Auction the spectrum’s ‘white spaces’

Even after we complete the digital television transition on Feb. 17, 2009, broadcasters will not be using all the spectrum allocated for television. The unused spectrum left over throughout the country has been dubbed the “white spaces.” Some companies are asking that the spectrum be given to them for free to use for unlicensed devices. This would be a mistake.

As a recent test by the Federal Communications Commission indicated, unlicensed use of the white spaces could interfere with digital television. But even if there were no risk of interference, giving spectrum away is an inefficient and wasteful way to allocate this scarce and precious national resource. The better course would be to license and auction the spectrum. We could even use a large portion of the proceeds to fund communications equipment for first responders, as we did in the digital television legislation we passed last Congress.

Many years back, the FCC gave spectrum away in random lotteries or in “beauty contests” to whomever made the commissioners the rosiest promises. This was a terribly subjective and inefficient way to allocate spectrum. So Congress moved to auctions in 1993, based on the Nobel prize-winning work of a number of economists. The result has been an unmitigated success. The wireless service market is now vigorously competitive and innovative. And we are seeing an explosion in wireless broadband services that will continue to grow as carriers roll out their next-generation networks. The icing on the cake?  The auctions that unleashed this innovation and competition have raised tens of billions of dollars for American taxpayers.

This is no coincidence. First, auctions put spectrum into the hands of those who value it most while letting market forces, rather than regulators, determine the best technologies and services. Second, auctions provide a predictable environment to ensure companies can invest with certainty. And third, the licenses that are auctioned protect against interference because license holders have both an incentive and a legal duty to prevent any problems.

This third point is particularly important in light of our digital transition. Maybe device manufacturers will eventually be able to solve the interference issue. But if they don’t, or if some of the devices malfunction, licenses make it easier to remedy any problem. By contrast, once unlicensed devices are out there, it is very difficult to control them or get them back. Should any problems occur in the white spaces, consumers’ digital television reception could be ruined. It is important to remember that years of planning and billions of dollars have been invested — and continue to be invested — by the government, the television industry, the consumer electronics industry, the retail industry and, ultimately, consumers, to ensure that the DTV transition is a success. 

We are also learning that there is great value in being able to repurpose spectrum in the future. We are starting to do that with increasing frequency, and licensing is what makes it feasible. Indeed, I’m not sure how we would have repurposed the broadcasters’ analog spectrum for emergency communications had we not licensed the broadcasters. Repurposing spectrum is much more difficult in an unlicensed world.

Some have argued that white spaces have no other valuable purpose. However, that clearly is not the case. Companies are already proposing that the FCC allow carriers to use it as an alternative to the special access services that are currently the subject of another FCC proceeding. Some also say that the spectrum won’t fetch much at auction, although I note that these are the same people who are asking to be given the spectrum for free. Other companies believe the spectrum could be worth as much as $6 billion. I’m not sure yet who is right. I am sure, however, that the market is far better than we — and far more objective — at predicting what technologies will be successful and what the actual value of spectrum is. And regardless how much money we raised at auction, we would be surer that we found the best use.

I certainly want the white spectrum used. It may still turn out that fixed and mobile broadband devices are best suited for the white spaces. And if there is no real alternative, the cost at auction will be relatively slight.  It may turn out, however, that it is better used as a special access alternative, or something we aren’t even thinking of yet. What’s the best way to find out while protecting the DTV transition at the same time? Let all providers and services compete in a properly structured auction.

Upton is a member of the House Energy and Commerce Committee.

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