Pai: Spectrum auction yields will fall short

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The auctions the Federal Communications Commission plans to hold to repurpose broadcast television spectrum licenses for wireless usage won't yield the revenue they're supposed to as currently designed, FCC Commissioner Ajit Pai said at a Dec. 12 House hearing.

In its September proposal, the FCC outlined how broadcasters would sell their spectrum in a reverse auction, and the government would then offer it to wireless carriers in a forward auction. The auctions are supposed to also generate revenue for the government to build a public safety network, known as FirstNet and, and to reduce the federal deficit. But, Pai said, under the proposed design, the revenue from the forward auction would only have to match the cost of the reverse auction, meaning there could be nothing left over.

Pai, an Obama administration-nominated Republican commissioner, spoke at a hearing of the House Energy and Commerce subcommittee on communications and technology. The combination of the reverse and forward auctions is inherently complicated and participants on both ends may be reluctant to bid if they don't feel confident in their strategy, he said. 

Rep. Greg Walden (R-Ore.), the subcommittee chairman, expressed skepticism that the FCC couldn't auction more of the spectrum it plans to set aside for guard bands, unlicensed swaths of spectrum meant to minimize cross-license interference.

In response, FCC Chairman Julius Genachowski said that the FCC's engineers used their expertise to decide the size of the bands, though the commission will take into account the comments it receives about the guard bands before it finalizes the auctions.

But, he added, the laws of physics only allow for so much tinkering, and the reality of interference will remain a factor.

Additionally, the guard bands will be available for unlicensed use, the type of spectrum that Wi-Fi emerged from. That innovation was unexpected, and Genachowski said he anticipates other major innovations on unlicensed spectrum that could produce hundreds of billions of dollars in economic value, plus related tax revenue.

The country will only benefit from that innovation if its licensed and unlicensed spectrum infrastructure is competitive with that of other countries, he also said.

For more:
- go to the hearing webpage (archived video and prepared testimonies available)

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