FCC would want. At that 

point, there is the forward option. I assume that the range of values would be at least on par with the 700 megahertz spectrum auction that we had recently, so the range might be anywhere from 

$0.03 per megahertz POP to up to $3.86 per megahertz POP. That 

is a huge range which shows you that markets matter. But one 

keeping is the more rules that are imposed on the usage for the 

winning bids, the lower the valuation will be, and any rules that 

increase uncertainty over the usage will lower the value. 

So overall, I think the revenue resources to the government can 

be large, but dwarfing any revenue to the government I think is 

the economic value to our economy, and I think that will outweigh 

any of the gains that the government will have in revenue, but 

those are also greater costs. 

[The prepared statement of Ms. Connolly follows:] 

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Mr. WALDEN. Thank you, Dr. Connolly. We appreciate your comments. 

Mr. Brenner, we are going to go to you next, Vice President of 

Government Affairs for Qualcomm, Incorporated. Thank you for 

being here, and proceed with your testimony, sir. 

STATEMENT OF DEAN BRENNER 

Mr. BRENNER. Good afternoon, Chairman Walden—— 

Mr. WALDEN. OK, now you got to push the button and bring the 

mic closer. There you go. 

Mr. BRENNER. Good afternoon, Chairman Walden, Ranking Member Eshoo, and members of the subcommittee. It is a special honor 

for me to testify here this morning. Thirty years ago to the day, 

I began working as an intern for this very subcommittee. What a 

great experience that was for a college student. 

I am here today, along with my colleagues, Alice Turnquist and 

John Cozin on behalf of Qualcomm, a company that didn’t exist 30 

years ago. Five years after my internship here, Qualcomm was 

formed. Today, Qualcomm is the world’s leading manufacturer for 

cell phones, smartphones, and other wireless devices. 

The policies pursued by this subcommittee, in particular, the 

move to spectrum auctions in the early 1990s, the reallocation of 

spectrum for the first PCS auctions, and the DTV transition have 

helped fuel the enormous growth in the American wireless industry. At Qualcomm, we spend over $2 billion each year in research 

and development to invent the most spectrally efficient technologies, to achieve the greatest capacity and best performance 

from every sliver of spectrum, licensed and unlicensed. 

We know that spectrum is precious and expensive, based on our 

own experience with spectrum auctions. Although our main business is developing wireless technologies, licensing them to other 

companies, and selling chips based on those technologies, we purchased licensed spectrum at auctions held in the United States, the 

United Kingdom, and India to facilitate the deployment of our new 

technologies. 

Qualcomm’s technologies are used in the 3G and 4G devices that 

Americans just can’t get enough of. We all want our mobile devices 

to work all the time and wherever we happen to be, and that requires the use of licensed spectrum. Let me explain why I say that. 

We make chips that support wi-fi, Bluetooth, and other unlicensed technologies to provide wireless connectivity in local areas, 

such as inside homes or on college or corporate campuses. In those 

settings, these chips enable wireless traffic to be offloaded from the 

licensed spectrum that wireless carriers use for their 3G and 4G 

networks. 

This is an important growing business for vendors like 

Qualcomm, and we are excited about it. Just this week we announced the new line of wi-fi chips using spectrum in the 2.4 

gigahertz, 5 gigahertz, and 60 gigahertz bands. But to provide 

ubiquitous wide area wireless coverage all over the Nation on a 

cost effective and interference-free basis, licensed spectrum is required. 

And that brings me to the topic of today’s hearing, because there 

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ploding demand for mobile broadband. The FCC’s October 2010 report found that by 2014, total U.S. mobile data traffic is likely to 

be 35 times the 2009 level. We are working on many new wireless 

technologies, but we don’t have any technology on the drawing 

board that can increase capacity 35 times. More licensed spectrum 

is needed. The FCC doesn’t have nearly enough new spectrum in 

its inventory to meet this gap. To promote broadband jobs and economic growth, we have got to close this gap. 

A number of steps must be taken and are being taken in parallel 

to help solve the spectrum crunch. These steps include things that 

the private sector is doing, such as developing and deploying new 

technologies, and things the government is working on, such as as 

reallocating underutilized U.S. Government spectrum. But these 

steps won’t be nearly sufficient to solve the spectrum crunch. To do 

that, it is crucial that Congress enact legislation to allow the FCC 

to conduct voluntary incentive auctions to reallocate more licensed 

spectrum for mobile broadband. 

The legislation that we support would allow the FCC to conduct 

a two-sided auction, composed of sellers who voluntarily decide to 

sell their spectrum because they think it would be worth more to 

a mobile broadband provider, and buyers who want to use the spectrum for mobile broadband. No one would be forced to participate 

as a seller or a buyer in a voluntary incentive auction, but under 

current law, there is no way for the FCC to get the spectrum out 

of the hands of the sellers who are willing to sell and into the 

hands of the mobile broadband buyers. 

Current law permits a TV station owner to sell its spectrum only 

to someone else who would use the spectrum to run a TV station. 

A TV station owner cannot sell its spectrum to a buyer so that the 

buyer can use it to provide mobile broadband. The legislation 

would allow the FCC to run a two-sided auction with all the station 

owners who want to sell on one side, and all the mobile broadband 

providers and new entrants who want to buy on the other. 

Qualcomm, both on our own and as a member of a group of companies who sell wireless equipment, including Alcatel Lucent, 

Apple, Cisco, Ericsson, Intel, Nokia, and Research in Motion, urges 

Congress to pass legislation to give the FCC authority to conduct 

voluntary incentive auctions to free up much-needed additional licensed spectrum for mobile broadband. Now, our group includes 

companies that compete against one another in the marketplace all 

the time. We make equipment using both licensed and unlicensed 

spectrum, but we all agree on three points. First, the spectrum 

crunch is real. Second, more licensed spectrum is necessary to solve 

the spectrum crunch. And third, authorizing the FCC to conduct 

voluntary incentive auctions is essential to solving the spectrum 

crunch. 

Passage of legislation authorizing voluntary incentive auctions 

would be a win-win-win-win. The first win would be for the sellers 

in a voluntary incentive auction, those who decide that their spectrum is more valuable for mobile broadband than in its current allocation will win because the legislation would allow them to sell. 

The second win is for the buyers. The buyers will win because they 

are going to get the additional licensed spectrum from mobile 

broadband so they can keep pace with consumer demand. They 

54 

need the certainty and speed of an FCC-conducted incentive auction in which the auction itself efficiently and quickly aggregates 

spectrum. The third win would be for the U.S. Treasury. Voluntary 

incentive auctions will raise significant revenues without raising 

anyone’s taxes or cutting any programs. Finally, the fourth win is 

the most important win of all. The real winners will be the American public. Mobile broadband has the potential to improve so 

many facets of American life. Giving the FCC authority to conduct 

voluntary incentive auctions is essential. Thank you. 

[The prepared statement of Mr. Brenner follows:] 

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Mr. WALDEN. Thank you, Mr. Brenner, both for your testimony 

and for your internship, although I was not here to enjoy that. 

We are going to go now to Mr. Feld. Harold Feld is the Legal Director for Public Knowledge. We appreciate your input in this matter. We look forward to your testimony. 

STATEMENT OF HAROLD FELD 

Mr. FELD. Thank you, Mr. Chairman—— 

Mr. WALDEN. Before you start, I am just going—they are going 

to ring bells here for a vote, a 15-minute vote. We are going to have 

you finish your testimony, and then when you are done we will 

plan to resume at about 1:25. So that will give everybody a little 

break here before we go into Q&A. 

Mr. Feld, please continue. 

Mr. FELD. My thanks to you, Mr. Chairman, Ms. Ranking Member, the subcommittee. I am the Legal Director of Public Knowledge. I am pleased to speak to you this morning on behalf of the 

Public Interest Spectrum Coalition about buttons and buttonholes. 

Buttons are tangible objects. They are things that people easily 

understand and think about. Buttonholes are designated empty 

space. Most people don’t think about the importance of buttonholes 

when they are buttoning their clothes, but without those empty 

spaces, you are not going to keep your coat closed. You need both. 

That is what I am here to talk about in terms of spectrum policy, 

which is the empty spaces in the spectrum, the white spaces, particularly in the broadcast spectrum. 

