The Federal Communication Commission (FCC), which is tasked with hosting annual auctions for commercial wireless providers, may soon lose the ability to license radio frequency bands if its spectrum authority expires on September 30th. The FCC’s current authority only lasts for 10 years and must be renewed by Congress. Should Congress fail to act in a timely manner, the consequences could be devastating.
The FCC collects billions of dollars each year from the sale of spectrum. This money is used to offset public debt and pay for a variety of important public projects such as FirstNet emergency communication networks. It also provides the federal government with a steady stream of revenue that cannot be easily replaced. To do so would require raising taxes on Americans who can ill afford higher costs during a time of high inflation. Yet, after the July 29th auction of the 2.5 Gigahertz band licenses, the FCC will struggle to raise revenue and Congress may find it difficult to build a spectrum pipeline.
Since its establishment as the world’s first spectrum auction authority in 1993, the FCC has collected nearly $230 billion in revenue for the Department of the Treasury. According to the Congressional Research Service, the FCC has managed to do this while keeping auction costs down to $2.3 billion, or less than 1 percent of total auction revenue.
Just last year, C-band auctions collected over $81 billion making them the most successful auctions in FCC history. Moving forward, Congress could do more to optimize allocations for both federal and commercial uses in order to fund programs and help close the digital divide.
Research suggests that some Americans still lack access to wireless internet. This is particularly true for low income Americans and those who reside in hard to reach places. Congressional revisions to spectrum policy could go a long way toward addressing these inequities by responding to consumer demand and expanding 5G networks.
The FCC’s own FY2022-2026 Strategic Plan emphasizes the need to pursue a “100 Percent” broadband policy and expand “access to communications that are essential for Americans who work remotely, learn remotely, receive healthcare, and engage in commerce.” This is particularly important for eliminating “historical, systemic, and structural barriers” to underserved communities.
Moreover, consumers could see significant benefits from greater investment in 5G wireless networks. These networks provide faster internet speeds at a lower cost to consumers and have been linked to a steady increase in subscribership. In addition, a Lost Economy report found that 5G services could provide $1.8 trillion in savings over a seven year period.
Similarly, the Cellular Telecommunications Industry Association (CTIA) estimates that 5G technologies could provide consumers $305 billion in annual healthcare savings alone. More recently, a 2021 report by the Interactive Advertising Bureau (IAB) found that the internet economy “now accounts for 12 percent of the U.S. gross domestic product (GDP)” and is responsible for over 17 million jobs.
The potential benefits from 5G technology are limitless.
However, in order to take full advantage of these benefits, the FCC must be permitted to continue auctioning and licensing spectrum. Congress should move quickly to grant reauthorization and also propose a plan for the future that clearly defines the FCCs role over spectrum. This will allow for the full rollout of 5G infrastructure and encourage innovation in apps and services that consumers demand. Failure to do so will keep these consumer benefits on hold and allow foreign competitors like China the opportunity to overtake the U.S. in wireless technology.