Incentive Auctions for Agencies’ Spectrum Would Require Different Incentives, Experts Say

Voluntary incentive auctions for spectrum held by federal agencies will likely be discussed during the 113th Congress, said David Redl, majority counsel for the House Commerce Committee. But he and others at an FCBA continuing education panel said the incentives involved on the federal side would be very different than the ones involved in the voluntary incentive auction of TV stations’ frequencies. “At the end of the day, when we look at ways to incentivize folks in the government to relinquish spectrum authorizations, simply paying them from the federal coffers isn’t going to cut it,” Radl said. “It’s the left hand paying the right hand.”

Government users of spectrum in the U.K. pay a fee for the frequencies they use, Redl said. If the U.S. used the same model, agencies would be paying the U.S. Treasury out of their Congress-appropriated budgets, he said. “Incentives really do matter, and as we look going forward at ways to get government users to be more efficient … thinking about the real incentives that drive government agencies as opposed to commercial entities is going to be an important part of the process.” A user fee system akin to the one used in the U.K. could work in the U.S., said Leslie Taylor, a consultant who works with companies to obtain spectrum licenses through the FCC and international agencies. Taylor has also previously worked at the FCC and NTIA. “Even though you're thinking it’s going from one pocket to another, they have to put it in their budget,” she said. “Somebody is going to think about that within the agency. And if they use less spectrum, they could put in a lower user fee. There could be some incentive there.”

The President’s Council of Advisors on Science and Technology (PCAST) report on federal spectrum use and sharing earlier this year recommended making the opportunity cost of federal spectrum use more transparent by implementing a “spectrum currency” shadow budget that would show the value of an agency’s spectrum holdings, said David Don, Comcast senior director-public policy. PCAST also recommended (CD July 23 p1) expanding the spectrum relocation fund, which reimbursed federal agencies that clear off the AWS-1 band, into a revolving spectrum efficiency fund, he said. That would allow federal agencies to use the fund to reimburse upfront costs associated with research and development, testing, equipment changes and to facilitate additional spectrum sharing, Don said. “At least they'd be budget-neutral, because right now from a federal agency perspective, there’s nothing but disincentives.”

Congress took steps to improve the incentives for federal agencies in the spectrum provisions of the Middle Class Tax Relief and Job Creation Act, allowing the spectrum relocation fund to fund spectrum planning activities and equipment upgrades, Radl said. “Some of the equipment that’s operating in federal spectrum is 20-plus years old,” he said. “Giving them the ability to upgrade was a big change. … Giving them a reason to get new equipment during the process of clearing was an incentive and reward we wanted to communicate in the legislation."

Improving the efficiency of agencies’ spectrum use also depends on giving NTIA an elevated role in the regulation of federal spectrum, Taylor said. “The NTIA doesn’t feel it can dictate to federal agencies.” NTIA’s role in spectrum has been limited to being an administrator, rather than a regulator, Redl said. “To quote Ronald Reagan, if this is trust but verify, they have completely fallen asleep at the wheel on verify. It’s just trust at NTIA. If an agency says ‘we need this spectrum, this is what we're using it for,’ the NTIA says ‘OK, you don’t conflict with anybody else, Godspeed.'” While NTIA on paper should have more authority, in reality it is more of a broker, said Michael Calabrese, senior research fellow at the New America Foundation’s Open Technology Institute. “They have a client mentality, where the agencies are their clients. And in fact, [NTIA is] beholden to them for almost their entire budget, which comes from the federal users.”