The policy objectives that we have all talked about here today of 

encouraging innovation, increasing economic activity which helps to 

reduce the deficit, as well as improving all of our lives, all of these 

things are critically important and we can achieve them, but we 

must not look at this just through the lens of a Congressional 

Budget Office score. In fact, I will state further that if we focus 

only on raising revenue or more precisely, what we think sitting 

here now, years out from an auction, a very complicated structure 

that we think will raise revenue. The spectrum prices will become 

a spectrum Armageddon, resulting in higher costs, stifled innovation, and reduced global competitiveness. The worst thing that 

could happen is what if they gave an incentive auction and nobody 

came because we structured it poorly? 

White spaces are unique in spectrum policy. They have been enthusiastically supported by Republican FCC chairmen and commissioners, and today’s Democratic chairmen and commissioners. 

White spaces exist without preconceived uses, and so are open to 

any entrepreneur technologist with a good idea. They are the most 

deregulatory approach to spectrum policy we have. As FCC Commissioner McDowell said, ‘‘The Commission’s actions of proving TV 

white spaces help to bring more broadband to consumers as quickly 

as innovation, rather than as quickly as government will allow.’’ 

The results have been spectacular for the U.S. economy. The 

short history of unlicensed spectrum has allowed the development 

of what were considered junk bands to yield tens of billions of dollars in economic gains and activities. The unlicensed spectrum now 

being considered in the prime broadcast bands promises to surpass 

that previous success. This is truly unlicensed 4G. 

62 

Allowing for additional allocation of national unlicensed spectrum under the 1 gigahertz band with its superior characteristics 

of penetration in long distance allow for the creation of gigabit capacity wireless LANs in offices, schools, high density residential 

areas, mesh networks capable of many miles of coverage at a fraction of the cost of current wi-fi technology. Such gains don’t show 

up in a CBO score, but they result in increased revenues for the 

Federal Government through investment, job creation, and economic productivity on an annual basis. 

Rural areas will be able to be served with high capacity wireless 

broadband service. Low barriers to entry for unlicensed allow these 

rural providers to serve their communities without winning licenses at auction, which they cannot afford to do. Indeed, areas 

that cannot be profitably served with licensed spectrum because of 

the cost of winning licenses are now being served with existing wifi without universal service subsidies, and will be better served and 

more broadly served with white spaces spectrum. 

Already we are starting to see the fruits of projects like these in 

places as diverse as Claudville, Virginia, with a population of 916 

to the much larger city of Houston. 

In order for this future to come about, for there to be a spectrum 

for smart grid coordination, machine to machine communication, 

inventory tracking and the rest, Congress has to make certain that 

the white spaces are protected by giving the FCC discretion in 

structuring and conducting auctions. The investors and companies 

that are building this technology today must believe there is a future for this here in the United States. United Kingdom is also 

looking at white spaces technology, as are China and Brazil, and 

its investors and companies do not believe there is a future here 

for this innovative new technology. They will take their investment 

and their jobs elsewhere. 

Providing the FCC flexible authority to conduct incentive auctions and allowing the Agency to pursue a broad approach to spectrum policy that is not exclusively tied to raising revenue will be 

the most effective means of promoting broadband, job creation, and 

economic growth. I just want to add that this is not an either/or. 

Rarely in policy do we have a chance to have it all. We can keep 

broadcasting as a vital service for this country. We can have significant new licenses for auction, and we can have a vibrant white 

spaces which will provide us with exciting new technologies for the 

benefit of all Americans. 

Mr. Brenner just said he doesn’t have the technology right now 

that would allow them to increase their capacity by 35 times. I 

don’t have one either, but by creating a test bed, a place where 

these technologies can develop at very low cost and be deployed 

quickly and effectively, such as the white spaces, I have a very 

good suspicion of where that technology will come from. 

Thank you, and I look forward to your questions. 

[The prepared statement of Mr. Feld follows:] 

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Mr. WALDEN. Mr. Feld, thank you very much for your comments 

as well. We appreciate the testimony of all our witnesses. 

We are in the middle of a vote now, so again, please plan to return no later than 1:25, and we will resume the hearing at that 

point for questions from the members. 

With that, we stand in recess. 

[Recess.] 

Mr. WALDEN. We will call the subcommittee back to order, and 

I think we had concluded testimony from all of the witnesses prior 

to our recess for the vote on the House floor. We anticipate another 

vote in about 45 minutes or so. 

I am going to start with the first round of questions, and I want 

to address the first questions I have to Mr. Schurz and Mr. Ellis. 

I would ask if you could elaborate on some of the efforts by 

broadcasters to bring new and innovative services to the broadcast 

spectrum. One of the purposes of this hearing was really to evaluate since DTV conversion, you know, what is happening out there 

in the marketplace? What are you able to do? I know Mr. Ellis, you 

touched on this a bit, but I would also like to explore what the hurdles are in the way of innovation in the spectrum that you have 

going forward. 

So if you could each take a minute or so just to kind of address 

what you are doing with it now, and what you think you could do 

with it. 

Mr. SCHURZ. I think what we have done with it now in almost 

all of our markets, we have multitasked channels, serving different 

audiences. We have three stations, two are right in the middle of 

Tornado Alley, one is on the edge. All of them do a 24-7 weather 

channel with regular forecasts so people who are very interested in 

the weather can always get that. 

What has also happened—the DTV transition happened 2 years 

ago. Mobile television, the standard was developed with that. Both 

Mr. Ellis and I are involved in those efforts. And so you are seeing 

that just starting now. A little over 70 stations are in mobile television. 

But I think the other thing is I don’t want to not talk about high 

definition in terms of the clarity and the quality of the picture and 

what that means for our constituents. High definition local news 

takes a lot of bandwidth, but is also a great consumer value proposition. 

Mr. WALDEN. Mr. Ellis, do you want to use a minute or so to 

comment on new technologies? 

Mr. ELLIS. The company we are putting together this time—this 

is my third broadcast group. The first couple groups I bet on the 

emergence of new programming. That was the trend I was trying 

to follow. This time, we are betting on the emergence of new technologies. The mobile technology is the most unique and different 

technology for broadcasters. That is where—you know, use the 

sports analogy, go where the puck is going. Mobile is where it is 

going. We are spending an awful lot of time on that, and the inhibitions of that business is the ability to get, you know, a signal into 

the mobile device. This is where the consumer is going we want to 

be able to access that device. 

82 

Mr. WALDEN. All right. Mr. Brenner, I want to go to you, because 

Mr. Ellis I believe mentioned OFDM and the ability to put chips 

in. Tell me what that would take and whether there would be acceptance of that in the market? 

Mr. BRENNER. Yes, I am not exactly sure what Mr. Ellis is referring to, Chairman Walden. OFDM refers to an interface that is at 

the core of long term evolution, LTE, which is the 4G technology. 

OFDM is also used in wi-fi. OFDM is a modulation technique, and 

so it can mean all kinds of different things. 

I think what Mr. Ellis was suggesting is that Qualcomm would 

incorporate some kind of mobile DTV capability into our chips. Obviously, we look very hard at the business pros and cons of adding 

a new capability to our chips. Our chips support multi-frequency 

bands, multiple technologies, and we strive to pack the most power 

into our chips at the least cost. 

Mr. WALDEN. Is that capability you have now today to put mobile 

TV in a chip? 

Mr. BRENNER. No, we have looked at it. We are—mobile DTV has 

been talked about—I looked back through my e-mail—since at least 

2007 was the first announcement about it. We have looked at it extensively. We haven’t seen a business case for it in our end. Whenever we consider putting a new technology into our chips, Chairman Walden, it is a very interactive process. We go back and forth 

with the device manufacturers, with the carriers and with application providers. We don’t just make that decision in a vacuum, and 

we—it is not mature. We just don’t see demand. 

Mr. WALDEN. All right. Mr. Ellis, do you want to comment briefly 

on that? 

Mr. ELLIS. In essence, if the carriers are not going to pay 

Qualcomm to put this thing in their chip, he is not going to make 

it. 

Mr. WALDEN. Mr. Brenner? 

Mr. BRENNER. That is a little too simple, quite frankly. So it is 

true, someone is going to have to give us a return on our investment when we put a new capability into our chips, but there is a 

web of relationships. There are folks who make devices, there are 

folks who come up with applications. We are also in a highly competitive market. If I don’t put a capability—I shouldn’t say I. When 

Qualcomm decides to pass on a capability, we consider very carefully the competition. Qualcomm is the leading chip set manufacturer, but it is hyper-competitive, so it is a little too simple to just 

say the carriers won’t pay us. We have to see a business case to 

make a rate of return. 

Mr. WALDEN. I want to go to Dr. Connolly now on a different 

issue. I am trying to get a rough range of what this spectrum is 

worth. 

You say in your testimony that similar spectrum was sold for between 3 cents and $3.86 per megahertz POP, as I understand it. 

