Congress proposes another incentive spectrum auction

Members of the House and Energy Commerce Committee introduced a bill Monday that will give government agencies a cut of wireless spectrum auction proceeds as a way to spur them to give up underused airwaves.

The Federal Communications Commission hasn't even finished designing its first incentive spectrum auction, and some House members are proposing the same design be used to incentivize government agencies to give up their under-used spectrum.

Representatives Brett Guthrie (R-KY) and Doris Matsui (D-CA), co-chairs of the House Energy and Commerce Committee Spectrum Working Group, introduced the bipartisan legislation, which will offer a financial incentive to government agencies to more efficiently manage their spectrum so that it can be reallocated for mobile carriers to use. The bill is being co-sponsored by Energy and Commerce Committee Ranking Member Henry Waxman (D-CA), Communications and Technology Subcommittee Chairman Greg Walden (R-OR) and Ranking Member Anna Eshoo (D-CA).

The premise behind the bill is similar to legislation Congress passed in 2012 that authorized an incentive auction for spectrum currently being used by the TV broadcast industry. The auction design will allow spectrum holders to offer up their spectrum in a so-called reverse auction, which will then be offered in a typical forward auction, where wireless service providers will bid on it. In exchange for giving up their spectrum or relocating to different spectrum, the government agencies will get a cut of the forward auction proceeds. The bill proposes that agencies get about 1 percent of the revenue from the sale of the spectrum.

As part of the Federal Spectrum Incentive Act, the government will create a new Federal Spectrum Incentive Auction Fund that will allow participating government agencies to access a portion of the revenue from the auctions of their relinquished spectrum. Among the potential uses, money from the Fund may be used to offset sequestration cuts.

The bill was introduced just days after the FCC announced that the planned incentive auction for the TV broadcast auction will be delayed until the middle of 2015. The auction, which was authorized in 2012, had a target date of 2014. But on Friday, the newly confirmed FCC Chairman Tom Wheeler posted in a blog that he felt the agency needed more time to ensure the complicated design of the auction was done correctly. We have "but once chance to get this right," he wrote.

Indeed, the auction is a complicated design. Bidders for the forward auction will go into the auction not knowing which spectrum bands are available or even how much spectrum will be auctioned off. It is still unknown which TV broadcasters will even participate in the auction or if the government will be able to get enough spectrum and raise enough revenue from bidders to pay the costs of the auction and also to fulfill one of the main goals of the auction, which is to help fund the nationwide public safety network called FirstNet.

Still, the Congressional leaders sponsoring the bill are eager to move it through the legislative process.

"By providing financial incentives for the first time, this bipartisan legislation will serve as a model to encourage the government to reallocate non-critical spectrum for commercial purposes" Rep. Matsui said in a statement. "It will provide many federal agencies an opportunity that will be hard to refuse, particularly as our nation's budget continues to shrink."

The FCC has already been authorized by Congress to conduct three auctions over the next couple of years, which is expected to bring more spectrum to the market. But the wireless industry says it needs more as demand for wireless broadband services increases.

"The federal government is the single largest holder of spectrum below 3 GHz,"' Jot Carpenter, vice president of government affairs for CTIA, the wireless trade group, said in a statement. "And incenting agencies to relinquish bands they aren't utilizing or using efficiently can help the commercial mobile industry gain access to the spectrum it needs to maintain America's place as the world's leader in wireless broadband service."