On April 6, 2011, the Obama Administration summoned Washington's spectrum policy elite to the White House to highlight its support for legislation giving the FCC authority to conduct voluntary incentive auctions. With such authority, the FCC could auction to new holders spectrum already licensed to other providers. Under pending proposals, the proceeds from such auctions would be shared between the U.S. Treasury and the licensees that gave up their spectrum. The Obama Administration and FCC, citing the dramatic increase in wireless broadband traffic and a looming spectrum shortage, believe that incentive auctions offer the most expedient way to move valuable but underutilized spectrum currently used for services like UHF TV broadcasting and Mobile Satellite Service (MSS) to wireless broadband providers that can put it to more intensive and welfare-enhancing use. FCC Chairman Genachowski has been a particularly strong advocate of incentive auctions, highlighting his support for legislation not just in friendly environs, but in hostile ones as well.
At the April 6 White House event, Obama Administration advisors produced a letter from 112 economists, including several former FCC Chief Economists, in support of incentive auctions. In the letter and during a panel convened during the event, the economists, noting the FCC's long history conducting spectrum auctions, urged Congress to leave much of the details associated with implementing incentive auctions legislation to the FCC. After the formal phase of the White House event, Obama Administration policy advisors convened a closed door meeting with some of the event participants and key Capitol Hill staffers to discuss further the benefits of incentive auctions and how to move legislation forward this year.
The April 6 White House event is the latest in a series of Obama Administration efforts to promote wireless broadband. Last year, President Obama expressed strong support for the FCC's National Broadband Plan (NBP) proposal to unleash 500 MHz of new commercial spectrum and directed federal government users to identify spectrum currently under their control that could be reallocated for commercial broadband use. In his State of the Union address earlier this year, President Obama touted the benefits of wireless broadband for fueling job growth and innovation, and pledged that 98 percent of the U.S. population would be served by high-speed mobile broadband in the next five years. On February 10, 2011, he discussed his Wireless Innovation and Infrastructure Initiative (Wireless Initiative), and its benefits for promoting U.S. exports, during a speech in Michigan. And on February 11, 2011, Austan Goolsbee, Chairman of the President's Council of Economic Advisors, outlined the Wireless Initiative's three major pillars: (1) release of the 500 MHz of new spectrum; (2) major investment incentives for network build-out; and (3) a Wireless Innovation Fund to support research and development. This latest White House event in support of incentive auctions further underscores the Obama Administration's well-founded belief that increasing the speed and deployment of wireless broadband will be key to U.S. global competitiveness and our overall economic recovery over the next decade.
Members of the House Energy and Commerce Committee's Communications and Technology Subcommittee held a hearing on June 1 to discuss possible legislation to authorize the FCC to conduct voluntary incentive auctions, including the best way to structure such auctions and how much flexibility to provide to the FCC. The hearing reflected widespread support among Democrats and Republicans for incentive auctions, as long as any reallocation of broadcast TV spectrum is voluntary and TV stations and viewers are not harmed.
Lawmakers agreed that voluntary incentive auctions reflect good economic policy as well as good spectrum policy, and appeared ready to move forward. Witnesses representing the wireless industry urged Congress to move forward quickly to pass incentive auction legislation, whereas broadcast witnesses expressed concern that broadcasters not be coerced into participating or face penalties for not participating (such as reduced interference protection, relocation to inferior channel allotments, diminished service areas, or spectrum fees.
Of course, the incentive auctions proposal is not without its detractors – The National Association of Broadcasters (NAB) chief among them. The NAB does not believe that a looming spectrum crisis exists. A paper it recently released concludes that "the impending spectrum crisis is not real." NAB's main concern, I believe, is that TV broadcasters have an extremely valuable asset, and policy makers might ultimately force them to relinquish at least some of their current spectrum holdings for less and/or "lower quality" spectrum.
Advocates of more wireless spectrum have the better argument. Indeed, CTIA and CEA, long-time supporters of incentive auctions, were quick to respond to NAB's efforts to downplay the looming spectrum shortage, and the FCC and legislation sponsors have been clear that participation in incentive auctions would indeed be voluntary. In addition, another strong supporter of incentive auctions, Mobile Future, on whose advisory board I sit, has produced a compelling engineering analysis demonstrating that if more spectrum is not made available soon consumer adoption of wireless broadband will be irreparably slowed.
Mobile Future and others, including the Pew Research Center, have also pointed out the importance of the relatively cheaper wireless broadband platforms to closing the digital divide that exists between minority and non-minority groups.
To gear up for the fierce policy battle ahead, the wireless, technology, and consumer electronics industries have forged new coalitions to advocate for incentive auction legislation. One such group is the High Tech Spectrum Coalition, whose member, Intel, recently testified in favor of incentive auctions at a House Energy and Commerce Committee hearing.
I say more power to the supporters of incentive auctions. As shown by Mobile Future, CTIA, CEA, and others, the evidence is overwhelming that a broadband spectrum shortage is on the horizon, and, given the inherent difficulty of re-farming beach front spectrum, incentive auctions offer a promising option for avoiding such a shortage. As Chairman Genachowski has suggested, now is the time to act. U.S. global leadership in wireless broadband hangs in the balance. The next few months will be critical if these important efforts in support of incentive auctions are to be successful.