Airwaves, Like Oil Reserves, Cash Cows in U.S. Budget Deal

  • Auction of federal agency spectrum to begin by 2024 under pact
  • Airwaves price rising as mobile companies send more video

Cellular communication towers in Emeryville, California.

Photographer: Justin Sullivan/Getty Images

The U.S. is turning to another asset in addition to its strategic oil reserve to help pay for a budget deal: airwaves.

The Federal Communications Commission will be required to auction 30 megahertz of airwaves used by U.S. agencies by 2024, according to a deal reached by congressional and White House budget negotiators Monday.

Airwaves are coveted by mobile companies straining to send video to the growing number of smartphones. An auction earlier this year for 65 megahertz of government and private airwaves attracted $44.9 billion in bids, with participants including AT&T Inc., Verizon Communications Inc., T-Mobile US Inc. and Dish Network Corp.

“Anything Congress can do to encourage long-term spectrum planning is very important,” said Phillip Berenbroick, counsel for government affairs at the policy group Public Knowledge. “There’s an opportunity for it to be very positive.”

The FCC plans another auction next year, of airwaves voluntarily given up by television broadcasters, and the Congressional Budget Office has estimated the sale will raise $10 billion to $40 billion. Next year’s auction is the last of three mandated by Congress in 2012, as part of a deal to raise funds as lawmakers preserved payroll tax cuts.

Identify Frequencies

The deal also frees funding for agencies to plan to relinquish more airwaves, and it tells the FCC and Commerce Department to identify additional frequencies for sale, Berenbroick said.

Spectrum prices, particularly for frequencies that are well-suited to adding capacity, have risen rapidly as carriers brace for a surge in mobile video use, Bloomberg Intelligence analysts John Butler and Matthew Kanterman said in a note Monday.

The spectrum provisions in the proposed deal could bring in $4.4 billion, and the oil sales could reap $5.1 billion, the Congressional Budget Office said Tuesday.

Mobile companies have pressed the federal government to identify more airwaves for auctioning after next year’s sale. Meredith Attwell Baker, president of CTIA-The Wireless Association, a trade group, in a statement Tuesday called the budget deal “an important first step” and said mobile service needs “hundreds” of additional megahertz of additional spectrum.

Agency Incentives

Recently, House lawmakers considered a bill to let U.S. agencies participating in auction use proceeds for program costs. The measure is part of efforts to “provide clear incentives for agencies to free up under-used, or unneeded, spectrum,” Representative Greg Walden, the Oregon Republican who is chairman of the House telecommunications subcommittee, said at a hearing Oct. 7.

More than 60 federal agencies and departments combined have over 240,000 frequency assignments across all spectrum bands, although nine departments, including the Defense Department, hold 94 percent of all frequency assignments for federal use, the Government Accountability Office said in a 2013 report.

In 2010, the Obama administration told U.S. spectrum planners to make a total of 500 megahertz of federal and non-federal spectrum available for wireless broadband within 10 years.

Neil Grace, an FCC spokesman, declined to comment.

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