Is this correct? 

Ms. CONNOLLY. Yes. 

Mr. WALDEN. With approximately 300 million people in the country, that means that even on the low end, each megahertz of a licensed spectrum could raise $9 million, and on the high end, each 

megahertz could raise $1 billion. Is that correct? 

83 

Ms. CONNOLLY. Yes. 

Mr. WALDEN. OK, all right. 

My time has expired. I would turn to the gentlelady, my ranking 

member, Ms. Eshoo, for 5 minutes. 

Ms. ESHOO. Thank you, Mr. Chairman, and I want to thank each 

one of the witnesses. I think you did a terrific job coming from 

where each of you is coming from, but it was really valuable, valuable testimony. 

To Mr. Feld, I loved your button and buttonhole analogy. I think 

we will remember that one for a long time. In your view, how much 

spectrum is needed to make the white spaces commercially viable 

for applications like smart grid and RFID tagging? 

Mr. FELD. Well, the most important thing is to ensure that there 

is white spaces available, particularly in the largest urban markets, because that is what is going to drive economies of scale is 

the ability for people to put this into their laptops and their wi-fi 

routers. 

In terms of an amount, the National Broadband Plan said we 

would like to have 20 megahertz of contiguous pure unlicensed 

spectrum. That would be real nice, but the beauty of unlicensed is 

it’s a technology. You don’t need that. As long as you have at least 

one or two available channels in the largest urban markets and 

sufficient—by which I mean not directly next to a broadcaster so 

you could use full power, and then sufficient in the rest of the 

country, which I think is not where the challenge is. There will be 

interest in developing and investing in this technology. 

Ms. ESHOO. Thank you. 

To Mr. Ellis, is Titan Broadcasting planning to offer mobile 

broadcasting, and what is your assessment of the potential market 

demand for this type of service? 

Mr. ELLIS. Yes, we do intend to offer mobile broadcasting in our 

assessment. You know, it depends on whether the consumer can actually see our signal on a mobile device. 

So we have to figure out whether you are going to start with the 

handset, which is controlled by the wireless carriers. Do you go to 

laptop, do you go to the N-card device, and how do you get the mobile consumer to actually see our signal? 

Ms. ESHOO. You stated in your testimony that you are testifying 

as a broadcaster that may sell of the spectrum of some of your stations under the right conditions. Can you tell us what the right 

conditions are, in your view? 

Mr. ELLIS. The right price. 

Ms. ESHOO. There you go. Everybody has their price, right? And 

to Mr. Guttman-McCabe, Thank you for your testimony and the 

work that CTIA does. 

The DTV transition freed up spectrum in the 700 megahertz 

band that’s been auctioned. But in some cases, has yet to be deployed on a commercial basis. I think it’s Mr. Barrow that has legislation that also mentions as part of the bill that there has to be 

an inventory done. 

I’m concerned about those who have purchased spectrum and 

have yet to use it, 3 years after the auction was completed. So 

while we know that the wireless usage is growing at an expoVerDate Nov 24 2008 13:56 Jun 26, 2012 Jkt 037690 PO 00000 Frm 00089 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 112\112-53 060111\112-53 CHRIS
84 

nential rate, how do we determine future spectrum needs when 

there is still spectrum sitting unused? 

Mr. GUTTMAN-MCCABE. Sure. Thank you, Congresswoman. 

That is sort of a broad question and I will take it piecemeal, if 

you don’t mind. 

First of all, while the 700 megahertz auction was completed a little while back, it wasn’t cleared until about a year ago. And it 

takes time to—Mr. Brenner and Qualcomm and companies like 

that, and Ericcson that do the infrastructure need to make sure 

that this spectrum is available and clear, then they begin the process of developing technology to implement on the network side and 

on the—— 

Ms. ESHOO. What is the average length of time to prepare the 

spectrum that is bought to bringing it to making use of it on the 

market? 

Mr. GUTTMAN-MCCABE. Sure. I guess it depends upon if their 

standards have been developed, but it could be, you know, a year 

to 3 to 4 years. You must keep in mind that these companies spend 

tens of billions of dollars the last two auctions and raised $33 billion, so they need to answer to Wall Street. They need to have a 

return on their investment, and they do move forward, and they 

move forward, you know, really quickly. In the last 10 years since 

I have been at CTIA, we have gone from analog to digital to third 

generation and now we’re looking at fourth generation deployments, all in a 10-year period. 

As far as your question about how do we determine what the future need is in terms of spectrum, whether it’s Kleiner Perkins in 

your area or the folks in Silicon Valley or the Informa Group, or 

you could sort of go on and on. They’ve all suggested that there will 

be upwards of a 35 times increase in demand. We’ve tried to simplify that. I’ve tried to simplify that in my mind, and the simplest 

example I have is if someone came to you and said that California 

was going to experience a 35 times increase in the amount of cars 

on its roads, after you’ve picked yourself up off the floor, I think 

we would think OK, what can we do in terms of driving efficiencies? What do we have in terms of new roads planned? And 

that’s what we’re asking Congress is we can work on the efficiency 

side of the equation. We can implement picocells and femtocells. 

We need help with the roads, and our roads are spectrum. We need 

help preparing for that tremendous increase, which is happening. 

I mean, you say preparing, data traffic doubled from ’09 to ’10, so 

we’re seeing that. 

Ms. ESHOO. Thank you very much. 

Mr. WALDEN. Thank you. We now go to the vice chair of the subcommittee, Mr. Terry. 

Before I do that, Mr. Kinzinger has a document he would like to 

put into the record with unanimous consent from Radio Ink regarding radio stations involved in helping residents in Joplin after the 

tornadoes, Clear Channel especially, so—— 

Mr. KINZINGER. Thank you. 

Mr. WALDEN [continuing]. Mr. Kinzinger, without objection that 

will be in the record. 

[The information appears at the conclusion of the hearing.] 

Mr. WALDEN. Mr. Terry? 

85 

Mr. TERRY. Thank you. 

So Mr. Schurz, despite your affinity for Notre Dame—— 

Mr. SCHURZ. Yes, sir. 

Mr. TERRY. I think Mr. Ellis probably answered this very bluntly, 

but I think a case has been made that more spectrum is needed. 

TV stations have spectrum and as I said in my opening, it is important that there is not a taking of your spectrum, that it has to be 

voluntary. But what will it take to get you—I am not negotiating 

here, but you on behalf of others, generally. Define voluntary for 

me. What is it going to take so that you would volunteer to give 

up some of your spectrum? 

Mr. SCHURZ. The definition of voluntary means that there are no 

negative ramifications for participating or for not participating. So 

I think the FCC can design such an auction. My concern principally is that for those people who choose not to participate, that 

you—and kind of the things I chatted about in my statement in 

terms of no one being forced to relocate to an inferior spectrum 

band that all viewers can keep, seeing the channels and stations 

I see now. No station is subject to increased interference and that 

broadcasters should be held harmless from the cost of repacking. 

I never heard the term win-win-win-win before today’s hearing, 

and I like that term. I think what we are looking for is people want 

to stay in the business. It is don’t lose. And really, it is not the 

broadcasters, it is the viewers in our communities. 

Let me also add to the don’t lose, that if there are spectrum fees 

and other costs, I think that is probably not in the spirit of voluntary. 

Mr. TERRY. Such as? 

Mr. SCHURZ. Such as that if we choose not to participate in the 

auction, repacking is involuntary. We understand that. We like to 

have the safeguards and protections on a going forward basis so 

there is no harm to the business and to the viewers in communities, but we would—we certainly don’t expect or want to see increased fees—spectrum fees if we choose not to participate. 

Mr. TERRY. And how do you answer Dr. Connolly’s statement 

that if there isn’t some mechanism for—to force holdouts, that it 

will actually degrade the value of the spectrum that may be auctioned off? 

Do you agree that that could happen? 

Mr. SCHURZ. From all the discussions I have seen about the way 

the auction is being considered, and there is no definitive auction 

yet, but there is a lot of discussion. My expectation is I think that 

they will probably find a way that will be equitable and maybe you 

would limit the holdouts. 

The question is, no one is—Mr. Ellis is here because they said 

GU might sell, and he said that—people ask how much spectrum, 

who is selling? No one knows the answer to that question. 

Mr. TERRY. Dr. Connolly, why don’t we work though this a little 

bit more. How do we—how do you see that we can provide enough 

incentives to win-win-win or not lose-win-win, and not have a situation where we have to engage in a taking? 

