Five Reasons Why Keeping the Incentive Auction Transition Timeline Matters

Five Reasons Why Keeping the Incentive Auction Transition Timeline Matters

July 18, 2017

In April, the FCC completed the world’s first incentive auction, repurposing broadcast TV spectrum in the 600 MHz band for mobile broadband. This auction raised nearly $20 billion—the second-most revenue in a FCC auction ever—including over $7 billion for deficit reduction. Now, those operators that spent billions are ready to deliver new wireless services to Americans. At the same time, broadcasters who sold spectrum are preparing to go off air, move channels, or channel share; and broadcasters who did not participate in the auction are either transitioning to a new facility, or staying on their existing channel.

Broadcasters have over three years (up to 39 months) to complete the transition and access to $1.75 billion in auction proceeds to reimburse transition costs. These rules—authorized by Congress, adopted by the FCC, and upheld by a federal appeals court—strike a careful balance: protecting TV viewers, providing broadcasters with sufficient flexibility, and allowing wireless providers timely access to their new spectrum.

Here are five reasons why keeping to the existing timeline matters:

Enhancing wireless coverage in rural America. Thanks to physics, the spectrum in the 600 MHz band travels far, making these airwaves ideal for enhancing coverage in rural parts of the country where cell towers are often miles apart. Deploying this spectrum is a major step in enhancing wireless broadband for rural America. And until broadcasters complete their transition, wireless providers can’t put this spectrum to the benefit of their rural customers.

Keeping more money in consumers’ pockets. Economists estimate that for every year wireless providers can’t access the spectrum won in an auction, there is a loss in consumer surplus roughly equivalent to the auction’s total revenue. In other words, consumers wind up paying more for a service than they otherwise would have to—and in this case, a year’s delay in accessing this spectrum would cost consumers roughly $20 billion. 

Meeting America’s demand for everything wireless. Americans’ data usage is at an all-time peak, growing 238 percent in the past two years. And that’s only the start: with 5G networks coming online soon and mobile data use expected to increase five-fold by 2020, the strain on the finite spectrum that powers our mobile lives will only grow.

Ensuring healthy auction revenues in the future. Auctions are a true and tested way to put spectrum—a limited natural resource—to its highest and best use. But auctions only work when the rules provide bidders with clear expectations and strong economic incentives. If the goal posts change post-auction, and access to spectrum takes longer than promised, trust will erode—and future auction revenues will decline—hurting taxpayers, wireless customers, and innovation.

Striking the right balance for impacted stakeholders. The transition plan offers flexibility for broadcast stations that cannot finish their new facilities by their deadline with construction waivers, deadline extensions, and grants of special temporary authority available. To stagger resource allocations, equipment manufacturing, and necessary personnel (like engineers and tower crews), the FCC created an orderly transition occurring in 10 phases over the three-plus years.

To help ensure a seamless transition, the wireless industry has stepped up as well. T-Mobile—the largest winning bidder in the auction—recently announced that they will fund the changeover costs for some rural public television stations, like PBS stations, that were not authorized under federal legislation to receive funding for the transition. 

Seven years after the incentive auction concept was first floated, let’s bring this historic spectrum auction to a successful close. That means sticking to the existing transition plan—a balanced proposal with bipartisan support that provides flexibility to broadcasters and helps America’s wireless industry stay competitive in the global race for 5G leadership. 

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