The Federal Communications Commission (FCC) spectrum auction authority was due to expire in December. At the last minute it was extended to March 2023 amid rumors that a “deal” that would allow Congress to mandate an auction in the lower 3 GHz band had fallen through.
March is not far away, and it seems likely that authority will be extended or another solution found by then, but this is nevertheless a ridiculous situation that no other country seems to have found itself in.
Auctions are a critical tool for spectrum management as well as a way for governments to gain a significant windfall from the auction fees. Managing spectrum is critical for an economy. Delaying or degrading this tool from the FCC toolbox is nonsensical as is Congress apparently taking over the decision as to which spectrum bands to auction. It is hard to imagine this approach could result in optimal spectrum management decision and in the U.S. deriving the maximum economic benefit from the sale and use of spectrum.
Why has this happened? It appears to be a mix of a flawed time-limited mandate to conduct auctions and excessive political interference in what should be a non-political field.
Many regulators around the world, such as Ofcom in the U.K., have been set up as non-political bodies. They operate at arm’s length from government, which has very limited ability to influence them, and their staff, unlike FCC commissioners, are not political appointees. Like independent central banks, this independence allows them to pursue optimal long-term policies in an area where decisions can have ramifications for decades. And decisions on optimal use of spectrum are much more about technology and usage than they are about any political preferences.
Why also is there any debate about the use of auctions – which have proven so effective over decades and are relied upon by every nation’s spectrum regulators? Auctions are mostly used to provide spectrum for licensed cellular use, although they can also be used in other areas.
Auctions for licensed exclusive-use spectrum have generated billions of dollars in revenue to the U.S. Treasury. Maintaining an adequate supply of licensed spectrum should be a goal of all policymakers to ensure that providers can continue to deploy and enhance advanced 5G networks. Opponents to auctions are often governmental users (e.g. defense, aeronautical) who perceive that auctions are used to remove their access to spectrum and the community that would prefer unlicensed access, predominantly Wi-Fi proponents, but also other short-range users.
The debate has also been more heated in the U.S. than elsewhere because the key spectrum bands used for 5G – broadly 3.4-4.2 GHz – around the world has relatively limited availability. In the U.S., this is due to incumbent, mostly governmental, use. This, in turn, has resulted in sub-optimal 5G deployment and concerns that the U.S. might be falling behind in 5G.
To set this on a more sensible course, we need to resolve procedural issues and then decide on the best way ahead, not just 5G spectrum but also spectrum for Wi-Fi, for new satellite systems and much more.
Procedurally there are two areas to resolve – the FCC and government. The right answer for the FCC appears obvious, especially given clear examples of best practice elsewhere. The FCC should be given the right to auction spectrum indefinitely and should be established as a non-political entity as Ofcom has been, charged with managing the spectrum in the best interests of the country. The FCC can then work to resolve disputes about best usage.
The government is more challenging. Governments make extensive use of spectrum but are rarely incentivized to use it as efficiently as possible and never to return spectrum that they do not need. Always safer to retain the spectrum in case a use materializes in the future.
This appears to be the case with the “deal” that Congress was working towards in the lower 3 GHz band, currently used by the military, which is not keen to vacate it for commercial use and may be effectively the issue blocking the provision of long-term auction authority to the FCC.
Much has been written about how to get governments to be better users of spectrum, and there is not the space here to reprise it all, but suffice to say that tools such as imposing a fee on the government for its spectrum holdings have not been of as much use as hoped. Better is to have a government spectrum management function staffed by individuals loyal to their profession (engineering and spectrum management), rather than the department that they are attached to and with clear powers to compare the value of spectrum in government use with that of commercial use, allowing re-purposing where appropriate.
If we did resolve these structural challenges, what is the right way ahead on 5G spectrum, and in ensuring that there is the optimal amount of spectrum for all users according to the value that they add from using it?
While economists rightly prefer that the market make these decisions, this is very difficult to do when unlicensed users and government users are involved. Unlicensed users make use of spectrum without paying for it at auction, and government users have effectively infinite resource and little incentive to relinquish unused or inefficiently used spectrum. This means that a decision needs to be made by wise and independent experts.
Ofcom has just shown how this might be done in a recent publication considering the upper 6 GHz band, a battleground between cellular and Wi-Fi. Ofcom set out a clear, evidence-based and impartial argument that resulted in a decision that was broadly “wait and see” but also allowed for innovative concepts such as potentially sharing the spectrum. Some might disagree with their choice, but at least the process is clear, impartial, evidence-based, open, entirely non-political and not subject to lobbying from those with the deepest wallets.
Which all shows just what a complex picture this is. It is not something politicians can resolve nor should those with the loudest voice have the greatest say. Clear, impartial, non-politicized decisions made by those with deep expertise in matters related to spectrum, networks and wireless use will lead to the best possible outcome. A chorus of these voices will determine the best path forward for spectrum policy in the U.S.
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