Ms. CONNOLLY. If the incentive—I mean, if the reverse auction 

is correctly designed, the broadcasters will only participate if they 

win. No one is going to participate and not win, because—and that 

86 

is by definition. And they can list different prices of which they are 

willing to do different things so they may be willing to do one thing 

and they offer a certain price. They may be completely unwilling 

to do other things, so they offer, you know, a every exorbitant price 

that they know won’t be accepted, or simply refuse to participate 

in that auction. 

The costs of any new packaging are, at least from what I hear, 

the FCC is offering to cover those. And so as long as what they are 

bidding on is well specified, then by definition, if their bid is accepted, they will win. 

Mr. TERRY. Right. But we are talking about—and you look at any 

development and you always see that one little old house on the 

corner, because that person wouldn’t sell out. 

Ms. CONNOLLY. And that is why we do need the ability to relocate, because they will hold out. And even—well, there is a possibility of hold out. There is also the possibility that if you—I mean, 

when you are bidding within a market, you are competing against 

the other broadcasters in that market, so if someone is not in the 

range that they know they are tying to empty, they are not true 

competitors to those in the range that they are trying to vacate. 

So by making relocation possible, you might have someone say 

on channel 21 who is willing to give up their location—their spectrum, go off the air or share or go somewhere else, and if someone 

on channel 40 is unwilling to, then 21 can sell their spectrum, you 

know, their rights to that spectrum and then we can move someone 

to channel 21. 

So it means that more broadcasters within a given market will 

be competing for these bids to vacate spectrum, and by having that 

forced relocation, then the other people outside that key band become competitors. So not only is it an issue of hold out, but just 

general competition. The more competition there is, the more the 

bids are going to become true valuations for the broadcasters themselves. So it is not just for the one hold out, it is a general statement of overall competition in the bids. 

Mr. WALDEN. Thank you. Mr. Dingell, Chairman Emeritus of the 

committee, we turn to you now for 5 minutes. 

Mr. DINGELL. Thank you for your courtesy, and I want to thank 

the distinguished gentlewoman from California, Ms. Matsui, thank 

you. 

This is not the first time we have visited this question. In earlier 

hearings, I have expressed my strong doubt that such auctions can, 

in fact, be truly voluntary. A great source of my alarm comes from 

the National Broadband Plan itself, where it states at page 79 that 

‘‘The government’s ability to reclaim, clear, and reauction spectrum 

is the ultimate backstop against market failure and is an appropriate tool when the voluntary process stalls entirely.’’ I would note 

that we are looking at this against a lot of actions by the Commission and the Office of Management and Budget, which have taken 

place without us having a real understanding of what spectrum is 

going where and being used by who, and sat upon by who else. 

So this seems to imply that the Commission’s action could be 

forcefully taking this spectrum away from broadcasters if too few 

or none at all participate in the voluntary spectrum auctions. 

87 

Now to all witnesses, starting with Mr. Schurz, yes or no. Would 

you support such action by the Commission, yes or no? 

Mr. SCHURZ. Which action? 

Mr. DINGELL. Picking and taking the spectrum forcefully from 

broadcasters. 

Mr. SCHURZ. No. 

Mr. DINGELL. Mr. Ellis? 

Mr. ELLIS. No. 

Mr. GUTTMAN-MCCABE. We support voluntary auctions. 

Mr. DINGELL. Ma’am, yes or no? 

Ms. CONNOLLY. Yes. 

Mr. DINGELL. You, sir? 

Mr. BRENNER. I always talk about voluntary incentive auctions. 

Mr. DINGELL. And sir? 

Mr. FELD. Voluntary auctions. 

Mr. DINGELL. All right. Now to all witnesses again, do you agree 

that broadcasters who are willing to participate in an incentive 

auction should be committed to do so in exchange for a fair share 

of such auctions proceeds, and set the reserve price of the spectrum 

it wishes to auction, yes or no? Mr. Schurz? 

Mr. SCHURZ. Yes. 

Mr. DINGELL. Mr. Ellis? 

Mr. ELLIS. Yes. 

Mr. GUTTMAN-MCCABE. Yes. 

Mr. DINGELL. Ma’am, yes or no? 

Ms. CONNOLLY. Who defines fair proceeds? 

Mr. DINGELL. Well, I am not quite sure I can, but—— 

Ms. CONNOLLY. That is the question, so I would say no because 

I don’t think anyone can define that, other than by the bid value. 

Mr. DINGELL. Thank you. Next witness? 

Mr. BRENNER. I am sorry to just raise a quibble here, but the use 

of the term reserve price, I don’t quite understand. 

Mr. DINGELL. Well, I am assuming the reserve price is the price 

that is fixed by the Commission as the price below which no auction would take place and no sale would take place. Yes or no? 

Mr. BRENNER. OK. Just—can I just clarify, Congressman Dingell? The reason why I am asking is normally I have the same understanding of a reserve price. I bid in three auctions over the 

years, and there is an aggregate price for the entire auction that 

the auctioneer sets. It has nothing to do with the individual 

bid—— 

Mr. DINGELL. Time is limited, please, yes or no? I will put you 

down as a no. 

Mr. BRENNER. I am not sure. 

Mr. DINGELL. Next witness. 

Mr. FELD. Depends on what result you want. 

Mr. DINGELL. All right. To all witnesses, in other words, if the 

FCC is overly restrictive in how reauctioned spectrum can be used, 

we will end up with a fine mess on our hands, just like the auction 

of the D Block. Am I correct in that? Starting with you, Mr. Schurz. 

Mr. SCHURZ. Yes. 

Mr. DINGELL. Mr. Ellis? 

Mr. ELLIS. Yes. 

Mr. DINGELL. Next witness? 

88 

Mr. GUTTMAN-MCCABE. Yes, you are potentially correct. 

Mr. DINGELL. Ma’am, if you please? 

Ms. CONNOLLY. Yes. 

Mr. DINGELL. Sir? 

Mr. BRENNER. Yes. 

Mr. DINGELL. Next witness? 

Mr. FELD. Yes. 

Mr. DINGELL. Thank you, ladies and gentlemen. 

Now to all witnesses again, similarly, the goal of any incentive 

auction, in addition to fairness to those who surrender the spectrum should be to maximize the revenue to the Treasury. Yes or 

no, starting with Mr. Schurz? 

Mr. SCHURZ. Yes. 

Mr. DINGELL. Mr. Ellis? 

Mr. ELLIS. No. 

Mr. GUTTMAN-MCCABE. That should be a significant part of it, 

yes. 

Mr. DINGELL. Ma’am? 

Ms. CONNOLLY. No. 

Mr. DINGELL. Sir? 

Mr. BRENNER. Yes, a significant part. 

Mr. DINGELL. Last witness? 

Mr. FELD. Absolutely not. 

Mr. DINGELL. All right. Now I would like to explore this channel 

relocation just a bit more. Now to Mr. Schurz and Ellis, both of you 

have considerable technical experience as broadcasters. Are my 

concerns about shifting from UHF to VHF valid? And I want to say 

that I have fears that doing so might restrict geographic reach of 

a given broadcaster. Second, I think going from UHF to VHF will 

impair the broadcaster’s ability to transmit digital signals. 

So are my concerns about shifting from UHF to VHF valid, yes 

or no? 

Mr. SCHURZ. Yes, I know our company has had specific 

incidences of that, no question. 

Mr. DINGELL. Mr. Ellis? 

Mr. ELLIS. Yes, VHF does not work. 

Mr. DINGELL. Now, again to Mr. Schurz and Mr. Ellis. Further, 

do you believe that reducing a broadcaster’s ability to transmit digital signals puts it at a disadvantage vis-&-vis the other content 

provider, yes or no? 

Mr. SCHURZ. Yes, I would agree with that. 

Mr. DINGELL. Mr. Ellis? 

Mr. ELLIS. Digital means over the air broadcasting only, yes, we 

are at a disadvantage to the wireless providers. 

Mr. DINGELL. All right, to all of the witnesses, with Mr. Schurz’s 

and Mr. Ellis’s response and mine, do you believe it is fair to 

broadcasters to require that they move from the UHF band to the 

VHF band, yes or no, starting with our next witness? 

Mr. GUTTMAN-MCCABE. I think there is a difference between the 

upper and lower VHF bands, a pretty significant difference, and I 

think, you know, that is a difficult question that we can work 

through as part of this process. There are a large number of broadcasters currently operating in both bands. 

89 

Mr. DINGELL. You can’t say that it is—you can’t say sitting there 

that it is fair at this time? 

Mr. GUTTMAN-MCCABE. Well, Congressman, there are a large 

number of broadcasters operating in both of those bands at this 

moment and doing well. 

