The Deficit Reduction Act of 2005 ( P.L. Nine programs authorized by the act to receive auction funds are: a program that would expend up to $1,500 million on coupons for households toward the purchase of TV set top boxes that can convert digital broadcast signals for display on analog sets; a grant program of up to $1,000 million for public safety agencies to deploy systems on 700 MHz spectrum they will receive as part of the transition; payments of up to $30 million toward the cost of temporary digital transmission equipment for broadcasters serving the Metropolitan New York area; payments of up to $10 million to help low-power television stations convert full-power broadcast signals from digital to analog; a program funded up to $65 million to reimburse low-power television stations in rural areas for upgrading equipment; up to $106 million to implement a unified national alert system and $50 million for a tsunami warning and coastal vulnerability program; contributions totaling no more than $43.5 million for a national 911 improvement program; and up to $30 million in support of the Essential Air Service Program. Spectrum License Allocation and Auction

One of the first steps the FCC takes in preparing for an auction is to develop a band plan that allocates the spectrum for specific purposes (for example, high-speed transmission, which benefits from bandwidth of at least 10 MHz per license) and to decide the number of licenses and the geographic coverage for each license (for example, 200 licenses for metropolitan areas). These decisions begin the process of shaping the auction: the size of the bandwidth has an impact on the type of service it can be used for, and the geographic coverage of licenses can be used to encourage, for example, small companies seeking a local license or large companies seeking to expand their national coverage by acquiring a regional or national license. The rules for the auction of licenses in the 700 MHz band are in a Second Report and Order adopted July 31, 2007. One reason for interest in the spectrum is that the airwaves used for TV have good propagation qualities, able to travel far and to penetrate building walls easily. The proposals for service rules that will provide the framework for licensee business models have dominated the controversy over the preparations for the auction of the 700 MHz airwaves. Some observers have called this the "100-year auction," because the decisions about its service rules could have a significant impact on spectrum management and the wireless industry for decades to come. Provisions in the auction rules, however, provide for a new, interoperable communications network for public safety users to be shared with commercial users. Not only do service contracts between consumers and wireless companies limit the customer's choice of wireless devices, but also, carriers are increasingly blocking access to certain services. This contract-driven business model is often referred to as a walled garden. A wholesale network could provide more market opportunities for new wireless devices, especially wireless devices that could provide unrestricted access to the Internet. The FCC will reclaim the spectrum and make it available to others. The Licensing Improvement section of the act laid out the general requirements for the FCC to establish a competitive bidding methodology and consider, in the process, objectives such as the development and rapid deployment of new technologies. The law prohibited the FCC from making spectrum allocations decisions based "solely or predominately on the expectation of Federal revenues...." The Emerging Telecommunications Technologies section directed the NTIA to identify not less than 200 MHz of auctionable radio frequencies used by the federal government that could be transferred to the commercial sector.
The United States, like most of the world, is moving to replace current television technology with a new, technically superior format generally referred to as digital television (DTV). As part of this transition, Congress has acted to move television broadcasters out of radio spectrum currently used for the old, analog technology. The vacated radio frequencies are now scheduled for release in accordance with provisions of the Deficit Reduction Act of 2005 ( P.L. 109-171 ), which sets a February 2009 date for the release of the spectrum. Auctions for commercial uses of the spectrum are scheduled to begin on January 24, 2008. About $10 billion of the auction proceeds has been designated for specific purposes by the act.
On July 31, 2007, the Federal Communications Commission (FCC) announced the rules for the auction of airwaves now used for analog TV broadcasting (700 MHz). Because the decisions the FCC makes in setting up an auction of spectrum licenses can shape the bidding process and the eventual outcome of the auction, the FCC typically finds itself under pressure to set requirements that favor specific interests or policy goals. The preparations for the upcoming auction have been particularly fraught with controversy. The propagation characteristics of the spectrum are such that it is considered ideal for wireless broadband. For this and other reasons, control of this spectrum is sought not only by the incumbent wireless companies wishing to expand their capacity but also by companies eager to apply next-generation technologies for new business models. The auction rules introduce two innovative business models for spectrum management and assignment that represent departures from past policy. One model requires a shared network to accommodate both public safety and commercial users in a partnership. The other innovative model designates spectrum licenses for a network that could be managed to accept any suitable wireless device. The decisions the FCC has made for this auctionâand by extension for spectrum policyâhave framed a new debate about access to the airwaves, the nature of competition in the wireless industry, and wireless access to the Internet.