The Spectrum

By | Updated April 28, 2017 8:59 PM UTC

The U.S. government has reaped billions of dollars from selling something we can’t see, taste or weigh: the spectrum. Some of these invisible electromagnetic waves carry radio, TV broadcasts and, increasingly, YouTube videos to our smartphones. With demand exploding, mobile capacity is being strained. Mobile operators were eager to own TV airwaves, since they go far and penetrate buildings. So the Federal Communications Commission arranged an auction to transfer some TV bandwidth to mobile use. The goal is to increase competition and service. TV stations, meanwhile, will need be squeezed into a narrower swath of spectrum. 

The Situation

Bidding on the one-year auction period ended in March. The FCC invited television stations to give up their airwaves so it could sell them to the highest bidders for use by wireless devices; 175 stations successfully sold frequencies. The agency will share the earnings from this first “incentive auction” with the stations, which will get $10.05 billion of the total $19.8 billion raised. The FCC will use $7.3 billion to pay down the national debt. The biggest airwaves buyers were T-Mobile US Inc., Dish Network Corp. and Comcast Corp. Mobile operators had been beseeching the U.S. government to free up enough airwaves to meet soaring demand from smartphone users and other wireless customers. The number of U.S. wireless devices has more than doubled since 2004 to reach 378 million in 2015. Video accounted for 50 percent of total mobile data traffic in 2012; 2015 it was 61 percent. Without more mobile bandwidth, users could suffer more dropped calls and crashed applications.

The Background

In the 17th century, Isaac Newton observed that sunlight passing through a prism split into a rainbow of colors; he called this a spectrum (for specters or ghosts). The entire electromagnetic spectrum ranges from tiny waves shorter than an atom (high frequency), to miles in length (low frequency). Different frequencies have different qualities, with some carrying more information and some going farther. Together, they form a sort of real estate in the sky. The neighborhood was wide open when the Italian radio pioneer Guglielmo Marconi in the 1890s showed how to send signals wirelessly over distances. Radio soon flourished with little regulation, at first mainly for ship-to-ship communication. In 1912, after radio interference blocked an iceberg warning for the doomed Titanic, the U.S. Congress established federal authority over airwaves. Later the government began assigning, without fee, licenses that granted exclusive use over certain frequencies. Applicants were winnowed through hearings or lotteries. In 1994, the FCC began assigning airwaves via auctions. Countries from India to Brazil have also used auctions to dole out portions of the spectrum. Europe’s frenzied 2000 and 2001 auctions reaped nearly $100 billion but left the overpaying mobile providers hobbled by debt, leading to bankruptcies and government bailouts.

The Argument

The U.S. government sees mobile technologies as a way to spread high-speed Internet access to more people. Seven percent of Americans own a smartphone but don’t have fixed-line broadband service at home or any other easy access to the Internet. The spectrum sale could also result in more mobile phone competition — there’s been speculation that Dish, a direct satellite television company, could end up offering phone service with its additional bandwidth. Most of the TV stations that sold spectrum are moving to other broadcast frequencies. About a dozen are expected to shut down. A few public television stations operated by financially strapped local governments and universities have already announced that they’ll go off the air, including ones in Philadelphia, Tampa, Florida, and Flint, Michigan. In all, nearly 1,000 TV stations will need to switch frequencies in coming years to make way for the expanded smartphone service. 

The Reference Shelf

  • The U.S.’s frequency allocation chart shows how the radio spectrum is currently divided.
  • The National Broadband Plan that laid out the case for the incentive auction in 2010.
  • The FCC explanation on how the auction worked and its guide to what it means for consumers.
  • A Pittsburgh Post-Gazette article on what happens to TV stations. 

First published Nov. 30, 2015

To contact the writer of this QuickTake:
Todd Shields in Washington at tshields3@bloomberg.net

To contact the editor responsible for this QuickTake:
Elizabeth Wasserman at ewasserman2@bloomberg.net