The FCC uses auctions (competitive bidding) as one of the primary means of choosing among two or more mutually exclusive applications for an initial license for most commercial services, including wireless, television and radio. In a spectrum auction, parties apply to become qualified bidders for one or more spectrum licenses and take part in an online auction for those licenses. By using auctions, the FCC seeks to award licenses to those who value them most and who will have an incentive to use them most effectively. Prior to Congress granting the FCC auction authority in 1993, the Commission relied upon comparative hearings and lotteries to select a licensee from mutually exclusive applicants.

On February 22, 2012, Congress authorized the Commission to conduct incentive auctions, and directed that we use this innovative tool for an incentive auction of broadcast television spectrum. Incentive auctions are a voluntary, market-based means of repurposing spectrum by encouraging licensees to voluntarily relinquish spectrum usage rights in exchange for a share of the proceeds from an auction of new licenses to use the re-purposed spectrum.