Secondary Markets Pose New Opportunity for Spectrum Shortage

Secondary Markets Pose New Opportunity for Spectrum Shortage

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These days, most people rely on mobile devices – cell phones, smartphones, you name it – to stay connected on the go.  As mobile use increases, so too does the demand for spectrum – the radio waves that make it possible for us to use our wireless devices to make calls, browse the Internet, watch the latest episode of Orange is the New Black, or download the latest app. But as demand increases, the federal government, private industry, consumer advocates, and everyone in between are trying to figure out how best to get more spectrum to support our explosive use.

According to Harold Feld and Dr. Gregory Rose of Public Knowledge, a DC-based public interest group, “policies governing access to spectrum have failed to keep pace” with the exponential growth of wireless services over the past twenty years.  Even as the Federal Communications Commission (FCC) prepares for a spectrum auction that will allow television broadcasters to sell their spectrum to the highest bidders, and talks remain ongoing about how best to leverage public wi-fi, we still need to find solutions to get more spectrum working for more people.

In their report, Breaking the Logjam: Creating Sustainable Spectrum Assets Through Federal Secondary MarketsFeld and Rose note, “auctions of desirable spectrum routinely raise billions of dollars. But this advantage of raising revenue comes at a high social cost. The high cost of spectrum licenses forecloses all but the most well capitalized bidders from winning licenses.”  Further, they note, “auctions by their very nature favor the largest providers because these providers have a superior ability to attract capital and to extract revenue from the licenses after the auction. This impedes the development of robust competition.”

What’s more, they say, “the need to raise substantial amounts of revenue immediately to recoup the cost of licenses also discourages spectrum auction winners from experimenting with new business models. Dynamic secondary markets for federal spectrum provide a means of addressing needs for spectrum access that the current choices – licensed and unlicensed access – do not meet.

Even by the FCC’s own-estimates, “demand for wireless capacity – for commercial mobile services, fixed services, and public safety – will rapidly outstrip the current allocations of licensed and unlicensed spectrum capacity. That point is underscored by a report released recently by The Brattle that explained, “using the FCC’s own formula and approach, we update that forecast and find that by 2019, the U.S. will need more than 350 additional MHz of licensed spectrum to support projected commercial mobile wireless demand. Accordingly, over the next five years the United States (U.S.) must increase its existing supply of licensed broadband spectrum by over 50 percent.”

Addressing our ever-increasing spectrum demand requires several solutions, and if the FCC is looking to make meaningful, lasting impact, it must look to secondary markets as a viable option for creating new opportunites for serving public demand.

2 COMMENTS

  1. Great point: “Dynamic secondary markets for federal spectrum provide a means of addressing needs for spectrum access that the current choices – licensed and unlicensed access – do not meet.”

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