With the rise of smart phones and increased broadband usage, mobile providers are scrambling to gain access to unused wireless spectrum. Currently, mobile providers have enough spectrum to run their networks, but with the rise of smart phones and increased tablet usage, they are approaching capacity. TV broadcasters, among others, currently hold licenses to portions of the broadband spectrum which they do not use. With that in mind, the big four wireless providers have tried various methods to increase their broadband access. Verizon wireless offered to purchase licenses from cable broadcasters in December 2011, and AT&T attempted to acquire T-Mobile over anti-trust objections in order to obtain access to more spectrum.   While AT&T abandoned the merger under antitrust scrutiny, the Department of Justice recently approved Verizon’s plan to purchase broadband spectrum with certain restrictions, and the FCC also approved of the purchase with the recommended restrictions. The conditions included a requirement that Verizon divest some of its broadband to wireless provider T-Mobile. Verizon says the expanded broadband access will increase coverage and speed for consumers, so some attempts have been more successful than others.

Along with approving the broadband purchases and swaps, the FCC is currently working on a plan to use broadband auctions to allocate the wireless spectrum among mobile providers and broadcasters. In February, Congress authorized the FCC  to run auctions to sell off broadband spectrum to the wireless providers. The auctions would allow Broadcasters and others with unused broadband to auction off the unused portions of their spectrum to wireless providers and others who are looking to expand their broadband usage. The bill also reserved some spectrum for first responders. Only a few weeks ago, the FCC put forward its plan under the authorization from Congress to run the auctions to reallocate spectrum, and the FCC commissioners will vote to approve the plan in their September 28, 2012 meeting. Currently, the plan allows TV Broadcasters to voluntarily auction unused spectrum and keep a portion of the proceeds. The revenues from the auction will be used to fund the auction, pay the broadcasters, and hopefully, raise up to 15 billion dollars to fund tax cuts in the February bill.  The auctions are expected to take place by 2014.

While Congress and Regulators see big public benefits and increased revenues from the plan, some are concerned either about broadcasters being forced out of licenses that the FCC has consistently renewed for decades or about broadcasters being able to profit by selling what is essentially a public good that Broadcasters have enjoyed for the same time period. What do you think? Are the auctions the best way to allocate public broadband spectrum? Or should the FCC and DoJ just continue to approve purchases like they did with Verizon, and renew smaller portions of the existing licenses as the licenses come up for renewal? Should Broadcasters be allowed to participate voluntarily in the auction, or should they be forced to forfeit any unused spectrum?

 

–Samara C. Pals Cramer

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2 Responses to FCC to Vote on Spectrum Auctions

  1. Lizzie says:

    The spectrum crunch is largely a product of allocating a limited resource for free to broadcasters before future, higher uses and higher values for the particular spectrum bands were known. Broadcasters believe they have “acquired” the right to spectrum given the continual renewal of their licenses, but how much return should broadcasters expect since their actual investment in the bands is nil? It seems some broadcasters are underutilizing their spectrum allocation, so in lieu of figuring out an option for band sharing, incentive auctions seem an appropriate tool to benefit both the broadcasters (who don’t need the spectrum) and mobile providers (who do, and are willing to pay for it). In the reallocation of licenses, the FCC should keep in mind how its initial allocations got them into this pickle in the first place.

  2. Kate Haywood says:

    The FCC faces a definite challenge in attempting to please all involved parties with a limited resource insufficient to go around–radio spectrum. The FCC auction would seem to efficiently reallocate current licenses, but there are dangers in the details facing regulators that will determine the auction’s overall success. First and foremost, regulators must be prepared for broadcasters to hold on to their licenses, and will need some form of incentive or measure to make sure a sufficient amount of spectrum is reallocated. As for potential incentives, regulators will need to determine how much of the auction proceeds will go to the broadcasters (who paid nothing for their present licenses), and what will go to tax payers. This could be a particularly tricky political move, and Congress will surely be quick to blame FCC regulators for any public backlash for diverting public funds into private hands. Overall, a great analysis of a very timely and important topic!