White House pushes for incentive spectrum auctions

The Obama administration has enlisted the help of more than 100 economists to make its case for incentive spectrum auctions that will free up more airwaves for wireless broadband services.

Today, the White House presented a letter signed by 112 economists "who specialize in telecommunications, auction theory and design, and/or competitive policy." The signed letter was part of a summit that the administration put together in an effort to persuade Congress to authorize a round of incentive auctions that would take unused broadcast TV spectrum and use it for wireless broadband services.

In the letter the economists said:

"We understand that Congress is considering legislation that would give the FCC explicit authority to run 'incentive auctions' in which it would have the ability to distribute some portion of the auction proceeds to licensees who voluntarily give up their license rights. We support such an effort and think it would increase spectrum efficiency in the United States."

The wireless industry and the Federal Communications Commission have warned that if more wireless spectrum is not made available in the next several years that wireless operators will not be able to satisfy the demand for mobile data. The White House threw its weight behind the cause last year. FCC Chairman Julius Genachowski also attended the summit. He said that creating incentive auctions is "the single most important step we can take" to free up spectrum.

In the FCC's National Broadband Plan presented to Congress last year, the agency recommended that 500MHz of additional spectrum be freed for use within 10 years. And the report recommended that 300MHz of that spectrum be made available within five years.

The FCC believes it can get about 120MHz of spectrum from TV broadcasters. The agency has suggested that broadcasters, which in total have licenses for about 300MHz of spectrum, can free up additional spectrum that is currently not being used. The proposal calls for these broadcasters to be given the option to put their excess spectrum up for auction in exchange for sharing the profits with the government. Experts believe the incentive auctions could generate about $28 billion in revenue.

Congress must authorize the auctions.

But broadcasters are leery. The National Association of Broadcasters has said that TV broadcasters have given enough wireless spectrum already. The 700MHz wireless auction a few years ago was an auction of excess TV spectrum that was freed up from the transition from analog TV broadcasting to digital. Recently broadcasters have also complained that wireless and broadband providers that already hold wireless licenses are hoarding spectrum.

Still, broadcasters maintain that they could be in favor of incentive auctions as long as they are truly voluntary.

"As we've said consistently, NAB does not oppose incentive auctions that are truly voluntary," NAB spokesman Dennis Wharton said in a statement. "We would remind our economist friends that broadcasters returned more than a quarter of the spectrum held by TV broadcasters less than two years ago, and that those airwaves have yet to be fully deployed."

In January, Senate Commerce Committee Chairman John D. Rockefeller (D-W.V.) introduced a bill that would authorize incentive auctions. And Sens. John Kerry (D-Mass.) and Olympia Snowe (R-Maine) also introduced a bill last month that would authorize incentive auctions, but that bill would also require a spectrum inventory be done.

But some experts wonder if the $39 billion proposed sale of T-Mobile USA to AT&T might stifle action on the incentive auctions. One of the reasons that AT&T cites for wanting to buy T-Mobile is that it will give the company access to more wireless spectrum.

"If these two companies can satisfy much of their spectrum needs by joining forces, it would reduce some of the demand for new spectrum and possibly lower auction revenue estimates," Rebecca Arbogast, an analyst at Stifel Nicolaus, said in a recent research note.

Related links
• White House backs FCC plans for more spectrum
• FCC unveils National Broadband Plan
• TV broadcasters prepare for spectrum battle