Spectrum Management: Auctions

Publication Date: September 2008

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Media, telecommunications, and information

Type:

Abstract:

Spectrum policy issues before Congress are characterized by economic, technological and regulatory complexity. An increasing number of public comments have criticized the effectiveness of spectrum management and policy in the United States. Questions regarding the role of auctions in spectrum management are of immediate concern because congressional authorization of the existing auction process expires in 2007. Proceeds from spectrum sales are presently attributed to general revenue in the U.S. Budget. In the 108th Congress, however, a precedent was established with the creation of a Spectrum Relocation Fund. This fund will hold proceeds from specified sales of spectrum currently allocated to federal use; federal agencies vacating spectrum to be auctioned for commercial use will be compensated from the fund for costs of relocation. In the 109th Congress, H.R. 1323 (Representative Stupak) is the first of several anticipated bills that would place auction revenues in special funds for specific purposes. The 108th Congress also asked for a study regarding the allocation of spectrum licenses, due by October 2005. The conclusions of this report may lead to changes in spectrum policy and the auction process. Congress may also consider ways to free valuable spectrum currently occupied by broadcasters as part of a plan to encourage the move from analog to digital television (DTV). How to use the proceeds of auctions for all or some of the released spectrum is a subject of discussion in Congress. The monies might go, for example, to facilitate the transition to DTV, to fund public safety communications improvements, or to help decrease the budget deficit.

Spectrum, a valuable resource governed by available technology, is regulated by the federal government with the primary objectives of maximizing its usefulness and efficiency, and to prevent interference among spectrum users. A key component of spectrum policy is the allocation of bands for specific uses and the assignment of frequencies within those bands. Auctions, a fairly recent innovation in frequency assignment, are regarded as a market-based mechanism for allocating spectrum. Other market-driven policies include licensing fees based on fair-market valuations of spectrum and flexibility in spectrum usage within assigned bandwidths. Today, spectrum for commercial applications is typically auctioned to the highest bidder, but many commercial users have spectrum acquired before the present-day auction process was implemented.

After years of debate over the idea of using auctions to assign spectrum licenses, Congress authorized the Federal Communications Commission (FCC) to establish an auction process to award spectrum licenses for certain wireless communications services (Omnibus Budget Reconciliation Act of 1993). These provisions include opportunities for small businesses, described as entrepreneurs, to receive bidding credits to help them compete with larger companies. H.R. 1661 (Representative Rush) would create a new category of loan within the Small Business Administration to help qualifying companies bid in spectrum auctions or buy spectrum in the secondary market.

This report will be updated.