Without Congressional action, the Federal Communications Commission will lose its general spectrum auction authority on September 30th. A congressional reauthorization of short-term FCC auction authority would ensure recent and upcoming auctions can continue without issue, while also giving Congress time to examine new bands for auction.
Since their inception, spectrum auctions have raised over $230 billion for the Treasury department, thus funding several of the government’s priorities while not having to raise taxes on the American people. This money has been used in investment and connectivity for innovation to close the digital divide. Because of the FCC’s auctions, spectrum distribution is fast, efficient, and economically rational. This continued process is vital for innovation, investment and international competition.
A lapse in FCC auction authority will definitely have a negative impact on the 2.5 GHz auction scheduled to begin in July and the subsequent ability to award licenses to winning bidders. This uncertainty will depress auction revenues in the 2.5 GHz, losing taxpayers billions, should Congress fail to act. It may also impact the FCC’s ability to issue licenses from the already completed 3.45 GHz auction. Leaving winning bids in the lurch and delaying deployments.
The FCC’s current auction authority comes from the Spectrum Act of 2012, which granted the FCC general auction authority for 10 years. Over the last 10 years we have learned that the Congressional Budget Office is less than accurate in gauging the value of spectrum and under general auction authority Congress is locked out of legislating on new spectrum opportunities and allocating the proceeds towards priorities without putting new burdens on taxpayers.
In March, Senate Commerce committee members Roger Wicker (R-Miss.) and John Thune (R-SD) penned a letter to the FCC requesting information on future spectrum auction opportunities and policy reforms that can be made to auction rules to promote international competitiveness. A short-term extension gives Congress time to examine possibilities, create a pipeline, and address additional priorities such as next-generation 911, funding rip and replace efforts, the costs of moving incumbents, rural deployment and other access concerns.
Since being introduced in 1993, auctions have granted spectrum licenses to the commercial wireless industry and have been a win-win for America’s wireless consumers, wireless providers, and federal agencies. They have also proven vastly beneficial to taxpayers, who are after all the beneficiaries of efficient allocations of this valuable, finite resource.
In 2016, the wireless industry contributed over $475 billion to the U.S. economy, supporting 4.7 million jobs and providing over 300 million Americans with reliable spectrum. In fact, last year, the FCC conducted two auctions for full-power mid-band spectrum, 280 megahertz of C-Band spectrum from 3.7-3.98 GHz being one, and the other being 100 megahertz from 3.45-3.55 GHz. These two auctions raised over $102 billion in winning bids. Auction 107, the most recent auction granting rights to deploy C-Band and 5G, on its own raised over $80 billion for the Treasury. The wireless industry can only continue to innovate and invest with the reauthorization of the FCC’s auction authority.
If Congress fails to act or chooses to revoke the FCC’s current power, the FCC will no longer have the authority to hold spectrum auctions, grant spectrum licenses related to those auctions or do other auction work that relies on this authority, with some limited exceptions. This would leave the United States at risk of falling behind China in producing innovative consumer innovations and enhancing national security capabilities.
Spectrum auctions are the best tools used to provide millions of people with fast and reliable spectrum, create millions of spectrum deployment jobs, and bring in billions of dollars of revenue for the Treasury department without having to raise taxes. Most importantly, they are essential to help close the digital divide. There needs to be continued leadership and cooperation between Congress and the Executive branch to build more spectrum and best serve the American people.