Mr. DINGELL. But if they have already shifted—well, we will put 

you down as a no. Next witness, please. 

Mr. WALDEN. Did you have another witness, Mr. Dingell, that 

was going to—— 

Mr. DINGELL. I don’t—— 

Mr. WALDEN [continuing]. Dare answer, because we are over the 

clock here. 

Mr. DINGELL. Well, I am willing to forego—I just want everybody 

to know that we are not walking into any tea party here. Thank 

you for your courtesy. 

Mr. WALDEN. Although some of us have a time or two. 

Mr. Stearns, we are going to yield to you for 5 minutes. 

Mr. STEARNS. Let me ask each of you, and I think this is kind 

of basic to start the question off, and I will just start with Mr. 

Schurz. Do you think before we do any auction off the spectrum 

that we should do an inventory? Just right on down. 

Mr. SCHURZ. As a businessman, before we determine where we 

need to go, we always start with where we are. Yes, I think an inventory is a good idea. 

Mr. STEARNS. Mr. Ellis, we should do a spectrum inventory first? 

Mr. ELLIS. Yes, but I think it can be done in a weekend. 

Mr. STEARNS. In a weekend, OK. Next. 

Mr. ELLIS. Yes, sir, this is not that complicated. 

Mr. STEARNS. OK. Next? 

Mr. GUTTMAN-MCCABE. I don’t think it needs to be done prior to 

an incentive auction process. 

Mr. STEARNS. So your answer is no, OK. Dr. Connolly? 

Ms. CONNOLLY. My answer would be no. 

Mr. STEARNS. No. Mr. Brenner? 

Mr. BRENNER. No. 

Mr. STEARNS. No. Mr. Feld? 

Mr. FELD. No. 

Mr. STEARNS. OK. Now let us say we do have a spectrum inventory, and you find out, you know, who has what and what they use. 

Do you think it is important in this layout that we determine how 

effectively this spectrum that they have is being used and what 

bands aren’t yet deployed, and how long until deployment? Is that 

an important—I mean, some of you don’t think we should do a 

spectrum, but it seems to me that if we do the spectrum inventory, 

we could find out how efficiently it is being used. I think members 

of Congress want to know that. Mr. Schurz, do you agree with that, 

that if we did a spectrum inventory we would want to find out how 

efficiently it is being used and what bands aren’t yet deployed and 

how long until they are deployed? 

Mr. SCHURZ. I think that what we are looking at right now is not 

only the total amount of spectrum, but no question how efficiently 

it is used. I think there is a question on how one would define that. 

Broadcasters have 6 megahertz. We use the 6 megahertz. So there 

90 

could be a lot of quibbling over the details, but yes, I think it is 

a good idea. 

Mr. STEARNS. Mr. Ellis? 

Mr. ELLIS. As a prudent business man, I think you should always know what—how you are using your product, yes. 

Mr. STEARNS. OK. 

Mr. GUTTMAN-MCCABE. Yes, our concern with an inventory is 

that you would—a suggestion that you might need to do it before 

you move forward with incentive auctions, and so—— 

Mr. STEARNS. That is what I am asking. 

Mr. GUTTMAN-MCCABE. Yes, so we believe a solid legitimate inventory of the government side of the equation, the commercial 

side is fine—— 

Mr. STEARNS. Which would include how effectively it is being 

used. 

Mr. GUTTMAN-MCCABE. Yes, although I think we would all share 

concerns about who would define that and how it would be defined. 

I mean, in our case—— 

Mr. STEARNS. Is it hard to define? 

Mr. GUTTMAN-MCCABE. Yes. 

Mr. STEARNS. OK. Dr. Connolly? 

Ms. CONNOLLY. I agree complete that I have nothing against 

doing an inventory and trying—— 

Mr. STEARNS. You folks have said no, but—— 

Ms. CONNOLLY. No, but I disagree with conditioning—— 

Mr. STEARNS. I think it is axiomatic, trying to decide how efficiently it is being used and what bands are yet deployed and how 

long. I think those are important questions we should know. 

Ms. CONNOLLY. But I would not condition the incentive auctions 

on doing that first, because I know that that can take years, and 

the value of the spectrum to our economy—— 

Mr. STEARNS. Mr. Ellis says it can take a weekend. 

Ms. CONNOLLY. Well, I don’t know if he has worked in the government. 

Mr. ELLIS. I am definitely not working in government. 

Mr. STEARNS. Touch ́ e. All right, Mr. Brenner? 

Mr. ELLIS. If I could—— 

Mr. STEARNS. Mr. Brenner first. 

Mr. BRENNER. So I want to be clear, Congressman Stearns, there 

should be an inventory and we should know—— 

Mr. STEARNS. But you said no. 

Mr. BRENNER. I don’t think we should hold up the auction process waiting because I am concerned that it will take forever, but 

just—— 

Mr. STEARNS. How can you auction off something you don’t know 

anything about? 

Mr. BRENNER. Well, we know—we are going to auction off spectrum that we know—— 

Mr. STEARNS. But don’t you want to know how efficiently it is 

being used, by whom, and what bands aren’t yet deployed and how 

long until—wouldn’t you want to know that? 

Mr. BRENNER. So Congressman, when I advise our management, 

I give them a presentation once a quarter or once every two quarters on new spectrum bands, what they are being used for, what 

91 

the likely time period would be for an auction, so I think those 

facts are known. What isn’t known is there are hundreds of thousands of FCC licensees across a whole range of services, ranging 

from private radio services, trucking companies, taxi cab companies, and we should find out if they are using the spectrum on an 

ongoing basis, and if they are not, let us get it back. I totally agree 

with you on that. 

Mr. STEARNS. OK, Mr. Feld? 

Mr. FELD. Just to clarify, because of the properties of the broadcast bands, it is pretty easy to say getting more of this stuff out 

there for use—for a number of different uses is a good thing. I don’t 

need an inventory to tell me I would love some of that stuff. The 

inventory, however, is extremely useful both on saying where else 

is there useful spectrum, and where are the other services that are 

in the band, which just aren’t the unlicensed. It is also wireless 

microphones, low power television translated, a whole bunch of 

things. Where are those going to land if we start to repack the 

band? So don’t need it to tell me I want more spectrum out there, 

but I do need it for spectrum planning. 

Mr. STEARNS. Thank you, Mr. Chairman. 

Mr. WALDEN. Thank you, Mr. Stearns. Now we will go to the 

gentlelady from California, Ms. Matsui for 5 minutes. 

Ms. MATSUI. Thank you, Mr. Chairman. 

As I mentioned in my opening statement, I believe the FCC 

should have the flexibility to structure and conduct incentive auctions. Dr. Connolly, you stressed in your testimony that the FCC 

must have a great deal of flexibility to design and implement incentive auctions. In granting FCC this new authority, how should Congress balance the need for FCC flexibility while providing some legislative certainty to ensure that there is enough participation from 

existing licensees to ensure successful auctions, and these auctions 

would bring about the maximum value and public interest benefits 

for our consumers? 

Ms. CONNOLLY. That is a very interesting question. I am not sure 

that there is anything that Congress could do to guarantee that 

people will come to the table. They will come to the table if it is 

in their incentive, and I think that that is why the FCC should be 

allowed to have these incentive auctions. I can’t imagine that putting restrictions on the auction would somehow increase the interest in selling off—or being willing to vacate certain spectrum. I 

think if anything, it would decrease it. So I cannot imagine what 

Congress could put in there that would somehow increase the desire of the broadcasters to sell these rights. 

Ms. MATSUI. So you are essentially saying that the marketplace 

would take care of this, and that therefore even though we have 

oversight, that you believe we should be a light touch, some principles, and that is it? 

Ms. CONNOLLY. Yes, but moreover, I think that if the goal is to 

make sure that the auction is as efficient as possible, any touches 

are going to make it less efficient. 

Ms. MATSUI. But could you balance out, though, the value as far 

as dollar value plus the public interest? 

Ms. CONNOLLY. I think what would maximize the dollar value is 

also what maximizes the public interest in this case. Now there are 

92 

tradeoffs. For example, when it is decided what are the bids that 

win on both sides, the revenue is based on the different demand 

curves, how much the clients—and how much demand. They are 

not going to choose a price that clears everything 100 percent, 

right, so that is a decision that will affect how much megahertz is 

repurposed, and it will also affect how much revenue is given to the 

government. 

