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How to Make $25 Billion in a Week…Spectrum Auctions

Over the past seven days, the United States Treasury is on pace to bring in more than $25.8 billion  without raising taxes, assessing penalties or fines, or imposing any other sort of burden on individuals, business, or foreign entities.  In fact, companies are clamoring to GIVE the federal government money.  Why you might ask?  Because the U.S. government learned in the 90s that it holds an extremely valuable resource: spectrum.  And it began auctioning that resource to private entities to build out the wireless networks that more than 90% of Americans now use to make calls, send texts, and access the Internet.  As Americans’ use of mobile devices has exploded, so too has the demand for spectrum needed to ensure wireless service providers can provide fast, reliable service to their customers.  The Federal Communications Commission (FCC) is currently conducting the first spectrum auction since 2008, and interest and participation is surpassing even the highest estimates. 

To be clear, there is not an infinite amount of spectrum at the FCC’s disposal to auction off, hence the reason why this auction is netting approximately $5-10 billion more than most analysts predicted. The scarcity of currently available spectrum, and the interest in the current auction, underscores why our policy makers need to continue to focus on building a pipeline of spectrum.  The now nearly five year old National Broadband Plan stated a goal of making 500 MHz of spectrum available for mobile broadband.  Congress and the Commission are on their way, but more needs to be done.  The incentive auction provisions included in the 2012 Middle Class Tax Relief Act should make about 100 MHz of extremely valuable spectrum available, but that will not be auctioned until at least 2016. 

Leaders in both chambers of Congress have indicated they intend to work to update our nation’s outdated communications laws in the 114th Congress, which convenes in January.  Spectrum will no doubt be an important part of that debate.  But lawmakers should not view that as the only opportunity to address our spectrum needs.  Early next Congress, lawmakers should reintroduce and act on narrower, bipartisan pieces of spectrum legislation that already exist such as H.R. 3674, the Federal Spectrum Incentive Auction Act, introduced by Reps. Brett Guthrie (R-KY) and Doris Matsui (D-CA).  Two other bills that have bipartisan, bicameral support, S. 2505 and H.R. 5125, the Wi-Fi Innovation Act, would make additional spectrum available for unlicensed Wi-Fi use.

The Advanced Wireless Services-3 (AWS-3) auction has yet to conclude, so that $25 billion figure will certainly go further north.  The clamoring for the spectrum available in this auction should refocus our lawmakers’ attention on the value of this resource, and the need to put it to use to meet the needs of the American public.

Public Policy Tags: Broadband, Communications, & Spectrum