Recently, there were news reports that President Trump, while meeting with executives to discuss his infrastructure plans, inquired about the possibility of auctioning the broadcast spectrum to wireless carriers. He should know that not only is it possible, it’s been done and its rare bipartisan path points to ways, even in the current discordant environment, to move our country forward.
The FCC is finishing an “incentive auction” of broadcast spectrum by which it created a market to match the price at which broadcasters were willing to sell spectrum with the price mobile operators were willing to pay. A bipartisan group of House Commerce Committee members described the outcome this way: “The incentive auction’s conclusion with more than $19 billion in bids marks the end of the second-largest auction and years of successful work in bringing market forces to bear on spectrum use policy. … Not only did the auction successfully encourage investment and competition by bringing 70 MHz of licensed and 14 MHz of unlicensed spectrum to meet our nation’s wireless broadband needs, but it also generated $7 billion for deficit reduction.”
How did such a success occur and what lessons does it bring to today’s environment? Three stand out.
First, begin with a clear problem statement and generate bipartisan support for solving the problem.
Several FCC economists proposed the incentive auction in 2002, but the idea gathered no momentum. In 2009, the congressionally mandated National Broadband Plan began by examining the biggest barriers to the United States having world-class broadband in 2020. The data pointed to a spectrum scarcity. Not only did the new wave of Smartphones create a hockey stick of demand, the spectrum cupboard was largely bare. Plan team members began discussing “the looming spectrum crunch,” publicly disclosed the data and invited comments.
Not everyone agreed. But the overwhelming sentiment was our analysis was correct, creating a significant political capital for action to address long-term spectrum needs.
Second, the solution should flow from a process that is transparent, fair, invites all to share credit and incorporates insights from a spectrum of stakeholders.
Once we had a consensus on the problem, we invited all to propose solutions. Many did, providing a basis for tentative recommendations that were refined after additional comments.
The incentive auction idea was a cornerstone of spectrum reform. Importantly, no one owned it. We socialized it so that the commissioners, congressional leadership and the White House all had a stake. When we handed the baton off to others (policy, in truth, is a team sport), they quickly — by D.C. standards — incorporated it into the only telecommunications legislation passed in the Obama administration.
Another key was including elements that appealed to all ideological views. We designed the proposal to achieve a clear public purpose — more affordable and abundant bandwidth — through a heavy dose of private incentives. While we listened to alternative ideas, we laid out objections to purer approaches, such as having 112 economists detail how a pure free-market approach wouldn’t work.
It was not without controversy. Broadcasters initially opposed it, suggesting Democrats would never support broadcasters profiting from a sale of public spectrum. Indeed, the White House’s National Economic Council and Office of Management and Budget raised that question. To their credit, when the facts and options were laid out, they quickly supported the idea.
These lessons are hard to apply in some areas, such as health care, where longstanding narratives and confirmation bias push analysis and problem solving to the sidelines. Still, when one considers many topics we will have to address, such as cybersecurity, artificial intelligence as well as infrastructure, that don’t neatly fit ideological narratives, the process of gaining consensus on a problem and incorporating solutions from all is a viable path for many issues.
There’s one more lesson that might prove more controversial, though it shouldn’t. That is that smart, data-driven economic policy will create far more jobs and economic growth than ad hoc, stunt-driven events. For example, as every $1 billion invested in spectrum creates 10,000 jobs, the auction will also create 190,000 jobs, about 225 times greater than the jobs promised as a result of the much greater publicized Carrier deal. Moreover, the freed-up spectrum will create a key input for the most important infrastructure for greatness in the 21st century Global Mobile Information Economy: the next generation mobile network.
Making, or keeping, America great is not the work of a single day or person but with a right approach, it can be done.
