Nate Scherer: No Auctioning Authority is Nothing Worth Celebrating

March 9, 2024, marks the one year anniversary since Congress let the FCC's auction authority expire.

Nate Scherer: No Auctioning Authority is Nothing Worth Celebrating
The author of this Expert Opinion is Nate Scherer, policy analyst with the American Consumer Institute.

America is fast approaching an important yet troubling milestone. Come March 9, it will have been one year since Congress allowed the Federal Communication Commission’s auctioning authority to lapse. Since then, no legislative proposal to restore auctioning authority has been successful, denying the FCC access to one of its most valuable tools for distributing licensed spectrum.

America’s ability to keep up with growing consumer demand, specifically for licensed mid-band spectrum, and stay competitive internationally depends on Congress moving quickly to restore this capability.

Increasingly aware of the value of spectrum and the role that selling it could have for revenue generation, Congress first granted the FCC auctioning authority in 1993. Commercial providers could bid on exclusive access to specific radio frequencies necessary for building wireless networks that allow for the delivery of quality products and services to customers.

Auctions represented a remarkable improvement over the old system which primarily relied on “hearings and lotteries to select a single licensee from a pool of competing applicants for a license.” Auctions are quicker and more efficient at distributing licenses to providers and more conducive to facilitating future investment in American wireless networks.

Spectrum auctions have proven to be remarkably successful. The Commission has held over 100 auctions, generating more than $233 billion for the U.S. Treasury. That’s money that can be used to fund future government programs and services such as next-generation 911 services or the Affordable Connectivity Program.

More importantly, spectrum auctions have enabled the commercial sector to obtain the spectrum it needs to invest in new 5G and future 6G technologies as well as unlock consumer benefits. Everything from autonomous vehicles and precision agriculture to smart grid technology relies on licensed spectrum being readily available.

Yet, last March Congress shamefully allowed the FCC’s auctioning authority to expire for the first time in its history. Disagreements over how long to extend the program stalled progress despite it enjoying broad bipartisan support. That leaves the FCC in limbo and unable to carry out future auctions. To date, no action has been taken to pass legislation that would remedy the situation. This is unacceptable. 

There is already growing concern about an imminent spectrum shortfall. Americans are using more data than ever before, fueled by a growing demand for faster speeds and new services. A recent wireless survey found that demand for mobile data increased by as much as 38 percent between 2021 and 2022 alone. It is now estimated that the wireless industry will need at least 400 MHz of licensed spectrum over the next five years, and nearly 1,400 MHz by 2032 just to keep up with this growing demand.

Such a shortfall puts America’s wireless ecosystem competitiveness at significant risk. Research already suggests that the U.S. is falling behind its peers in the race to 5G. For instance, China, a major geopolitical rival, is soon expected have as much as four times the amount of licensed mid-band spectrum as the U.S. To maintain a seat at the table in the years ahead where it can set technical standards and influence spectrum harmonization, the U.S. must lead on all 5G metrics. This will require identifying more spectrum for commercial purposes and reauthorizing the FCC’s auctioning authority to effectively distribute it.

The upcoming first anniversary of the FCC losing that authority is nothing worth celebrating, but Congress can redeem itself by moving swiftly to restore it before March 9. While a long-term extension is preferable, and Congress should strongly consider introducing a spectrum pipeline alongside any reauthorization, even a modest short-term extension of the FCC’s auctioning authority would be a significant improvement over the status quo. Only by doing nothing will Congress continue to fail the millions of Americans who rely on broadband services.

Nate Scherer is a policy analyst with the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit us at www.TheAmericanConsumer.Org or follow us on X @ConsumerPal. This piece is exclusive to Broadband Breakfast.

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