So that will be a call to the extent that they have a target of 120 

megahertz, I think that gives a certain amount of a restriction 

there in terms of how far they are likely to go. But I have had 

enough experience with auctions to see that, you know, anytime 

additional conditions are put on the—there are very strong consequences, and I would say D Block is a very good example of that. 

Ms. MATSUI. OK, thank you. 

President Obama set out a plan to create a wireless innovation 

fund of $3 billion funded through spectrum proceeds, which would 

go towards research and development of emerging wireless technologies and applications. This question is for Mr. GuttmanMcCabe and Mr. Brenner. We all know that R&D is essential to 

keeping America competitive. In the context of spectrum, what does 

this mean for your industry and its ability to develop the next wireless technologies and applications? 

Mr. GUTTMAN-MCCABE. Sure. Thank you, Congresswoman. 

CTIA has a large number of members who invest billions, if not 

tens of billions of dollars each year, and Mr. Brenner will talk a 

little bit about his company who is a member. We tend to try to 

do our best to facilitate that in the private sector, and we believe 

there are probably two ways that Congress could significantly help 

that. One is the purpose of this hearing today, to talk about getting 

more spectrum to market and funding the network infrastructure, 

such that people want to feel comfortable putting R&D dollars to 

work. The second is—and it is something that has been proposed 

by you and Ranking Member Eshoo and Congressman Stearns, and 

that is taking the R&D tax credit and making it permanent. Providing the ability for companies like Qualcomm and others to say 

hey, we have got a future that we understand that makes sense, 

and we are not revisiting this every couple years. And for us, that 

sort of making that tax credit permanent will provide a heck of an 

incentive for our industry. 

The last thing that I would add, which we have just discovered 

recently at CTIA, is we talk a lot about R&D within the United 

States, and I think we focus on U.S. companies, which is key and 

important, companies like Qualcomm. But what we have learned is 

because we have become the hub, the epicenter of wireless, whether it is the apps world or the network world or the device world, 

we are finding foreign companies are moving their R&D facilities 

here into the United States, and we are finding more and more foreign-based companies with R&D facilities in California, in Texas, 

and in other States. And we think that is because we have the 

right ecosystem to facilitate that. 

Ms. MATSUI. Right. I am sorry, Mr. Brenner, I am out of time, 

but a quick comment from you? 

Mr. BRENNER. Well, research and development is synonymous 

with Qualcomm. As I said in my testimony, we spend $2 billion 

93 

every year on research and development, over 20 cents of every dollar that we make in revenue, so we are constantly researching new 

technologies. It is essential. 

Ms. MATSUI. Thank you very much, and I know I have really run 

out of time. Thank you, Mr. Chairman. 

Mr. WALDEN. It is all right, we want to get the answers. Thank 

you, Ms. Matsui. 

We will go now to Ms. Blackburn. Thank you for being here, and 

we look forward to your questions. 

Mrs. BLACKBURN. Thank you, Mr. Chairman, and thank you to 

our witnesses, and thank you for your patience. 

I love hearing you all talk about innovation, and I am glad we 

just touched on the R&D tax credit, because the innovators that I 

am talking to in Tennessee, some of them I have been working 

with for years because I ran the Tennessee Film, Entertainment, 

Music and Interactive Technologies component of our State government at one point in my career, and innovators want that certainty, and regulatory uncertainty right now is just a bear, and 

they talk about it to us quite a bit. 

Listening to you all, I would imagine each and every one of you 

knows somebody who is innovating some new application or attachment for the broadband, and they are waiting to see what is going 

to happen with spectrum. So let us just say Congress sits on their 

hands and that nothing is done. Mr. Brenner, let me just throw 

this to you. What do you think would happen if we see this spectrum crunch get worse, because we know that capacity demand is 

outpacing the capacity, and if Congress doesn’t free up some of the 

spectrum for commercial broadband, what do you see that impact 

being on the economy and on jobs? 

Mr. BRENNER. It would be extremely detrimental impact on the 

economy and jobs, Congresswoman Blackburn. I don’t think that 

there is—the world is going to end tomorrow or the next day, but 

I think the FCC and the broadband plan did a very good job of laying out short-term, medium-term, and long-term steps and I think 

they have pretty much proven in a—their white paper that by 

2014, we are going to have a serious problem. 

What could happen? We could have basically the effect of brownouts. The devices won’t work all the time. Your devices won’t work 

wherever you go. That is obviously a problem today. The carriers 

are spending a fortune, billions of dollars every year. We almost 

take for granted to provide better service and better coverage. We 

are spending, as I say, billions of dollars inventing more technologies. That whole ecosystem will slow down and will ultimately 

stop, and then also, from an international point of view, I was in 

Canada yesterday. We are actually ahead of the Canadians, which 

we weren’t 2 years ago. We are ahead of the Europeans with our 

mobile systems and the Asians, and we won’t be if we don’t have 

enough licensed spectrum coming online. 

Mrs. BLACKBURN. You know, I find it so interesting when you 

equate it to the brownouts, because so many of our entertainment 

industry innovators in the spectrum have become financial service 

innovators and healthcare delivery system innovators, and we are 

seeing a tremendous amount of parallels, if you will, in those industries. And I know that is something that they bring forward to 

94 

us all the time is wanting the certainty of the availability of that 

spectrum. 

Mr. Guttman? 

Mr. GUTTMAN-MCCABE. Yes, Congresswoman, just—I would 

point you to an article, a kind of timely article in the Wall Street 

Journal this week that talked about India and the impact of not 

bringing enough spectrum has had on the Indian market. I think 

we all think of India as a really rapidly emerging market, and yet 

in the last 2 years, because of the failure to bring additional spectrum to market, their capital expenditures have gone down 42 percent, and they said that by 2015 they will not be able to serve 1/ 

3 of their mobile broadband customers, which could have a 1 percent impact on Indian GDP. 

So the article ties it directly to not bringing spectrum and not allowing these companies to really—to move forward. And that is a 

macro level, but I think it is illustrative. 

Mrs. BLACKBURN. OK. Mr. Ellis? 

Mr. ELLIS. I do not think it is a spectrum problem; I think it is 

an architecture problem. The one-to-one architecture of the wireless industry, you know, is always going to have a problem, no matter how much spectrum. If you—if eventually you do run out of 

spectrum, either because they don’t get it now or they don’t get the 

next load they are going to need later, what is going to—the solution to this is a partnership between broadcasters and wireless. We 

have a very efficient methodology for delivering, you know, high 

content video. They have a very inefficient methodology. The two 

of us could work some great things together. 

Mrs. BLACKBURN. OK. Dr. Connolly, I have got just 30 seconds 

left. You have talked around the issue of the auctions, the incentive 

auctions, and I agree with your comment about the D Block. We 

put so many restrictions on that by the time the FCC finished, nobody wanted it. I mean, it is lying fallow. 

So in your perfect world, what would those conditions for a spectrum auction be to see revenue to the Treasury, and then affordability to the private sector so that innovation is carried forward 

on this spectrum? So if you were designing it, what would you say 

it needed to be? 

Ms. CONNOLLY. I would not put conditions. 

Mrs. BLACKBURN. No conditions? 

Ms. CONNOLLY. That is my personal. 

Mrs. BLACKBURN. OK, and I appreciate that because that is what 

we need to hear, because that is what we want to do. 

I think we all agree that in a 21st century economy, making certain that the creative economy has the space in which to work and 

expand, and knowing that what you all are sitting here talking 

about and representing today touches every economic sector in this 

country. 

When you look at my district in Tennessee, the efficiencies that 

have been derived for small business manufacturing primarily have 

come through looking at the advances that have taken place 

around spectrum. The auto industry, the entertainment industry, 

the healthcare industry, the financial services industry, the defense 

technologies, the list goes on and on and on. So I appreciate that, 

and I am over my time and I yield back. 

95 

Mr. WALDEN. Thank the gentlelady. 

Now go the gentleman from Illinois, Mr. Rush, for 5 minutes. 

Mr. RUSH. Thank you, Mr. Chairman. I have only a few minutes 

to ask questions, so I am going to ask questions of all the panelists. 

If you could respond by a yes or a no, then I have a second question 

I would like to ask you also. 

The FCC’s record on auctions as it relates to minority, women, 

and small business success has left much to be desired. In fact, 

that record has led former FCC Commissioner Edelstein to conclude that auction results have been appalling in terms of gains 

that minority, women, and rural carrier-owned businesses have 

made as wireless licensees. During the AWS 3 auctions, for example, large incumbents with deep pockets walked away with almost 

70 percent of the licenses. Can the FCC design incentive auctions 

in a way using bidding credits, tzx incentives, or other mechanisms 

to increase these appalling numbers and indemnify broadcasters 

who relocate? A simple yes or no, beginning with Mr. Schurz. 

