Congress, FCC Auctioning Spectrum to Raise Money for Tax Cuts

NEWS ANALYSIS: A new bipartisan payroll tax cut bill contains broad authority for the FCC to auction new sections of spectrum, including frequencies currently assigned to television broadcasting.

The U.S. House of Representatives and Senate, in a rare show of bipartisan action, have approved a bill that would continue the payroll tax cut of 2011 for all of 2012. The bill, known as the €œMiddle Class Tax Relief and Job Creation Act of 2012€ (HR3630), includes a spectrum auction provision as a way to help the federal government pay for the bill.

The provisions appear in Title VI of the bill, which is expected to be signed into law by President Barack Obama shortly after passage. The spectrum to be auctioned includes a section currently assigned to government use between 1,930 and 1,995MHz that can be auctioned for commercial use. These frequencies are fairly near existing 4G frequencies used by some carriers.

In a move that changes the approach from the Federal Communications Commission practice when broadcast television in the United States was changed to digital from analog, the new bill would allow the FCC to pay television broadcast stations if they agree to relocate their frequencies from one band to another.

However, the more significant part of the bill is that it also allows the FCC to compensate broadcasters if they agree to relocate from their UHF frequencies (meaning anything higher than Channel 13) back to VHF frequencies (meaning anything from channel 13 and lower). Since the bulk of U.S. broadcasters were moved to UHF during the digital conversion, some broadcasters could end up getting their original channels back.

In addition to relocating television stations, the bill would allow the FCC to auction off €œwhite space€ spectrum. White space is the band of frequencies between television channels that€™s intended to protect one station from interfering with an adjacent station. Currently, that set of frequencies is kept clear to reduce interference, but with digital television occupying the broadcast frequencies, the relatively low-powered signals from 4G communications aren€™t much of an interference issue.

The ability to relocate television broadcasters also means that the FCC can free up sets of frequencies so that wireless carriers can have a consistent set of frequencies available nationally. This increases the value of that part of the spectrum, and makes life easier for carriers, and ultimately will make wireless devices slightly less complex, and thus perhaps a little less expensive.

The relocation of television broadcasters from one channel to another would have little impact on consumers since the majority of people get their television through cable or by satellite. For those who do get their TV over the air, all that€™s required is a quick search (something the television set will do automatically) to locate the new spot where the television station is broadcasting.

Once the television stations are moved and a chunk of spectrum is opened up, the FCC can the auction those frequencies to anyone who wants to come up with enough money. The proceeds of the auction would be used to fund the payroll tax cut, or in those cases where a television station agreed to change broadcast frequencies, it would compensate them for doing so, since changing the frequency of a television broadcast station is an expensive proposition.

It€™s also worth noting that the bill would try again to establish an emergency communications network. This was tried before, but failed because the government€™s restrictions on the use of the emergency frequencies made the auction relatively uninteresting to carriers. Now it appears from the bill that the carriers could use the frequencies for commercial operations as long as they agreed to give first responders priority access during an emergency.

Other emergency features of the bill that have little to do with making spectrum available for wireless companies include an upgrade to the 911 system.

Assuming that all of this happens as it appears it might, the wireless data spectrum could gain a lot of important real estate. The 1,900MHz bands being vacated by the government would provide added space in frequencies close to what wireless carriers are already using, while the vacated television broadcasting frequencies would provide a vast amount of space with good propagation characteristics and good building penetration of the sort that carriers have been lusting over all along.

It€™s hard to figure exactly what the white space frequencies would be used for because the individual bands are very narrow and widely dispersed, but there€™s been some interest in finding a way to use them. The auction provisions also allow the FCC to sell access to microwave frequencies in the 5GHz region and above.

Potentially,these frequencies could open up the possibility of a 4G service similar to what was proposed by LightSquared, but without the problem of adjacency to GPS.

€œI€™m pleased that Congress has recognized the vital importance of freeing up more spectrum for mobile broadband, both licensed and unlicensed,€ said FCC Chairman Julius Genachowski. €œAlthough the legislation could limit the FCC€™s ability to maximize the amount and benefits of recovered spectrum.€

Genachowski noted the inclusion of a broadband public safety network, and said, €œOur goals have included developing fair, effective mechanisms for providing all carriers an opportunity to obtain spectrum, promoting world-leading innovation, free-market competition and mobile broadband access for consumers throughout the country.€

Wayne Rash

Wayne Rash

Wayne Rash is a freelance writer and editor with a 35 year history covering technology. He’s a frequent speaker on business, technology issues and enterprise computing. He covers Washington and...