Electromagnetic radio spectrum is the fuel that powers the American commercial wireless industry. And this commercial wireless industry, in turn, powers the American economy with advanced 5G connectivity, ranging the full gamut from facilitating remote work and telemedicine to helping utilities manage their grids more efficiently and allowing farmers increase the productivity of their crops and livestock.
But as the demand for more wireless service grows, the supply of available spectrum for commercial use is becoming increasingly constrained. For this reason, all eyes are on ways to repurpose the last great trove of underutilized spectrum: spectrum used and managed by the federal government.
The federal government has assignments for about half of the “beachfront” spectrum, yet most agree that government agencies, and the government as a whole, use and manage spectrum resources inefficiently. The big question is whether it is possible to increase this efficiency so that more spectrum can be repurposed for commercial use?
My colleagues and I published a paper on this very topic nearly a decade ago entitled Market Mechanisms and the Efficient Use and Management of Scarce Spectrum Resources, 66 Federal Communications Law Journal 263 (2014). As the economics of spectrum have not changed since the paper was released, perhaps our analysis can provide some important insights as the Biden Administration works to update the National Spectrum Strategy.
We begin by tackling government spectrum use and demonstrate that the “ghost market” approaches commonly proposed to enhance public sector efficiency in spectrum such as a General Services Administration-type model and the 2012 spectrum sharing proposal by the President’s Council of Advisors on Science and Technology (PCAST) may not, in the long-term, be effective. We next turn to government spectrum management and present an economic model addressing spectrum assignment between public and private users using either auctions or leasing. We find that government management of spectrum resources is not desirable beyond some minimum level. In fact, any proposal that contemplates the leasing of government–managed spectrum to the private sector may be presumed to include “too little” repurposing of government spectrum to the private sector. We conclude that if the goal of spectrum use and management is economic efficiency, then policymakers should expand the private sector’s management of the nation’s scarce spectrum resources. That is, a goal of spectrum policy should be, to the extent feasible, to reduce the role of the federal government in spectrum management, shifting that management to private actors with better incentives and capabilities.
One possible option we suggest is to create a mechanism whereby government agencies are required to detail exactly what they need to achieve their mission from their current spectrum allocation. Rather than allow the government to continue to manage this spectrum, the FCC would auction this spectrum to the private sector under a sharing agreement subject to these requirements. So while the private sector would manage the spectrum, essential government services would still be protected—a win-win for all. Auction proceeds could also be used for a variety of socially-beneficial purposes, including providing funds for enhanced e-911 services or paying down the country’s crushing national debt.
We are pleased to see that there is a successful precedent for this model that demonstrates proof of concept: FirstNet—America’s nation-wide, dedicated interoperable public safety network.
FirstNet was borne out of the horrific events of September 11, when it became readily apparent that first responders simply could not communicate efficiently with each other. Recognizing that building a new, government-owned and -run stand-alone public safety network from the ground up would be cost prohibitive, would take years to build, and may never achieve coverage parity with commercial networks, in 2016 the U.S. government issued a Request for Proposal (“RFP”) to see if a private carrier might be able to administer the FirstNet program more efficiently by leveraging and building upon its existing network assets. While the RFP process was competitive and contentious, in March 2017 AT&T ultimately won the contract by virtue of its nationwide network coverage, its extensive spectrum portfolio, and a commitment to invest an additional $40 billion over the life of the contract to build, deploy, operate and evolve the FirstNet network. Nine months later, FirstNet announced it was open for business with all 50 states, the District of Columbia, and the five U.S. territories opting into the plan.
Since FirstNet formally got off the ground six years ago, its growth has been prodigious. As of April 2023, FirstNet is providing service to more than 25,000 public service agencies and organizations, accounting for more than 4.7 million “always-on” encrypted connections with priority access—a specialized service that conventional commercial wireless offerings are ill-equipped to do. Moreover, there are over 200 apps in the FirstNet app catalogue, and nearly 600 FirstNet ready devices.
History bears witness that government agencies will not relinquish their spectrum willingly. To get them to move will require firm leadership from both the White House and from Congress. As FirstNet demonstrates, however, in the era of increasingly tight spectrum constraints, it is nonetheless possible for both government and private commercial stakeholders to eat their cake and have it too.
Lawrence J. Spiwak is the President of the Phoenix Center for Advanced Legal & Economic Public Policy Studies, a non-profit 501(c)(3) research organization that studies broad public-policy issues related to governance, social and economic conditions, with a particular emphasis on the law and economics of the digital age.