Experts Debate Lack of Transparency in Federal Spectrum Policy

WASHINGTON, June 7, 2010 – Experts gathered last week to discuss problems surrounding transparency in federal spectrum policy and the challenges in addressing the issue.

In a discussion hosted by Public Knowledge, most panelists agreed that the issue of transparency in spectrum markets, especially with regard to federal use of spectrum, is not easily solved.

A recurring point of contention was the question of how to raise governmental consciousness of the price of spectrum, so as to prevent overuse by the government at the expense of the private sector.

“What we are talking about here, if I may use a forbidden word, is centralized planning,” said Gregory Rose, an econometric researcher and analyst. “That kind of planning offers enormous efficiencies. It’s one of the reasons we won the First World War.” Rose went on to suggest that the only way to encourage private sector solutions was to increase centralized government control over federal spectrum.

“[If you want to increase innovation], ironically enough, where we have to start is centralized planning of federal spectrum policy,” he said.

Kathleen Ham, T-Mobile’s director of federal regulatory affairs, was less optimistic. She argued that one of the major problems in government use of spectrum was its inability or unwillingness to pay accurate pricing for the resources it uses.

She cited T-Mobile’s experience with spectrum auctions. “We dealt with 12 government agencies,” Ham said. “We had a really good window after the auction  – not so much before the auction – into their abuses.”

Ham also cited her experience working at the Federal Communications Commission as evidence that the government views itself as, in some sense, above prices.

“One of the things we learned is that the government doesn’t have the same incentives as the commercial sector, frankly, in terms of efficiency,” Ham argued. “I would love to see them actually have to pay for the spectrum they use.”

The benefit of this approach, Ham argued, is that the federal government would be forced to treat spectrum as the scarce resource that it is, thus maximizing efficiency in how the government uses it.

The major obstacle is that this also would require more transparency in how the government audits its usage of spectrum – not something that would necessarily be forthcoming, given that much of federal spectrum usage is related to national security concerns where transparency may not be appropriate.

Larry Strickling, assistant secretary of Commerce for the National Telecommunications and Information Administration, touched upon this topic of potentially compromising essential federal functions earlier in the day in a keynote address. Ham saw the issue less charitably, arguing that much of the problem arose from misunderstandings about technology by the government.

“The concept of sharing your spectrum is not something that they’re comfortable with, familiar with,” Ham said. “One government agency said ‘well, it’d be too expensive to turn that equipment on.’”

Other panelists took issue with Ham’s implicit preference for a strictly economic spectrum policy. Daniel Sepulveda, a senior advisor to Sen. John Kerry, D-Mass., pointed out that the government was not solely obligated to meet a bottom line. “There are almost no economists in the legislature,” Sepulveda said. “And I think there’s a reason for that. Economic efficiency isn’t the end-all, be-all of social policy.”

Rose concurred in Sepulveda’s caution about strictly economic solutions, saying that market mechanisms “notoriously fail” when expected to provide public goods.

Mark MacCarthy, a professor of public policy at Georgetown University, was more skeptical of the centralized approach. “Do you really want all decisions to be done in a centralized fashion?”  MacCarthy asked, calling the idea “draconian.”

However, in response, Public Knowledge Legal Director Harold Feld argued that a draconian approach was necessary, given the generally inefficient habits of the federal government.

“Agencies will never say let’s save money and be spectrally efficient,” Feld said.