On March 9, Congress inexplicably allowed the Federal Communication Commission’s (FCC) auctioning authority to expire for the first time in its history. The lapse of the regulatory agency’s ability to auction spectrum licenses — government licenses granting an entity an exclusive right to use certain radio frequency bands — to commercial providers represents a devastating blow to the nation’s ability to invest in its future and deliver quality wireless and broadcast service to millions of Americans. This expiration also reveals the need to create a long-term national game plan for the future that includes a robust spectrum pipeline.
Since 1994, the FCC has conducted regular auctions of licenses for electromagnetic spectrum on which commercial wireless providers can bid to gain exclusive access to certain radio frequencies necessary for providing network services.
These auctions allow the government to allocate spectrum more efficiently than “either comparative hearings or lotteries” and serve as a positive reminder of what’s possible when the government embraces market-based innovation. They also generate significant funds for the United States Treasury. According to agency records, FCC auctions have contributed over $258 billion to the U.S. Treasury since 1994, and have the potential to generate even more in the future. This money has played a critical role in allowing the government to fund important programs like next-generation 911 services necessary for improving public safety.
The auctions responsible for generating this funding are now no longer possible because a small number of lawmakers were unable to agree upon the best course of action for extending the FCC’s auctioning authority. While the House unanimously passed a bipartisan bill that would have extended the agency’s auctioning authority to May 19, the Senate failed to take similar action due to a disagreement over a “date change,” effectively killing the proposal.
Shortly afterward, a variety of House lawmakers, consumer advocacy groups and trade organizations such as the Cellular Telecommunications Industry Association (CTIA) released statements expressing dismay that the Senate was unable to do something as simple as renew a decades-old agency power critical to preserving spectrum access. By neglecting to act, the Senate failed to ensure that America continues to lead “the world in the development of next generation wireless networks and applications.” FCC Chairwoman Jessica Rosenworcel also released a statement on behalf of the FCC urging Congress to move quickly to restore the agency’s auctioning authority, which she correctly notes has been an “enormous engine for market innovation and the flourishing internet ecosystem.”
People are right to be dismayed. This outcome was very much preventable and reflects a pattern of poor decision-making on the part of lawmakers. For too long, Congress has continued to kick the can down the road and only granted the FCC short-term auction authority extensions. Yet until last year, the FCC was operating on a 10-year plan, provided by the Middle Class Tax Relief and Job Creation Act of 2012. Longer extensions such as these are far more conducive to stability and allow the agency to plan for the future.
However, what’s truly ideal is a long-term national game plan that includes a robust spectrum pipeline. This game plan should prioritize holding auctions for mid-band spectrum, the range of which is considered the sweet spot for 5G technology due to its comparative advantages over low-band and high-band spectrum. This range of spectrum is particularly well-suited for 5G because it can carry large amounts of data over vast distances, providing consumers with more coverage at faster speeds and at affordable prices.
Unsurprisingly, these 5G improvements have facilitated an explosion in consumer demand. The number of 5G mobile phone service subscription plans is at an all-time high, with 168 million subscriptions expected by 2024. The number of wireless connections in the U.S. also continues to rise. Today, there are 499 million wireless connections, up from 109 million in 2000.
To keep up with demand, commercial providers need to have access to more mid-band spectrum. The same goes for any other band of spectrum deemed essential to 5G or next-generation 6G technology. In other words, the spectrum pipeline can’t be allowed to run dry. The U.S. has too much to lose by allowing other countries to take the lead on 5G. Already, countries like China are believed to have made at least three times as much spectrum available to providers for 5G technology as the U.S. This scenario is unacceptable.
Any serious national game plan should not only require that Congress move quickly to restore the FCC’s auctioning authority, but also ensure that the FCC takes adequate steps to provide ample opportunities for commercial providers to bid on spectrum. This means empowering the FCC to free up more valuable bands of spectrum to be sold at more auctions. Actions such as these will go a long way toward rebuilding Congress’s credibility and ensuring that commercial providers have what they need to improve services and close the digital divide. The clock is ticking, and Americans are waiting.
Nate Scherer is a Policy Analyst with the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit us on www.TheAmericanConsumer.Org or follow us on Twitter @ConsumerPal.