When It Comes to Spectrum, Can We Make Nice and Share?

WASHINGTON, June 4, 2010 – The issue of spreading around communications spectrum so that businesses, consumers and others can perform and innovate effectively was discussed as a conference hosted by Public Knowledge on Thursday.

Larry Strickling, assistant secretary of Commerce for the National Telecommunications and Information Administration, began the meeting with a speech on averting the spectrum crisis. He summarized the issue as there’s a finite amount of accessible spectrum, and what is left is rapidly being gobbled up.

The NTIA and the Federal Communications Commission currently have a role in regulating broadband. They assign spectrum to government agencies when they request it and auction off sections to the highest bidder.

The benefit is the big companies like Verizon can purchase exclusive, strong frequencies upon which to base their high-volume traffic. The detriment is that federal agencies get spectrum for free, and since there is no monetary consequence when they use more than they need, there might be spectrum that could be sold that is currently assigned to agencies.

Strickling said, “The question is, can we share?”

Secondary markets may be the answer. Panel moderator Scott Wallsten, vice president for research and senior fellow at the Technology Policy Institute, defined these markets as markets where spectrum is sold by someone other than the original owner, in this case, the FCC and NTIA.

These secondary markets already exist. Panelist Chris Duffus, senior vice president of Spectrum Bridge, pointed out that Spectrum Bridge already buys and sells spectrum. He explained his company’s business model by comparing it to selling carpet fragments.

Wallsten said companies like these are important to ensure that the spectrum goes to the highest bidder.

Kathy Brown, senior vice president of public policy development for Verizon, said allowing big companies to auction off spectrum they do not use gives them a financial incentive to look at their uses, streamline them and innovate that technology.

Karl Nebbia of the NTIA spectrum management office said secondary markets get the agencies out of the “bad guy” role. For example, when a channel is not available, people don’t blame the government for blocking it. They know that someone simply purchased it before they could use it.

Nebbia said the real motivation is that the United States only has a limited amount of spectrum available and the nation must figure out how to share it.

It would seem like everybody wins in this situation; everyone gets the spectrum that they need, and only what they need, for a fair price in an equitable way. However, there are two problems posed to secondary markets.

First is money. The benefit to auctioning spectrum is evidenced by the multibillion-dollar pot set aside for broadband by congressional action to relocate some agency channels. While the FCC is required by law not to take auction price into consideration, the NTIA does mull over this and with billions of dollars at stake, it won’t let go easily.

However, Public Knowledge Legal Director Harold Feld and Gregory Rose of Econometric Consulting said they were confident that the government would make money from secondary auctions.

The second problem is transparency. Public Knowledge and other organizations want agencies to be specific about how much spectrum they actually use. This transparency may help them be accountable for and more reserved in using spectrum.

Agencies are firm in not releasing this information because they say it could compromises secure channels. They argue, for example, covert operations could be blown and mobile devices used by the Secret Service could be hacked.

One panelist suggested that agencies pay a fee for spectrum to keep them conservative in their use of this resource, and yet maintain their security.

The one thing the panel agreed upon was that the answer to this problem is unclear, and that there are many approaches.

Strickling said he hoped NTIA would be able to offer some proposed steps and have an analysis completed by this fall.