GAO Report on the FCC's Spectrum Allocation and Assignment Process

[David Farber <dave () farber net>]

-------- Original Message --------
Subject: 	[Dewayne-Net] GAO Report on the FCC's Spectrum Allocation and 
Assignment Process
Date:   Fri, 25 Nov 2005 11:26:10 -0800
From:   Dewayne Hendricks <dewayne () warpspeed com>
Reply-To:       dewayne () warpspeed com
To:     Dewayne-Net Technology List <dewayne-net () warpspeed com>



[Note:  I was one of the twenty-two 'experts' on the two panels that  
were used in assisting in the preparation this report.  DLH]

GAO Report on FCC's Spectrum Allocation and Assignment Process, Nov.  
10, 2005

Abstract

Telecmmunications: Preliminary Information on the Federal
Communications Commission's Spectrum Allocation and Assignment
Process, GAO-06-212R, November 10, 2005
<http://www.gao.gov/docsearch/abstract.php?rptno=GAO-06-212R>

PDF: <http://www.gao.gov/new.items/d06212r.pdf>
Accessible Text: <http://www.gao.gov/htext/d06212r.html>

The radiofrequency spectrum is a natural resource used to provide
an array of wireless communications services, such as mobile
voice and data services, radio and television broadcasting,
radar, and satellite-based services, which are critical to the
U.S. economy and national security. Historically, concern about
interference among users has been a driving force in the
management of spectrum. The Federal Communications Commission
(FCC)--an independent agency that regulates spectrum use for
nonfederal users, including commercial users--and the National
Telecommunications and Information Administration (NTIA)--an
agency within the Department of Commerce that regulates spectrum
for federal government users--have worked to minimize
interference through the "allocation" and "assignment" of
spectrum. Allocation involves designating "bands" of spectrum for
specific types of services or classes of users, such as
designating certain bands for commercial use and others for
government use. Assignment provides an authorization or license
to use a specific portion of spectrum to entities, such as
wireless companies. Demand for the radiofrequency spectrum has
exploded over the past several decades as new technologies and
services have been and continue to be brought to the market in
the private sector and new mission needs unfold among government
users of spectrum, including wireless communications critical for
public safety officials responding to natural and man-made
disasters. As a result, nearly all parties are becoming
increasingly concerned about the availability of spectrum for
future needs, because most of the usable spectrum in the United
States has already been allocated to existing services and users.
Therefore, to promote a more efficient use of this resource and
meet future needs, FCC has increasingly adopted more
market-oriented approaches to spectrum management in recent
years, including using a competitive bidding process, or
auctions, to assign spectrum to commercial users. Prior to
auctions, FCC had used comparative hearings, which were
quasi-judicial forums, and lotteries as assignment mechanisms.
Since 1994--the first full year FCC was authorized to use
auctions--FCC has held 59 auctions for over 56,000 licenses to
select between competing applications for the same license or
spectrum. The Commercial Spectrum Enhancement Act required us to
examine FCC's commercial spectrum licensing process and report
findings to the committees of jurisdiction by September 19, 2005.
As discussed with the committees of jurisdiction, we examined the
(1) characteristics of the current spectrum allocation process
for commercial uses; (2) impact of the assignment process,
specifically the adoption of auctions to assign spectrum
licenses, on end-user prices, investment, entry and participation
of small businesses, and competition; and (3) options for
improving spectrum management.

The current practice of allocating spectrum is largely regarded
as being a "command-and-control" process--that is, the government
largely dictates the use of spectrum. In particular, based on
regulatory judgments, FCC determines and limits what types of
services--such as broadcast, satellite, or mobile radio--will be
offered in different frequency bands by geographic area. In
addition, FCC issues service rules to define the terms and
conditions for spectrum use within given bands. These rules
typically specify eligibility standards, as well as limitations
on the services that relevant entities may offer and the
equipment and power levels they may use. Available evidence
suggests that FCC's use of auctions has had little to no negative
impact on end-user prices, investment, and competition; evidence
on the impact on entry and participation of small businesses is
less clear. According to economic research and many of the
industry stakeholders we spoke with, auctions have little to no
effect on end-user prices because the auction payments represent
a sunk cost, which do not affect future-oriented decisions, such
as pricing decisions. Similar arguments were made for the impact
of auctions on investment. Industry stakeholders and panelists on
our expert panel offered a number of options for improving
spectrum management. The most frequently cited options include
(1) reexamining the distribution of spectrum to enhance the
efficient and effective use of this important resource, (2)
ensuring clearly defined rights and flexibility in commercially
licensed spectrum bands, and (3) extending and modifying FCC's
auction authority. For example, a number of panelists suggested
that the government evaluate the relative allocation of spectrum
for government and commercial use as well as the allocation of
spectrum for licensed and unlicensed purposes. There was no
consensus on these options for improvements among stakeholders
and panelists on our expert panel, except to extend FCC's auction
authority. Twenty-one of 22 panelists supported extending FCC's
auction authority, which is scheduled to expire in 2007.

Subject Terms:

Licenses
Radio frequency allocation
Regulatory agencies
Spectrum
Spectrum management
Telecommunications
Wireless

Weblog at: <http://weblog.warpspeed.com>


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