Microsoft's Brad Smith (Credit: Gary Arlen)

Microsoft Claims Rural White Spaces Plan Could Cost Less Than $12 Billion

Says "not our goal to make a profit" from rollout envisioned for next 5 years

Hours before Microsoft Corp. President Brad Smith uttered the first words of his company's "Rural Airband Initiative" that would use TV white space spectrum, the National Association of Broadcasters denounced his company's proposal as "the height of arrogance." Smith unveiled the plan at a Media Institute luncheon in Washington on Tuesday, July 11.

NAB's preemptive attack, spurred by a New York Times story earlier in the day previewing Smith's speech, focused on the plan to use broadcast spectrum although Microsoft "refused to bid on broadcast TV airwaves in the recent FCC incentive auction."

When B&C asked Smith about the NAB invective during a Q&A session after his long but sparsely detailed speech, the Microsoft executive said he did not want to "hurl insults at each other." He proposed that Microsoft "should sit down with [NAB President/CEO] Gordon Smith to see how they could "work together" on Microsoft's vision to bring digital education, telemedicine, agribusiness and other data services to rural America.

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"We all have the opportunity to learn from each other," Smith said.

Microsoft's Smith focused on efforts to "close the rural broadband gap," which he said now deprives about 23 million Americans of high-speed data access. He suggested that the Microsoft white spaces proposal—running on underutilized broadcast TV airwaves—would cost $8 to $12 billion nationwide, which he called "more affordable" than other wireless broadband ventures, which could cost up to $50 billion. Smith said that Microsoft will offer a free license for some of its white spaces technology to "stimulate the market" including community investments.

Smith showed several prototype receivers, some of which Microsoft has used in field trials in 20 global locations ranging from Kenya to Taiwan to Washington state. The devices, built by Adaptrum, 6Harmonics and Aviacomm, are priced at under $800 now, and he said the prices would fall to $200 or less. They will be able to carry data at speeds up to 400 Megabits per second, he said, with initial models now operating at 25 Mbps and 40 Mbps. He said that Microsoft has run about 20 projects reaching 185,000 users—insisting that "this technology is ready to take off."

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Smith explained that by bundling white space spectrum from several channels, throughput speeds could go even higher, bolstering his push for more bandwidth.

Smith acknowledged that use of white spaces "won't be a panacea," but he quoted a Boston Consulting Group study, which showed that 80% of people who live in sparsely populated U.S. areas (about 2 to 200 people per square mile) would benefit from such white spaces service via broadcast airwaves. The BCG study also concluded that satellites would be better for less populated areas, while fixed wireless would be more appropriate for more urban areas, Smith explained.

Microsoft distributed a 50-page white paper, "A Rural Broadband Strategy: Connecting Rural America to New Opportunities" to more than 200 attendees (many of them Microsoft invitees) at the monthly Media Institute luncheon. The crowd was nearly three times the size of the group's typical events, and included guests such as Rep. Derek Kilmer (D-Wash.), Rep. Darrel Issa (R-Calif.) as well as executives from media, education and business non-profits, which Microsoft apparently will recruit to support its plan.

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Policy Challenges

Smith cited a July 4, 2022, goal for the Microsoft plan to "close the rural broadband gap."

"The necessary standards are in place" and "innovative business models" are being developed, he said. "This is now ready to scale. "It is time for a new company to set a new course."

He pointed out that the FCC has taken its time with major policy decisions, citing the 13 years from the first cell phone proposal to the first certified product and the 14 years for a similar WiFi process. He said that white space usage has been under consideration for nine years so far and should be accelerated now.

Several communications experts at the event (who requested anonymity) contended that the proposal's expectation of broadcast bandwidth would not face an easy policy process. One lobbyist for a major group owner simply dismissed the plan as one that would "take our business away from us."

Prior to its early Tuesday statement, NAB had filed comments at the FCC about the Microsoft plan, which NAB's Patrick McFadden in a blog, summarized as "a heist...based on a con game."

The Microsoft proposal, which it characterizes as a blend of "broadband and cloud computing," would start with 12 white spaces projects in 12 states in the next 12 months (Washington, Arizona, North and South Dakota, Kansas, Texas, Wisconsin, Michigan, Georgia, Virginia, New York and Maine.)

Smith said that the first phase could connect up to two million people in rural areas.

He suggested that the initial efforts would trigger "community investments." He vowed that Microsoft will stimulate the market "by licensing our technology," based on 39 patents including 14 dealing with white spaces delivery. He indicated that some of the patents would be licensed at no cost.

"We want to be a catalyst," he said. Smith envisioned that white spaces technology in major urban markets would incent equipment makers to enter the business, which would spur expansion into rural areas. He described use of channel 37, which the FCC has approved for sharing with wireless medical telemetry systems, and he pointed to the "vacant channel proceeding" (described in the white paper booklet he distributed) as proving that even more spectrum will be available for the Microsoft proposal.

He cited the importance of including Low Power TV in the plan. And he stressed that recent spectrum reallocation activities have created 210 MHz for broadcasters, 140 MHz for mobile carriers and only 18 MHz for "public" services. He said that federal and government funding "will accelerate this work" to distribute the proposed services.

During the Q&A follow-up to Smith's remarks, Rep. Issa asked about the funding for more bandwidth.

Smith responded by characterizing Microsoft's plan as offering "an opportunity for the FCC to be innovative" especially by enabling processes that would allow channel bonding for "dramatically higher speeds."