Sensible Wireless Spectrum Policy Needed to Close Digital Divide
As the Federal Communications Commission (FCC) considers how best to expand internet speed and access, all eyes are on a critical piece of the puzzle: mid-band ("C-band") spectrum. This bit of bandwidth is pivotal for lightning-fast 5G internet. But, this swath of spectrum is largely tied up by satellite companies who use the spectrum to beam their signals from space to Earth.
Unfortunately, these current beneficiaries want to commandeer the spectrum for their own benefit, by "selling" the C-band without any requirement to compensate the current owner — U.S. taxpayers. This proposal makes a farce of privatization, which normally results in more widespread access to valued goods. Instead of pursuing a faux sale, the FCC should commit to a robust auction process that would close the digital divide and bring internet to unserved areas.
If the satellite company consortium known as the "C-Band Alliance" (CBA) had their way, they would be empowered as a monopoly to sell $60 billion of valuable spectrum without pressure to make taxpayers whole. The CBA companies trying to sell the spectrum certainly do not own it. In fact, they were licensed this spectrum for free back in the 1960s. Allowing these leasees to become owners for free flies in the face of basic economics, where buyers compensate sellers and allow prices to reflect supply and demand.
In contrast to this half-baked approach by the CBA, the FCC's established way of reallocating spectrum via auctions has served consumers well in the past. Previous FCC-managed auctions have set the stage for nationwide 5G, while delivering a whopping $121 billion to the American taxpayer. The FCC has used incentive auctions to get incumbent and prospective users of spectrum to agree on a price, and the new users are given the green light to repurpose bandwidth for 5G deployment. But new users are simply taking over the lease, allowing the FCC to re-auction the spectrum in the future and bequeath the proceeds to taxpayers.
Even as the CBA tries to muddy the waters between sound privatization and a corporate handout, the consortium claims that a "private sale" approach would speed up 5G deployment and bridge the digital divide. But if the CBA had their way, the opposite would likely happen. Private companies have already suggested that they would pursue litigation should the FCC permit the CBA to sell this spectrum on the secondary market because of lack of transparency.
Not only will this litigation be costly, but it would delay relicensing and reallocation efforts for years to come, leaving the spectrum wholly unavailable for 5G deployment. Notwithstanding litigation, the act of designating a monopoly for the sales process would limit 5G availability nationally. One scholar incorrectly argues that this centralized approach would, "have a tendency to bring to market a smaller portion of the band at a higher price than that which would prevail in a competitive market."
These shenanigans would likely hit rural America the hardest, since providers have been reluctant to build-out to less-populated areas. 5G would diminish the need to build-out, but the CBA approach would lessen the promise of 5G and delay its debut in rural counties across the nation.
State legislators have taken notice and are sounding the alarm at CBA's flawed proposal. A collection of them representing Iowa, Kansas, Missouri, Nebraska and South Dakota delivered an urgent letter to the FCC, imploring the federal government to safeguard the promise of 5G by keeping spectrum open and available for auction instead of closed-off via faux privatization.
Hanging in the balance are technologies that could exponentially improve the wealth, health, educational and cultural fortunes of rural communities across the country. For the residents of America's big cities, continued technological progress and innovation have become expected. But for those in less populous locales, next-generation internet might seem like fantasy. Medical professionals in America's dying rural hospitals would relish the opportunity to practice telemedicine or instantaneously share a CAT scan, but this could only happen via sensible federal policies.
Whether in Washington D.C. or Idaho, all of America stands to benefit from more reliable internet that can connect users ten times faster than 4G. But America will only see this benefit if scarce, valuable spectrum is managed prudently. Until the FCC can cobble together an actual privatization plan where taxpayers would be made whole, the agency should use auctions to bring about next-generation internet standards. The FCC stands at a precipice, and the stakes could not be higher.
David Williams is the President of the Taxpayers Protection Alliance.