Tomorrow the Federal Communication Commission’s (FCC) auction authority will expire. Despite its obvious importance, for US global competitiveness and consumers, Congress extended the authority only a couple months when it was about to expireearly this fall. Instead of doing the real work, Congress merely kicked the can down the road and so here we are again.
Since 1993 the FCC has had the authority to auction radio spectrum licenses for use by various private sector entities. Spectrum is a finite array of frequencies, think of them as radio station channels, which the government manages on behalf of the people in pursuance of the “public interest.” An increasingly scarce resource, spectrum demands appropriate use and distribution to maximize the opportunity for innovation as a return benefit to the public.
Congress has empowered the FCC to grant licenses, including through spectrum auctions. The authority to auction blocks of spectrum has typically been extended a decade at a time, a practical option that allows for auctions to be planned appropriately to keep the pipeline of available spectrum flowing, and with an eye toward balancing the governance models to achieve the right mix of licensed, shared licensed and unlicensedspectrum.
For licensed spectrum entities pay to lease spectrum for “private” use. These spectrum holders do not “own” spectrum—they have been granted licenses to use of spectrum for particular purposes. As is the case with any license, there is a limitation in the express or implied rights.
Shared licensed spectrum is as it sounds, when more than one entity occupies the same spectrum and have some arrangement for use. For example, a company may use spectrum that the government also uses, each using it at certain times or within certain conditions. This is still licensed but is also shared.
Finally, unlicensed spectrum are bands of spectrum that are not under a command–and control model, but the spectrum is largely“open“ for exploration, experimentation and innovation. In theseunlicensed bands, interference is avoided by certain technical limitations placed on the devices operating in the spectrum.
A balance of these approaches to spectrum deployment isnecessary to meet various market demands and our country’s needs.
Significantly, about two-thirds of spectrum is held by federal agencies, approximately 12 times more than is held by the wireless industry. As government can simply take the airwaves for use, the people controlling that spectrum do not have the same incentives to most efficiently and effectively use the bandwidth. Industry has various market mechanisms that work towards efficiency, such as competition, paying to lease the airwaves via auction, or in the case of unlicensed bands,consumer expectation of efficient use of multiple products guides the development and deployment of the technology.
For their part auctions are a critical piece of the spectrum pipeline puzzle as they not only raise money for the US treasury but also provide a stream of spectrum to meet consumer and citizen’s ongoing and increasing demands. Consumer demand for more spectrum continues to grow rapidly as the importance of wireless services to our economy increases. Maximizingscarce resources such as spectrum only makes sense, particularly as doing so benefits taxpayers and helps our struggling economy.
Congress must do its part to give priority to a continuous supply of mid-band licensed spectrum via auctions. But this move alone does not guarantee success. Government policies need to make sure that the spectrum that is made available is being used optimally so that all that need it can get to it. Making more spectrum available via the market allows for this resource to be distributed to its best purpose, particularly when government policies work in concert, and not opposed, with that goal.
As with so many things these days the global race is on. The option for the U.S. is to either win or fall behind, ceding the future to our global competitors, while also disappointing consumers.
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