Mr. SCHURZ. That is a complicated question. I think you will see 

less diversity in terms of ownership, and I think you will also see— 

I think you will see as a part of the repacking the Hispanic community, one in three watches television over the air, so viewers will 

be hurt—— 

Mr. RUSH. You can’t give me a yes or a no? 

Mr. SCHURZ. I will go with yes. 

Mr. RUSH. Yes. Mr. Ellis? 

Mr. ELLIS. Was the question can they design it so—— 

Mr. RUSH. Yes. 

Mr. ELLIS. Yes. 

Mr. GUTTMAN-MCCABE. I think that is possible, and I—Congressman, I don’t know if you saw this morning, but a letter came in 

from the NAACP and Rainbow Push and a number of Hispanic 

groups all supporting—10 organizations in total supporting incentive auctions. 

Mr. RUSH. Dr. Connolly? 

Ms. CONNOLLY. May I ask clarification? You are asking can it be 

done to help diversity among licensees or among those who are receiving the services? 

Mr. RUSH. The licensees, expand the pool of licensees. 

Ms. CONNOLLY. It can be done, but it can be done very poorly, 

and we have had evidence of that before. 

Mr. RUSH. It can be done better? 

Ms. CONNOLLY. I would argue that it is—— 

Mr. RUSH. My time—— 

Ms. CONNOLLY. Scale matters here. Scale matters here. I don’t 

know that that should be the goal. 

Mr. RUSH. Can you give a yes or a no? Mr. Brenner? 

Mr. BRENNER. I think it is possible. I think Dr. Connolly’s point, 

which I think is a fair one, is this is a very capital-intensive business for wireless business, so access to capital is a huge determinant in who can bid in an auction and who can win, but is it 

possible? Yes. 

Mr. RUSH. It can be done? 

Mr. BRENNER. It can be done. 

Mr. RUSH. Yes. 

96 

Mr. FELD. One of the great advantages of the white spaces is 

that it allows women and minority-owned businesses to get access 

to spectrum, which is why so many civil rights organizations supported us and white spaces. With that said, I absolutely agree, the 

FCC can and should do a better job in making sure that women 

and minority-owned businesses have greater opportunity in licenses at auction. 

Mr. RUSH. OK. Well, let me ask you this other question. Can the 

FCC design incentive auctions in a way that increases minority, 

women, rural ownership, entices enough broadcasters to relocate, 

and also generates sufficient funds to pay for a national public 

safety network? Yes or no? 

Mr. SCHURZ. I think the answer to that is yes. I mean, you are 

talking about auction design. 

Mr. ELLIS. Yes. 

Mr. GUTTMAN-MCCABE. I think it is possible, and I think the 

question about funding a public safety network is going to be one 

that is hashed out with you and others in this committee, and I 

think that is a difficult question that is going to take a lot of 

thought. 

Ms. CONNOLLY. It is a possibility to do. 

Mr. RUSH. All right. 

Mr. BRENNER. Yes, it is possible. 

Mr. FELD. Yes, and they ought to. 

Mr. RUSH. All right. Could incentive auctions create additional 

unintended consequences and problems? 

Mr. SCHURZ. Yes, no question about it. 

Mr. ELLIS. Yes. Solvable, but yes. 

Mr. GUTTMAN-MCCABE. Not if done properly. 

Ms. CONNOLLY. I think they would be minor, relative to potential—well, they would be inconsequential, relative to the gains. 

Mr. BRENNER. I think that they will be a huge success. 

Mr. FELD. I think that they are complicated. We don’t know what 

the best model is, which is why we need to proceed cautiously and 

give the experts flexibility. 

Mr. RUSH. All right. Mr. McCabe, give me some examples of unintended problems that might occur under incentive auctions? 

Mr. GUTTMAN-MCCABE. Well, I think we have talked at length 

about making sure that we don’t try to overly dictate what the FCC 

can and should do here. I think we have seen that it is not just 

the D Block. We have seen it with the C Block and other bands 

of spectrum that have been auctioned, so I think that is an unintended consequence for the auction as a whole. 

I think with regard to broadcasters, I think we just have to be 

considerate and think through the process and make it something 

that incentivizes them. It is in our interest on the wireless side for 

the broadcasters to have an incentive to participate, and that is 

what we want. We want them to participate. We believe it can be 

wildly successful, and we believe we can’t miss this opportunity. 

We have seen Germany and United Kingdom and France and Italy 

and Spain and South Korea and Japan have all identified spectrum 

for commercial mobile purposes and are bringing it to market. We 

can’t fall behind. 

97 

Mr. RUSH. Mr. Chairman, I thank you. You have been very generous with the time you have allotted me. 

Mr. WALDEN. Thank you, Mr. Rush, for your questions, and panelists for your answers. 

We go now to Mr. Latta for 5 minutes. 

Mr. LATTA. Thank you very much, Mr. Chairman. I appreciate it. 

To our panel, thanks very much for being here today. Some of the 

questions I would just like to follow up to some of the other members who were already asked today. 

If I could, Mr. Guttman, if I could start. We were talking a little 

bit about the ramifications if there isn’t a voluntary auction out 

there, and you were talking about what happened in India. In this 

country, how many jobs would be affected or how many jobs do you 

predict that wouldn’t be created if we didn’t have this auction? 

Mr. GUTTMAN-MCCABE. Sure. So we have seen numbers between 

100,000 and 200,000 new jobs if we can move forward with incentive auction legislation, and that is sort of direct employment that 

we looked at and viewed. But I think if you look at sort of what 

we call the verticals, healthcare and smart grid, intelligent transportation and education and areas like that, you are talking about 

a ripple effect that is almost immeasurable. We really do strongly 

believe, you know, no matter who you look at who is measuring 

this, that the change that is going to happen in this ecosystem is 

staggering. Two years ago, 3 years ago the hottest selling handset 

was the Motorola Razr. We didn’t have application stores. We barely had third generation, certainly not fourth generation. We didn’t 

have tablets. I think when we looked at—Kleiner Perkins study 

looked at the first three quarters after the launch of the iPod, and 

they went from zero to one million, the first three quarters after 

the launch of the iPhone went from zero to four million. The first 

three quarters of the iPad went from zero to 14 million. And so we 

are seeing a ramp up that is almost vertical, and I—it is almost 

impossible to put a number on the value and the jobs and the 

money that will flow to the economy—— 

Mr. LATTA. That is going to be my next question. Is there any 

way to predict what that value would be in dollars? 

Mr. GUTTMAN-MCCABE. Well, we have seen numbers that have 

come out of the Administration from Mr. Summers that have said 

for every dollar that goes in in terms of investment, it results in 

$7 to $10 in increased GDP. And so that is a multiplier that we 

think is probably a legitimate number. Dr. Connolly might know— 

she just gave me that look. But you know, there clearly is a multiplier effect, and we have seen it measured at 7 to $10 for every dollar in investment that—— 

Mr. LATTA. I see that Mr. Ellis would like to make a statement 

on this. 

Mr. ELLIS. I am just wondering if anybody is going to hold him 

to these numbers. 

Mr. LATTA. I beg your pardon? 

Mr. ELLIS. Is anybody going to hold him to these numbers? 

Mr. GUTTMAN-MCCABE. Every time we see them, they go up, and 

so I will say yes. I will be willing to suggest—I mean, Cisco put 

out its networking numbers today, and they went up again. We 

have got a company here that sells solutions to spectrum problems 

98 

saying we need to bring more spectrum to market. If that isn’t the 

greatest illustration that we need some help, I am not sure what 

is. 

Mr. LATTA. Well I know Dr. Connolly—Mr. Chairman had asked 

initially what that value might be, and you had thrown out a low 

end and a high end. Could you say what those are again? 

Ms. CONNOLLY. Well, I had—the megahertz POP values that I was looking at were between $.03 and $3.86 per megahertz POP. 

That is purely based on the 700 auction, but if you aggregate that 

up, that means that based on a 700 megahertz auction, 1 megahertz at the lowest end would generate $9 million and at the highest end could generate $1 billion, approximately. 

Mr. LATTA. Mr. Brenner? Please turn on your mic. 

Mr. BRENNER. We need to multiply that by the number of megahertz that would be auctioned, so if we are auctioning 120 megahertz, Dr. Connolly’s high number is tens of billions of dollars, 30, 

40, $50 billion in auction revenues. I don’t know if that is going to 

happen, but you know, there is no question that there is huge demand for spectrum, and if there is an auction, there will be people 

with a lot of money bidding to get more spectrum. 

