FCC, not free market, best for spectrum auction

Editors' note: This is a guest column. See Steve Largent's bio below.

In the last few weeks, I have read a number of op-eds claiming that reallocation of broadcast spectrum for wireless use should be left to the free market. While I am a fervent believer in free markets and limited government, there are rare instances in which government involvement is necessary. I agree with Federal Communications Commission Chairman Julius Genachowski on his proposal that managing the incentive process to voluntarily reclaim broadcast licenses and repack the spectrum is an area that absolutely requires FCC leadership and experience.

When the FCC assumed responsibility in 1927 to determine the license holders for the nation's spectrum, there were only a few licensees. Today, and largely driven by the wireless industry, spectrum is a scarce commodity that commands billions when auctioned.

To ensure that this finite resource is put to its highest and best use, the federal government acts as manager and aggregator of the licenses. For wireless, it identifies spectrum bands that are nationally, and sometimes internationally, harmonized once underused spectrum is identified and license holders are moved (or repackaged). With thousands of license holders across the country, including broadcasters, it's a challenging task but one the government does well to ensure interference-free service.

Once the spectrum bands are free, CTIA members will bid against all participants for the right to purchase the spectrum for billions of dollars through federal government auctions. This spurs the "virtuous cycle" of innovation and competition. When spectrum is available, wireless providers develop and upgrade their networks, devices, services, and content. Ultimately, consumers benefit by our continuous offering of the world's best wireless products and services.

Since spectrum is a valuable and finite resource, we must evaluate every single license holder to ensure each is efficiently using its bands. In recognition of this column's own finite space, let's look at our members, then the broadcasters.

Facts show that the U.S. wireless industry has the most efficient providers in the world. We have three times more mobile subscribers than any one of these countries: Japan, South Korea, Germany, the U.K., France, Italy, Spain, and Canada. Americans talk on mobile devices more than 830 minutes per month, twice as many as in the closest country, yet the average revenue per minute is 4 cents, half that of the closest country.

Despite leading these other countries in usage and value, many of these countries' governments are dedicating large bands of spectrum for their wireless industries because they recognize that mobile broadband is a key economic driver. Germany just auctioned 350MHz of new spectrum, Japan has identified 400MHz of spectrum for reallocation, and the U.K. has identified 355MHz. Italy, France, Canada, and Spain have each identified more than 250MHz of new spectrum for reallocation for their respective wireless industries. Right now, the U.S. has less than 50MHz that could be auctioned. This equation doesn't add up if we want to keep leading the world's mobile revolution.

Broadcasters, and a few others, suggest that government mechanisms to facilitate the reallocation of spectrum aren't necessary and that reallocation should be left to the free market. This won't work either. If we are to ensure the highest and best use of spectrum, the FCC must play a role in the reallocation and repacking of broadcast spectrum, as it has proposed to do.

As part of the FCC's National Broadband Plan, more than 120MHz of spectrum was identified for reallocation from the broadcasters. Currently, the broadcasters have 294MHz in each market, and much of it is unused. In our recent white paper, we conservatively estimated that the auctions of broadcast spectrum reclaimed through a voluntary mechanism would gross at least $36 billion for the federal government. This process would keep free over-the-air broadcast service while the industry would pay billions to the U.S. Treasury and billions more to the U.S. economy to deploy new technologies. Ultimately, consumers continue to get the world's best products and services. Everyone wins.

The FCC rightfully plays a critical role in the voluntary broadcast incentive auction process because it works for everyone involved. Let's work with the FCC and move quickly to get this valuable spectrum to auction--the first step will be legislation that authorizes an incentive auction--so that the U.S. wireless industry can remain the world's leader and continue to offer our consumers the best mobile experience.