FCC assigns licenses for commercial enterprises,  state and local governments, and others. However, concerns exist  about the ability to meet the growing needs of both commercial and  government users. Many  are also concerned that current spectrum-management practices, which  generally take a command and control approach—that is, policies wherein  government largely dictates how spectrum is used—may not work  effectively as spectrum needs rapidly change. This provided additional spectrum for commercial wireless services. Spectrum managers in the countries  we studied shared their views on the advantages of market-based policies,  which included their usefulness in  facilitating the reallocation and reassignment of spectrum to its most  efficient use;    allowing the market to handle the assignment and allocation of spectrum,  which some believe the market can do better than managers can;  requiring government agencies to pay market prices for spectrum just as  they do for other resources, such as land and electricity; and    addressing the challenges of spectrum management under conditions of  increasing demand and rising unpredictability of new opportunities for  using spectrum. Some Countries Have Adopted Market-Based Mechanisms for Government and Commercial Users

According to spectrum managers in Australia, Canada, and the United  Kingdom, these countries have adopted market-based mechanisms as part  of their spectrum-management approaches for both government and  commercial users. Several mobile  telephone companies supported a postponement of these auctions. Thus, while these current efforts may be  beneficial within the current regulatory environment, an analysis of  whether there is a need for comprehensive reforms—such as changes in  the structure of spectrum management—may best be undertaken by an  independent body. For more information on spectrum-management  structures in other countries, see appendix V.

		In the United States, Commissions Have Been Used to Look at Major Policy Change When Complex Policy Disputes Arise

In the past, commissions have been established to look at certain difficult  policy issues. In 1927 a compromise was  reached that led to a bifurcated framework for the management of  radiofrequency spectrum by the federal government. However, technology, consumer demand, and  government needs are growing rapidly. Moreover, no single  agency has been given ultimate decisionmaking authority over all  spectrum in the United States or the authority to impose fundamental  reform. This commission  would examine, among other things, whether structural reform of our  current system is needed. Views among those we spoke with on this issue were mixed. For  example, the commission should include representation from the  government, commercial, and technical sectors. Possible Policies to Consider

Whether the current policies should be continued;    Whether mechanisms that create economic incentives to encourage users  to use spectrum more efficiently could be developed:  If it is appropriate to apply these mechanisms to all users or only to  subsets of users, including government users;    Possible mechanisms to consider include:  Requiring users to pay for spectrum licenses in the marketplace;  Allowing users to sell spectrum in the market place;  Allowing users to lease spectrum from other users;  Charging an incentive-based fee that is designed to mimic a market      where one does not exist;  Increasing the flexibility of use embedded in a license;  Providing more spectrum for experimental and unlicensed uses;  Increasing the use of band managers.
Why GAO Did This Study

The radiofrequency spectrum--a natural resource used for wireless communications--is a critical input to various commercial and government functions. Because of expanding commercial and government demand for spectrum, there is increasing debate on how best to manage this resource to meet current and future needs. GAO was asked to examine whether future spectrum needs can be met, given the current regulatory framework; what benefits and difficulties have arisen with the application of market mechanisms to spectrum management; and what barriers exist to reforming spectrum management.

What GAO Found

In the past, the United States relied primarily on a command and control approach to spectrum management, wherein the federal government largely dictated the use of spectrum. This approach generally met commercial and government users' needs for spectrum. However, increased use of commercial wireless services, such as mobile telephones, and expanding government agency missions have created growing demand for spectrum resources. GAO found that concerns exist as to whether the current spectrum-management approach can adequately meet future needs for spectrum. The United States and most other countries that GAO spoke with are incrementally adopting market-based mechanisms for spectrum management. By invoking the forces of supply and demand, market-based mechanisms can help promote the efficient use of spectrum, especially in an environment with increasing and unpredictable demand. A prominent example of a market-based mechanism is the requirement for commercial spectrum users to bid at auction for the right to use spectrum. However, because of mission and system requirements, there is some question as to whether these mechanisms can or should be applied to certain government functions. Also, legal and technical limitations can, in some instances, hinder the application of these mechanisms to commercial users. GAO found several barriers to reforming spectrum management in the United States. While active dialogue among key stakeholders is ongoing, differing priorities have led to little consensus on appropriate reforms. In addition, the current spectrum-management structure--with multiple agency jurisdictions and a slow decisionmaking process--has hindered consideration of whether fundamental reform is needed. In the past, commissions--such as the Defense Base Closure and Realignment Commission--have been used to look at major policy change when complex problems arise.