have been chosen over GSM and all
of the benefits from the introduction
and use of that technology would not
have occurred. Ultimately, providers
have been able to implement their own
choice of technology and upgrade from
2G to 3G and now to 4G without FCC
approval. And firms could offer voice,
video, and data without having to apply
for a change of service.
While the FCC has made great
strides in flexibility, it has not adopted
full flexibility and still specifies some
spectrum for particular uses such as
satellite or broadcast television. Incentive auctions are one way to facilitate
the move to flexibility.
illustration by stuart bradford
current Bands for Reallocation
Even with the reallocation of channels
50–69, additional valuable spectrum is
currently allocated for broadcast television. Allocating a lot of spectrum to
television may have been optimal in the
1950s, but with only approximately 10%
of U.S. households watching free over-the-air, instead of subscription, television, it is unlikely to be optimal today.
At the same time, the last 25 years have
seen an explosion in the usage of hand-held mobile wireless devices and the
value of spectrum for such services has
increased substantially relative to the
value of spectrum for television.
The FCC relocated television broadcasters from channels 50–69 during the
transition to digital television and has
auctioned this 700MHz spectrum. Ve-rizon is already using some of the allocation that it purchased at auction for
new LTE services that promise to pro-
There is debate
about how much
should be reallocated
vide higher capacity and faster mobile
There is debate about how much
more spectrum should be reallocated
from over-the-air terrestrial television. Current legislation targets up to
120MHz, but more or less may be socially optimal. One way to resolve this
debate is to create an efficient marketplace where rights can be traded while
minimizing transactions costs.
The leading contender as a method
for facilitating this transition is an
incentive auction. In such auctions
broadcasters would put their transmission rights up for auction in combination with additional rights from the
FCC. Each broadcaster would be able
to set its own minimum price to cease
over-the-air transmission. The auction
would aggregate broadcaster rights
and FCC rights (for example, rights for
unused frequencies) into packages for
which new providers would bid.
Incentive auctions are likely to be
somewhat complex, but we know they
must include a few crucial factors.
First, broadcasters must be able to