FCC Chairman’s Proposed Spectrum Auction for 5G Is Good Policy

Published January 6, 2020

Federal Communications Commission (FCC) Chairman Ajit Pai made the right choice to support an FCC auction of the “C-Band” spectrum, although the full commission will have to vote on this plan and the details have not yet been made public.

Public Resource, Private Licenses

An FCC-led public, open, and transparent auction process that creates a level playing field for all interested parties would allocate resources efficiently to the parties that value them the most. Public-spectrum auctions led by the FCC are a step toward market-based spectrum management and privatization of public airwaves while maintaining needed governance of spectrum.

According to federal law, the American people own the radio waves—that is, the spectrum—or at least own the right to license those electromagnetic waves for use in the United States. The FCC regulates, by that licensing, those radio waves so consumers can enjoy the services provided without interference from other uses of the airwaves.

Again, by law, the FCC is directed to hold an auction so all potential buyers can submit bids for the use of the airwaves, under the theory that this open system will return the greatest benefits to citizens both in terms of maximizing revenue and putting the spectrum to its highest and best use.

C-Band Underutilized

Various parts of the spectrum are better for some applications than others, and the C-Band part is particularly good for wireless technology. The continued transition to wireless communications means a never-ending need for more of, and more efficient use of, the spectrum. Unsurprisingly, several companies are interested in obtaining licenses to use this spectrum.

A group of satellite service providers wants to privately sell off spectrum they have underutilized in the C-Band, changing its use from satellite to terrestrial.

However, spectrum holders don’t “own” spectrum; they own licenses to use spectrum. So what they really have sought to do is resell their satellite licenses outside of the FCC process and convert them to terrestrial use in a private sale where they pocket the money instead of benefiting taxpayers. That would seem to transform what is owned by the people into a private asset that can be traded at a business’s whim.

Auctions Benefit Public

The C-Band holders want to bypass the FCC and create a secondary market for spectrum allocation. Very real technical and practical problems can develop from new nonlicensed or unapproved uses, such as interfering with other services, including broadcasts, in the same or other bands of spectrum. Skipping the FCC process, even if allowed, is not as easy as flipping a switch from one sales method to another.

Make no mistake, secondary markets are valuable and part of the free-market universe. But secondary markets require clear ownership and clear rules, and that framework simply doesn’t exist for spectrum licenses, just as it doesn’t exist for trading permits to work federal lands or driver’s licenses.

In fact, under current law and with the infrastructure that is in place, the right approach is the existing open auction framework at the FCC that has been proven to be successful not only in redeploying spectrum but also in properly valuing spectrum for the public benefit. Simply put, there is no free market in spectrum by law.

Perhaps the day will come when a new process could supplant the FCC-led public auction process for repurposing spectrum, but this aspiration for long-term spectrum policy is not the world we have today.

Bartlett Cleland ([email protected]) is managing director of Madery Bridge Associates and policy counsel for the Institute for Policy Innovation. An earlier version of this article was published by IPI. Reprinted with permission.

Internet Info

Agit Pai, “Letter to Honorable Roger Wicker, Chairman, Committee on Commerce, Science, and Transportation, United States Senate,” Federal Communications Commission, November 18, 2019: https://heartland.org/publications-resources/publications/fcc-chairman-agit-pai-letter-to-honorable-roger-wicker-chairman-committee-on-commerce-science-and-transportation-united-states-senate

Juliana Knot, “FCC Chair Supports T-Mobile-Sprint Merger,” Budget & Tax News, The Heartland Institute, October 3, 2019: https://heartland.org/news-opinion/news/fcc-chair-supports-t-mobile-sprint-merger