Incentive Auctions

In February 2012, Congress passed legislation giving the FCC authority to conduct incentive auctions. Recommended in the National Broadband Plan, incentive auctions are an innovative, market-based approach to unleash spectrum to help meet rapidly growing consumer demand for mobile broadband.

Headlines

4/17/12
Genachowski Names Gary Epstein Senior Advisor

3/27/12
Blog Post: Concept Ratified, Work Begins

3/27/12
Leading Auction Experts Advise FCC on Incentive Auctions

3/21/12
Chairman Genchowski on Incentive Auction Task Force

Spectrum is the invisible infrastructure on which our mobile networks depend and is a limited national resource used for all forms of wireless communication – from the radio broadcasts in your car to the cell phone in your pocket to the Wi-Fi router in your home.

Commercial uses of spectrum change over time with the development of new technologies. For example, consumers are increasingly watching video content on their smart phones and tablets in addition to watching it on TV. These devices also allow the workday to continue outside the office in cafes, airports or riding the train. As a result of the rise of mobile broadband, spectrum must be made available to meet new demand.

The use of incentive auctions is one of the ways we can help meet the dramatic rise in demand for mobile broadband. Current licensees - - like over-the-air-broadcasters -- would have the option to contribute spectrum for auction in exchange for a portion of the proceeds. This will open up new business opportunities for current holders of spectrum licenses while helping to meet the demand for spectrum by new services – a win-win.

Incentive auctions have been endorsed by, among others, the CEOs of major American companies and 112 leading economists including Nobel laureates, former members of the White House Council of Economic Advisers, and former FCC Chief Economists from across the ideological spectrum. The use of incentive auctions to repurpose spectrum is a complex and important undertaking that will help ensure America’s continued leadership in wireless innovation. The best economists, engineers and other experts are hard at work at the Commission to get the job done right - - with openness and transparency.

The Commission is guided by the goals of unleashing investment and innovation, driving economic growth and job creation, enhancing our global competitiveness and benefiting consumers.

Background

Spectrum is needed to promote economic growth. Small and large businesses would reap the benefits of more spectrum, resulting in greater investment and more U.S. jobs. FCC analysis estimates economic value creation of more than $100 billion in the near-term by meeting the need for spectrum.

According to the High Tech Spectrum Coalition, over the next five years, investments in 4G wireless technologies will create 205,000 U.S. jobs.
Analysts project tablet sales of 55 million worldwide this year, making it a $35 billion dollar industry.
By 2015, analysts project that mobile apps will generate $38 billion in global annual sales.
Mobile online shopping grew to $4 billion in sales worldwide in 2010, up from $1.4 billion in 2009. There is also tremendous social value in making more spectrum available: more mobile broadband spectrum will drive breakthroughs to improve education through mobile learning, enhance health care through life-saving remote diagnostics and promote energy efficiency by supporting the smart grid.

Inside the Spectrum Crunch

Within the next few years, the growth of mobile broadband will exceed the ability of our networks to keep up. We will face a “spectrum crunch” that will lead to poorer-quality service and higher prices for consumers. The spectrum crunch is driven by many factors, such as:

490 million smart phones were sold worldwide in 2011, exceeding the number of PCs sold over the same period of time. And global sales of tablets are expected to surpass PC sales by 2015.
In 2011, smart phones consumed about 15 times as much data as traditional cell phones, on average, while connected laptops used nearly 170 times the data. In just the last few years, total mobile data consumption has grown by a factor of 7, and some projections anticipate that the next several years will see growth of 17 times current levels.
The number of mobile broadband subscribers worldwide is projected to grow from 1.2 billion to 5 billion by 2016.
The United States now has more wireless connections than people. The Census Bureau estimates the US population at just over 313 million, while there are over 320 million wireless subscriber connections.

To meet the economic challenge posed by the spectrum crunch, President Obama has called for a near doubling of the spectrum available for wireless broadband, and has identified mobile broadband as a key element for American innovation.

Working to Ease the Crunch

Incentive auctions are one new piece of the Commission’s spectrum policy, which is aimed at efficient use of spectrum as well as identifying additional spectrum for mobile broadband. Elements of this strategy include:

Opening up 25 MHz of wireless communications services spectrum for mobile broadband.
Releasing the “TV white spaces” for unlicensed use by the public – the largest amount of unlicensed spectrum in 25 years – to enable innovations such as Super Wi-Fi enabled technologies.
With NTIA, working to identify bands of Federal spectrum for potential reallocation to mobile broadband.
Exploring the removal of unnecessary barriers to flexible use of mobile satellite spectrum.

The Commission is also working to remove regulatory obstacles to robust and ubiquitous deployment of 4G mobile broadband such as regulatory barriers related to the placement of wireless towers. It’s been estimated that removing red tape and expediting approval processes could result in $11.5 billion in new broadband infrastructure investment over two years.

But we still need more spectrum to meet the imminent spectrum crunch. Today, there is inadequate spectrum available to meet growing demand for mobile broadband, and the historic process of reallocating spectrum for new uses has taken between six and 13 years.

Federal Communications Commission