Next Up in Tech—Mobile Spectrum Debate

April 29th, 2014

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Mobile broadband is transforming the way we work, learn, and live. But all of us pecking away on smart phones and watching video on our tablets has put an enormous strain on the wireless networks. How, Washington is wondering, will they be able to keep pace with our voracious demand? In particular, will there be enough spectrum to meet our ever expanding need for data?

In order to free-up new capacity, Congress—as part of the Budget Control Act of 2011—authorized the Federal Communications Commission (FCC)  to run an auction in which spectrum used by TV broadcasters could be auctioned off to mobile broadband providers. The independent Congressional Budget Office (CBO) estimated that the auction would raise enough revenue to: compensate the broadcasters for giving up their spectrum; pay for FirstNet, a nationwide first-responder communications network recommended by the 9/11 Commission; and generate $13 billion in deficit reduction.

But a lot of the specific details of how the auction will function—such as who can bid—were left up to the FCC. On May 15th, the FCC is expected to vote on its rules for the upcoming auctions. Press reports indicate that the FCC would like to reserve a portion of the spectrum being auctioned for companies like T-Mobile and Sprint. According to FCC Chairman Tom Wheeler, such set-asides for these companies and others are necessary to spur more competition and to promote the deployment of wireless broadband services in rural and unserved areas.

However, restricting the auction could undermine the entire process, putting public safety and America’s innovators at risk. A leading study has shown that by creating eligibility restrictions in the auction process, the FCC will most likely end up taking in significantly less money—estimates have come in from $6.7 -$13.4 billion under the mildest restrictions and $13.4-26.4 billion in lost revenue with more severe restrictions. This means less money to reimburse broadcasters, less money for FirstNet, less money for deficit reduction, and less money for vital public investments that help us educate our children, build roads, cure disease, and train our next generation workforce.

Such concerns were echoed earlier this month in a letter signed by 78 House Democrats urging the FCC to allow as “many bidders as possible to compete in an open and fair auction on equal terms will allow for the full market price for spectrum to be realized and, in turn, lead to higher compensation to incent greater broadcaster participation resulting in more spectrum allocation.” And industry leaders also have raised concerns; AT&T has even suggested that it may skip the auction if the restrictions imposed by the FCC are found to be overly burdensome.

An incentive auction, if structured properly, has the ability to help usher in a new era of technological innovation and middle class prosperity. A lot of people are watching to see if the FCC can get this right.