Spectrum Should Go To The Highest Bidder. Period.

Dropped calls and slow Internet service on smartphones will increasingly become the norm in todays wireless world, due to the limited amount of spectrum available to wireless companies and the huge explosion in non-traditional wireless devices, such as the iPad and smartphones.  Mobile device  signals are run over radio frequency bands, similar to the way your broadcast television, AM/FM radio, satellite TV, or even your Wi-Fi network work.  There are only so many frequencies available to support the specific technical demands of wireless broadband services, and only so much capacity that each frequency can hold.  This means that as more customers sign-up for wireless service, and as more customers begin to use the Internet via their smartphones, the more unreliable service becomes.

 

Demand for wireless service is booming.  Over 91% of Americans have a wireless phone.  Twenty-five percent of U.S. households have gone wireless only, forgoing a landline in their home.  AT&T says that demand on its current network has increased 8000% in the past four years, and that by 2015, its network will transmit as much data every 6 weeks as it did all of 2010.  Similarly, Cisco predicts that wireless data traffic will increase 39-fold from 2009 to 2014.  Each carrier is addressing the coming capacity crunch in different ways.  The AT&T/T-Mobile merger is one example of a path to acquire access to more spectrum resources in the short term to service the demand coming from consumers.

 

To help, the FCC has granted access to “white spacespectrum.  When the FCC first began licensing spectrum to broadcasters, they left wide gaps between the slices of spectrum they divided amongst the major broadcasters, due to fear of interference amongst the channels.  With today’s technology that prevents this interference, these fears are being put to rest.

 

An even bolder and more comprehensive step is for Congress to authorize the FCC to serve as a market-maker and conduct incentive spectrum auctions as a way to bring fallow broadcast spectrum to market.  The incentive auctions as currently proposed by the FCC and endorsed by the White House would allow broadcasters to voluntarily auction off their unused spectrum, thus freeing it up for wireless companies to use.  Broadcasters are skeptical of these spectrum auctions, however.  Their worry is that these “voluntary” auctions may not be all that voluntary after all, and that penalties could be imposed if they chose not to participate.  Many lawmakers are sympathetic, and are weary of any auction that may force broadcasters to participate.

 

Broadcasters are currently hoarding some of the most prime spectrum for wireless carriers.  There are only around 13 million people left in the United States who use the airwaves to receive their television signal.  One study of broadcast spectrum use in New York City showed that, at its peak, usage was at a mere 13%.  The incentive auctions would offer some smaller broadcasters a business option to auction off all or a portion of their spectrum and receive a percentage of the proceeds as a result.

 

When broadcasters were first given their license to use this spectrum, there was plenty to go around, and they were given it by the government at very low cost.  It was a benefit to the consumer to do this, as they were able to receive valuable news, information and entertainment because of this arrangement.  This isn’t the case anymore – more and more people are getting their information and entertainment through cable or the Internet.  If folks want to continue getting their news and entertainment from broadcasters, these consumers can.  Pursuant to current legislative proposals, broadcasters can choose to operate on the frequencies adjacent to their current operations and continue to provide the same broadcasts as they do now.  Or they can decide to stop broadcasting and sell their spectrum to the highest bidder.  It’s up to them, it’s voluntary.

 

Spectrum is a valuable and finite resource that is still owned by the American public, and there’s no reason broadcasters should be able to squat on a resource that isn’t being used to its full potential.  In fact, the spectrum auction could fetch so much money that it would cover subsidizing the basic cable of these current broadcast TV users for the next 20 years and beyond. 

 

The spectrum currently being used by broadcasters should be reallocated and auctioned off to the highest bidder.  If the spectrum is that valuable to broadcasters, they should be free to bid on it, the same as wireless providers.  Broadcasters shouldn’t be left to monopolize this resource simply out of historic reverence.  And what to do about the people who still get their television over-the-air?  By getting broadcasters to move, consumers would still have access to these channels and broadcaster could be held harmless for moving. 

 

Zack Christenson blogs for the American Consumer Institute on tech policy, and is a digital strategist at The Heartland Institute.

 

 

 

 

 

 

 

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