American Spectrum Policy Should Allow More Compensation to Agencies for Clearing and More Geographic-Based Sharing

The Fourth Branch Program of the Mercatus Center at George Mason University is dedicated to advancing knowledge about the effects of regulation on society, commerce, and innovation. As part of its mission, the program conducts independent legal and economic analyses to assess agency rulemakings and proposals from the perspective of consumers and the public.

The notice asks,

How could a spectrum management paradigm be structured such that it satisfies the needs of commercial interests while preserving the spectrum access necessary to satisfy the mission requirements and operations of Federal entities?

Federal agencies are market participants for many indispensable inputs—including electricity, vehicle fleets, office supplies, and labor—but not, anomalously, for spectrum. Economic distortions arise because of the lack of price signals and the inability of agencies to transfer spectrum to commercial entities for compensation. The attached Richmond Journal of Law and Technology article contains research about how agencies sell and lease their real property to commercial entities and proposes a similar framework for spectrum.^[1] No policy mechanism performs better at expanding new services than transferring unused and underused federal spectrum to commercial operators with exclusive, flexible use licenses.^[2] There is little “low-hanging fruit” today when it comes to federal spectrum transfers, and the article proposes using a system of overlay license auctions, which enable federal agencies to be compensated for clearing spectrum.^[3]

The notice also asks,

To what extent would the introduction of automation facilitate assessments of spectrum use and expedite the coordination of shared access, especially among Federal and non-Federal spectrum stakeholders?

Spectrum use assessments should be resisted on the commercial and federal side because they are a poor proxy for the underlying value of the wireless system. Rarely used systems can have massive social value (like missile-detection systems), while constantly used systems can have little underlying value (like a video surveillance backhaul link that easily could be replaced by a fiber link).

As for spectrum sharing, the attached paper points out that geographic-based sharing works fairly well.^[4] On the other hand, opportunistic or real-time spectrum sharing—which has been a priority of the National Telecommunications and Information Administration (NTIA) since at least 1991—has never been deployed on a widespread basis, and caution is required before devoting resources to opportunistic spectrum-sharing regimes.^[5]

Thank you for the opportunity to comment on this important proceeding. Spectrum demands are increasing on the commercial and federal side, and it is critical that the NTIA, federal agencies, and the FCC coordinate in order to find market-based, financially prudent, and win-win spectrum transfers and sharing mechanisms.

ATTACHMENT

Brent Skorup, Sweeten the Deal: Transfer of Federal Spectrum Through Overlay Licenses, 22 Rich. J.L. & Tech. 5 (2016)