Mr. LATTA. Mr. Schurz? 

Mr. SCHURZ. The 120 megahertz number has been thrown 

around, and I just want to give a little perspective. That was in the 

National Broadband Plan, but that plan did not envision Canada 

or Mexico, and so the amount of spectrum that you will successfully get out of broadcast spectrum I would argue is significantly 

less. There are some issues with the plan, and so there are a lot 

of numbers going around. I just want to make certain that Canada 

and Mexico do impact spectrum in the United States. 

Mr. LATTA. Mr. Feld? 

Mr. FELD. I just want to emphasize, we can’t know today how 

many broadcasters will want to participate in voluntary auction, 

but when we talk about both meeting our spectrum demand and 

the value that is being contributed to the economy, it is important 

to consider the value of the unlicensed and the white spaces as 

well. There are a lot of uses that individually don’t take up a lot 

of bandwidth, are a poor fit with licensed, and when we are thinking about how we are going to meet the spectrum demand and the 

spectrum crunch, particularly when we are talking about machine 

to machine, smart grid, other uses where it is really not necessarily 

a good fit with a licensed service. The ability to offload all that traffic to the unlicensed and save the licensed space with the higher 

bandwidth uses that people are looking at is critical to meeting our 

spectrum needs. 

Mr. LATTA. Thank you. Mr. Chairman, I see my time has expired 

and I yield back. 

Mr. WALDEN. I thank the gentleman from Ohio. 

I would now recognize the gentleman from Illinois, Mr. 

Kinzinger. 

Mr. KINZINGER. Thank you, Mr. Chairman. It is good to be last, 

always, because you guys know you get to go home maybe, unless 

somebody else shows up. 

I don’t have a whole lot to ask because most of it has already 

been asked, but to me, in a way as I am kind of really getting to 

99 

figure this out, it seems like not having the voluntary auctions 

would kind of be a lose-lose. It really reduces flexibility for everybody, really, on all sides of this debate. 

Let us say we don’t move on anything like a voluntary auction, 

we just keep status quo. I know this has been asked in different 

ways, but just very briefly, I will give all six of you a chance just 

to say, you know, what do you see as a scenario? So you know, typical Congress, let us say we don’t do anything and we find ourselves where we are now. What is kind of the long-term—and I 

know there was discussion about brownouts, you know, and— 

where do we see this? We can start over here at the—my left. 

Mr. SCHURZ. I think there is no question that demand is growing. 

I will say that we are in smaller markets, and the capacity crunch 

really does not exist in our markets. So in the smaller and rural 

markets, you won’t—it is not a pressing issue. I think what you 

will see is you will see great innovation by broadcasters. You are 

seeing it today. It is 2 years since the digital transition. You will 

see more. 

Mr. ELLIS. About half my stations are in small markets. Same 

answer as Todd. Half of our stations are in major markets, Los Angeles, San Francisco, Boston, New York/Philly corridor. I think if 

there is no auction, you know, and we are allowed to do so, we will 

approach the wireless companies to create partnerships where they 

can offload some of their high bandwidth content, you know, their 

broadcasting type content—— 

Mr. KINZINGER. So you are saying—— 

Mr. ELLIS [continuing]. And make partnerships out of that. Yes, 

indeed. 

Mr. GUTTMAN-MCCABE. You know, I think there will be partnerships. There are partnerships. But I don’t think we should take 

away from this notion that the broadcast architecture is a perfect 

architecture. It is great if you want to watch the Super Bowl when 

the broadcasters want to deliver the Super Bowl, which I do, and 

that is one of the times I do. But all of you and all of our customers 

want their content when they want it, and so whether it is large 

or small, I disagree strongly with the notion that—I mean, some 

of our most active members on the spectrum issue are smaller carriers who want wider channels, who want to be able to deliver in 

rural areas what the large carriers want to deliver in urban areas. 

They want broad, wide channels to deliver the video content, to deliver the Powerpoints and things like that. So I strongly, strongly 

urge, with all due speed that Congress consider incentive auctions. 

I don’t see—— 

Mr. KINZINGER. Well, and it seems like it would be creating kind 

of a—as I see it, it creates a market mechanism for broadcasters 

or anybody really to make a decision which best suits them at that 

moment, is just kind in general how it seems. 

Dr. Connolly? 

Ms. CONNOLLY. I agree. This—the incentive auction is, I think 

the most expedient way that I see in front of us to achieve something that almost everyone believes has huge value. So not doing 

it, then you are delaying any gains that your economy could have, 

and as a broadcaster, I would worry that other mechanisms might 

be used to get that spectrum that would not be as advantageous 

100 

to them, which is something that the broadcasters—I think is why 

the incentive auction is good for them, because they can win from 

it. 

Mr. BRENNER. So to round out my prior answer where I referred 

to brownouts, I mean, what is going to happen if Congress doesn’t 

pass the legislation is the folks who do have spectrum are going to 

continue to face this exploding demand, and they are going to have 

to ration capacity. They are going to have to assign the bandwidth 

in some way, and there are only two ways to do it. That is to raise 

prices, and so it just goes to the customers who are willing to pay 

more, and that is a bad thing for the economy, or there will be this 

diminution in service. I don’t think there is a third alternative. 

Mr. KINZINGER. OK, and just quickly? 

Mr. FELD. There is a fine line between taking a problem seriously and panicking. I don’t think we need to panic here. I do not 

believe we are going to have significant brownouts if we don’t pass 

legislation, and I believe that—we have seen a lot of innovation. 

We have seen a lot of cleverness that has gone on as people have 

confronted technical challenges. That is one of the things that actually makes this country innovative and great is that when we hit 

things like what looks like a wall on spectrum capacity, we find 

ways around that. 

Mr. KINZINGER. Yes, we are pretty good at that, aren’t we? We 

are good at being innovative, that is what is amazing. I also, just 

to wrap up, I serve a fairly rural district, and you know, one of the 

things I am obviously concerned about is continuing to deploy 

broadband to those folks that are underserved, just simply by fact 

that they don’t live around a lot of other people. With that, I yield 

back. 

Mr. WALDEN. Thank the gentleman for his questions. I thank the 

panelists for their answers. Your testimony has been very helpful 

to our committee to hear from all of you. 

I have asked unanimous consent to submit three letters to the 

record, a letter from 112 leading economists, including Dr. 

Connolly, to President Obama supporting incentive auctions, a letter from 10 groups representing minority interests supporting incentive auctions, and a letter from 33 IT equipment innovators supporting incentive auctions. Without objection, they will be entered 

into our record. 

[The information appears at the conclusion of the hearing.] 

Mr. WALDEN. Again, I thank all of our witnesses today and in 

the past panels. We intend to tackle this issue head-on and in a 

bipartisan and thoughtful way. I appreciate your input and that of 

others in the audience, and others watching. We intend to get this 

right, not only for our country to grow jobs and innovation, but also 

for public safety, to make sure that they have an interoperable network taxpayers can afford and that they can always rely upon. 

So thank you all for your participation. We stand adjourned. 

[Whereupon, at 2:35 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

PREPARED STATEMENT OF HON. EDOLPHUS TOWNS

Thank you, Chairman Walden and Ranking Member Eshoo. I am very pleased 

that the Sub Committee is holding this hearing. It is very important to get the full 

101 

perspective on spectrum so we can move forward on bipartisan legislation to address 

this issue. 

I am a strong supporter of President Obama’s goal of improving the way this 

country uses its spectrum and freeing up more for mobile broadband and a national 

public safety network. Incentive auction authority is an efficient tool to put spectrum in the hands of those companies that most want it to roll out the latest most 

innovative devices our families will rely on in the future. It is critically important 

that the FCC, given its deep expertise in conducting high quality auction, be given 

wide discretion in how it is designed and implemented. 

I am encouraged by the energy of the high tech community and the response from 

the broadcasting community to see this through. My constituents still rely on free 

over the air television, and mobile broadcasting has shown particular promise in 

disaster situations. I am concerned that opportunities for smaller and minority focused broadcasting may be hurt if the smaller broadcasters are first to take advantage of the incentive auctions. However, the need for spectrum for mobile broadband 

by ever more users is undeniable, as FCC data has shown. I would like to hear from 

our witnesses whether and how both of their preferred outcomes can be achieved. 

Again, I thank the Subcommittee for tackling this subject in a broad and comprehensive manner. I look forward to working with my colleagues on these and 

other issues as we move forward in this Congress. 

Thank you and I yield back the balance of my time. 

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