Background

Radio frequency spectrum is managed primarily by regulations that set rules, for example, for permissible uses, certification of devices, requirements for public safety, and the acquisition of licenses. The Federal Communications Commission (FCC) is responsible for overseeing licensed and unlicensed spectrum used for commercial purposes and by state and local agencies, including first responders, as well as most other radio frequencies not assigned for federal use. Although Congress has a legislative role in spectrum management, the FCC routinely takes on the responsibility of making decisions about the assignment of spectrum for different uses and sets the rules for auctions of spectrum licenses. Today's technology can only operate on certain frequencies; commercially viable frequencies are a valuable commodity. Auctions are a market-driven solution to assigning licenses to use specific frequencies and are a recent innovation in spectrum management and policy. Several lucrative auctions have added billions to the federal treasury, applied to general revenue. Creation of two important trust fundsâthe Spectrum Relocation Fund and the Digital Television and Public Safety Fundârequired new language and amendments to existing law to permit some auction revenues to be applied directly to specific programs through trusts. The FCC's plan for the amount of spectrum per license, the number of licenses, and the conditions for use of the designated spectrum is developed for each new wireless service. Auctions of Spectrum Used for Television Broadcasting

The Balanced Budget Act of 1997 required the FCC to conduct auctions for 78 MHz of the analog television spectrum planned to be reclaimed from television broadcasters at the completion of the transition to digital television and to allocate 24 MHz for public safety services. Commercial Spectrum Enhancement Act

This act created the Spectrum Relocation Fund to provide a mechanism whereby federal agencies can recover the costs of moving from one spectrum band to another. This fund could provide a means to make it possible for federal agencies to recover relocation costs directly from auction proceeds when they are required to vacate spectrum slated for commercial auction. In effect, successful commercial bidders would be covering the costs of relocation. Deficit Reduction Act

The Deficit Reduction Act of 2005 ( P.L. The act set a definite date of February 17, 2009 for the release of spectrum at 700 MHz currently held by broadcasters. 108-458 ) dealt with spectrum policy. Provisions in the auction rules, however, provided for a new, interoperable communications network for public safety users to be shared with commercial users. A national license for 10 MHz, designated as Upper Block D, was put up for auction under service rules that required working with a Public Safety Licensee to build and manage a shared network. These licenses are referred to as the C Block. Auction Results

The auction grossed $19,592,420,000. The D Block received a single bid of $472,042,000, well below the minimum price of $1.3 billion the FCC established for that license. In an Order adopted and released on March 20, 2008, the FCC directed the Wireless Telecommunications Bureau not to proceed with the re-auction of the D Block because it is "in the public interest to provide additional time to consider all options...." The FCC therefore has begun a review of its rules regarding licensing, structuring a partnership, setting service requirements, and other rules and obligations established prior to the commencement of Auction 73.
Radio frequency spectrum policy issues before Congress are characterized by economic, technological and regulatory complexity. Of particular interest to policy makers are the allocation of spectrum for specific types of use (such as TV broadcasting, radio, advanced wireless services, or unlicensed) and the assignment of licenses for exclusive or shared use of specific frequencies. Today, most frequencies allocated for commercial uses are assigned through auctions, with licenses going to the highest bidder. Another important allocation of spectrum is for unlicensed use. Both commercial and non-commercial entities use unlicensed spectrum to meet a wide variety of monitoring and communications needs. Suppliers of wireless devices must meet requirements for certification to operate on frequency bands designated for unlicensed use. Examples of unlicensed use include garage door openers and Wi-Fi communications. The Federal Communications Commission (FCC) regulates licensed and unlicensed spectrum not allocated for federal use, is responsible for auctioning spectrum licenses, and can also use its authority to redistribute licenses.
Proceeds from spectrum license sales are presently attributed to general revenue in the U.S. Budget. In the 108 th Congress, however, a precedent was established with the creation of a Spectrum Relocation Fund to hold proceeds from the auction of specified radio frequencies allocated to federal use; federal agencies vacating spectrum to be auctioned for commercial use are being compensated from the fund for costs of relocation. In the 109 th Congress, the Deficit Reduction Act ( P.L. 109-171 ) included provisions that placed certain auction proceeds in a Digital Television Transition and Public Safety Fund. The fund is being mainly used to assist the transition from analog television broadcasting to digital broadcasting, and for contributions to programs for public safety. Over $7 billion of the auction proceeds were applied to deficit reduction. The funding came from the auction of spectrum (at 700 MHz) currently used for analog television broadcasting, to be vacated by February 17, 2009. The auction, Auction 73, concluded on March 18,2008; it grossed $19,592,420,000.
The rules for Auction 73 introduced two new business models for spectrum management and assignment that represented departures from past policy. One model designated a block of spectrum licenses for a network that could be managed to accept any suitable wireless device or software application, referred to as open access. The other model would require a shared network to accommodate both public safety and commercial users in a partnership. A national license, referred to as the D Block, was put up for auction, as part of Auction 73, with a reserve price of $1.3 billion. The winning bidder would have been required to assume the cost and responsibility of building the network using D Block spectrum and adjacent spectrum assigned to public safety. The sole bid for the D Block was below the reserve price and consequently the D Block will be re-auctioned. The prospects for this new auction have triggered a debate about the nature of competition in the wireless industry and the need for a nationwide public safety network that may be resolved by Congress through legislation.