In the State of the Union, President Obama addressed a number of issues with our current infrastructure. Among them, he noted the following: “So much of America needs to be rebuilt. We've got crumbling roads and bridges. A power grid that wastes too much energy. An incomplete high-speed broadband network that prevents a small business owner in rural America from selling her products all over the world.” One way to help this small business owner? Allow for the auctioning of unused spectrum.
Almost two years ago, the White House and the FCC promised to nearly double the amount of available spectrum for mobile broadband. This promise has not yet been fulfilled, largely due to inaction from Congress and the Obama administration’s FCC. In order to bring wireless services to the last remaining unserved areas of the country, it is imperative that government acts now to allow private companies to engage in voluntary incentive auctions, thus freeing up more available spectrum.
Unfortunately, the president’s rhetoric doesn’t match his actions. In the president’s American Jobs Act of 2011, he proposed a new tax on spectrum. By making it more costly to obtain a spectrum license, this would only worsen the looming spectrum crisis. The tax would take more money away from spectrum license holders, deterring their ability to build out wireless networks and provide new services to the American public. Furthermore, the broadband providers would then be forced to transfer some of these new costs to consumers, increasing prices for working families. New taxes are not the answer to the spectrum crunch.
Allowing for voluntary auctions will increase both available spectrum and revenue. According to a Congressional Budget Office estimate, a well-structured spectrum auction can raise as much as $25 billion, before some money is spent on a public safety network. Many have proposed that the revenue gained by auctioning this unused spectrum could be used to pay for the payroll tax extension, helping alleviate some of the burden on both small businesses and working Americans during this tough economy.
The upcoming payroll tax extension provides an ideal vehicle to authorize new spectrum auctions, as debt ceiling and deficit reducing packages did before it. However, any legislation should tie the FCC’s hands to ensure that the Commission does not impose any needless conditions and restrictions on the auction process. This includes letting every company have a fair shot at bidding for spectrum.
President Obama has addressed the need for more spectrum and now Congress and his FCC need to act upon this. It is imperative that voluntary incentive auctions are authorized soon in order to end the looming spectrum crisis and work toward closing the nation’s deficit. The payroll tax extension provides an ideal vehicle to get this done.