Key recent regulatory developments impact the US telecom market

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Summary

This opinion piece discusses a few of the key regulatory developments currently taking place in the US telecom market and addresses why they are important.

The FCC lost its spectrum authority

What’s happening?

• In March 2023, and for the first time, the US Congress did not renew the FCC’s spectrum authority. This took away the FCC’s ability to hold spectrum auctions and to distribute already won and paid for spectrum, which impacted the 2.5GHz licenses from the most recent auction.
• The lapse in authority was linked to the Department of Defense and the National Telecommunication and Information Administration (NTIA) studying whether spectrum in the lower 3GHz band, which is used by the Department of Defense, can be opened up for commercial use.
• It’s been a year and the FCC still does not have its spectrum authority back.

Why is this important?

• There were no spectrum auctions in 2023 and there are no auctions currently planned.
• The winners of the last auction, where T-Mobile was the biggest winner, were left in limbo. The FCC was unable to release the licenses after it lost authority. Finally, in December 2023, special legislation was passed to give the FCC temporary authority to issue licenses that were won before it lost its authority. The legislation required the licenses to be issued by March 2024. T-Mobile and the other winners have only just acquired their licenses, one year and seven months after the auction concluded.
• Finally, in general, the US needs a pipeline of spectrum to be a leader in next-generation wireless, to compete against its adversaries, and for economic growth.

The US government released its National Spectrum Strategy

What’s happening?

• At the end of 2023, the US government released a National Spectrum Strategy with the aim to secure spectrum for commercial and federal government needs.
• It identified more than 2700MHz of spectrum to be studied for use by both the private sector and federal agencies, which could take two years. The bands being looked at include the lower 3GHz, 5GHz, 7GHz, 18GHz, and 37GHz bands. However, studying the spectrum is not a guarantee it will be used.
• In the National Spectrum Strategy, the NTIA identifies spectrum sharing as one way to meet future spectrum demands.
• The big US operators were fairly well aligned in their thoughts on the National Spectrum Strategy. They want to see more mid-band spectrum quickly, preferably exclusive licensed spectrum, and they do not have much enthusiasm for dynamic spectrum sharing.

Why is this important?

• Spectrum is a scarce resource, and the demand for it continues to grow. It is essential for everything from everyday smartphones to critical sectors like aviation, manufacturing, energy, and defense.
• The US is also seen as lagging behind with its amount of spectrum allocated for 5G and has not always been aligned with global trends in relation to bands. A few of the bands identified in the National Spectrum Strategy that are considered important for near-term use include the lower 3GHz and 7GHz bands.
• However, the wireless trade association, CTIA, has also pointed to research that highlights the risk of the US becoming a spectrum island by failing to allocate key spectrum that the rest of the world is moving forward with for 5G. The lower 3GHz and 7GHz bands are now being looked at, but 4GHz wasn’t included in the National Spectrum Strategy, despite increasingly being used around the world for 5G. On top of this, in the US, the 6GHz band is dedicated to unlicensed use, while in much of the world it is licensed for 5G.

BEAD funding to expand broadband coverage

What’s happening?

• The Broadband Equity, Access, and Deployment (BEAD) program was established by the Infrastructure Investment and Jobs Act (IIJA) with $42.45bn allocated to the program. It provides funding to states and territories to expand broadband to unserved and underserved areas, and it prioritizes fiber technology.
• In July 2023, the NTIA revealed the state-by-state funding allocations for the BEAD program. Currently, the NTIA is going through the states’ initial proposals. And then there is a challenge process that relates to eligible locations, which is a long and complex one. The earliest that subscribers are expected to be on BEAD-funded networks is the end of 2025.

Why is this important?

• In general, the BEAD program is important in bridging the digital divide in the US.
• Beyond that, it also demonstrates how important fiber is becoming to the US and how both public and private funding opportunities are likely to change the operator landscape in the country. BEAD is a big example of public funding, and it prioritizes fiber.
• Tier-1 broadband operators are expected to lose some share to new operators that will emerge due to BEAD and other funding, and are anticipated to overbuild into tier-1 operator territory. Together, small rural operators could end up covering a lot of households and be a collective threat to tier-1 operators’ market share.

Appendix

Further reading

US: Country Regulation Overview – 2024 (February 2024)

US Service Provider Market Report – 2023 (December 2023)

Author

Kristin Paulin, Principal Analyst, Service Provider Americas Markets

[email protected]