Enacting More “Sticks”: Spectrum Fees regarding Government Users

Wireless service and device use is exploding and more commercial range – both licensed and unlicensed – is going to be needed to meet the insatiable demand. While improvements in spectral engineering and infrastructure builds may provide some relief, spectrum is really a finite resource so large swaths of spectrum now used by the particular U. S. government must be reallocated to the private sector to resolve forthcoming shortages. And the establishment of range fees for government agencies, or Agency Spectrum Fees (ASF), is one tool to make this happen.

There are many way to reduce the Federal government’s spectrum allotment. Statutorily forcing agencies to move to other bands remains the most effective way, yet this requires strong leadership, is usually a one time event focusing on specific frequencies and may run into political storms. Others advocate for new incentives that provide agencies funding to voluntarily surrender valuable groups, but this too has drawbacks as the “carrots” needed to achieve success may exceed rationality and may only work in narrow circumstances. Further, it is unclear whether such incentives would change the behavior of individual organizations to use their spectrum more prudently. The benefit of ASF is that they can function being a more nuanced “stick” approach that will continually generates, if operated properly, spectrum efficiencies. More importantly, it is not a good either/or situation: they can work as an individual solution or be part of a multi-layered approach.

Overall, the ASF concept is rather simple. By establishing an annual price to government agencies based on their allocated frequencies, which would impact their annual budgets, an agency would have the deeply-rooted interest in minimizing its individual spectrum footprint. In other words, imposing a cost would force agencies to reconsider their spectrum holdings because they would only want to pay for what is really needed to accomplish their mission, therefore freeing spectrum for commercial utilizes. It’s not too dissimilar to having gear pricing for various sized storage units – it rationalizes behavior by getting users to “rent” what is actually needed, minimizing the chance that will space goes unused. A this year GAO Report stated it pretty well: “[f]ees could help to free spectrum for new utilizes, since licensees that use spectrum idly, lazily, slowly, may reduce their holdings or pursue sharing opportunities once they carry the opportunity cost of letting their range remain fallow or underused. inch

Simply by some accounts, the Federal government currently occupies – either exclusively or on a primary basis – between sixty and 70 percent of all range in the commercially most valuable range among 225 MHz and 3. 7 GHz, which comes to approximately two, 417 megahertz. Some have stated that the federal government only controls seventeen percent of this spectrum, but that will figure does not take into account all of the contributed spectrum the government has where, due to the primary status, it can restrict or preclude commercial use. If range fees result in a reduction of the complete amount of government spectrum by even 15 percent, that would equate to about 363 megahertz. I don’t plan, in any way, to trivialize or minimalize the valuable functions for which organizations use spectrum, but the days of arranging or warehousing spectrum on the infinitesimal chance that a particular band could be used in the rarest of events need to be brought to an end. To argue that will federal agencies cannot get 15 to 20 percent more spectrally efficient, with the use of modern technologies and sharing of services and range within the government, is ludicrous, specifically since it is estimated that the personal sector is getting approximately 30 percent more effective in its spectrum use every year. 1

Federal agencies argue that it is impossible to properly capture the value of range usage to meet their public protection missions. However , this point completely ignores the fact that federal spectrum users are already subject to numerous other budgetary pressures from reducing building rents and workforce sizes to the cost of input goods and services. If spectrum fees are problematic, how is it that organizations can deal with the myriad annual cost restrictions imposed by the General Services Administration? Generally, the Federal government is attempting, albeit slowly, to reduce its general square footage. Even the Department associated with Defense has been subject to space downsizing over the years as part of the Base Realignment and Closure (BRAC) process. Spectrum ought to be treated as just another factor that will agencies should account for as they prepare their annual budgets. And such costs put a more accurate price upon all of the costs for a particular company or function.

Additionally , another concern raised with spectrum fees is setting the appropriate amount to make sure it is not therefore punishingly high as to jeopardize a good agency’s public safety functions. In certain regards, rate selection (whether flat rate or market fluctuating) can never be a truly perfect process because it will require some entity, rather than the marketplace, to create the rates. Accordingly, we need to take certain fallibilities and use a conventional approach when setting the price point, adjusting it upwards as time goes on. At this point, I would argue that NTIA, in assessment with the Office of Management and Budget, as is done for spectrum relocation costs, should set the annual rate on a per megahertz basis in line with recent FCC private sector range auctions in order to generate a price for a given frequency. Where multiple organizations are sharing a particular band, the price can be divided on an equitable foundation, rather than trying to determine each agency’s use or its intrinsic value. For instance, where sharing occurs, the cost allocated for primary and supplementary use can be proportioned, albeit fairly arbitrarily, at two-thirds and one-third, respectively.

The budgetary mechanism for applying these fees on government customers presents some challenges but can also be resolvable. Accepting the position that NTIA accurately knows how much spectrum every agency holds, even spectrum that is used for classified functions, simple math produces the annual fee owed by an agency (i. e., price per megahertz times spectrum allotments times any reduction for sharing). From that amount, an agency’s annual budgetary appropriation level will be automatically reduced accordingly, via a sequestration-like structure, in that fiscal year.

Since there are current budget caps for discretionary investing, which are very likely to stay in place for the foreseeable future, a federal agency would be challenged to convince Congressional Appropriators to plus-up its account to counteract the impact of its spectrum costs. This is because any increase would have to arrive at the expense of some other precious program within their appropriations allocation. Also those who want to increase the caps will be unlikely to provide relief because it stomach at the expense of other investing that they are pursuing. Further, limits can be by legislation, if necessary, to prevent any kind of budgetary backfilling, if needed. Personally, I would leave any funds created by the fees to Appropriators to reallocate as they see fit, but I could see where some would want the money to lower the overall discretionary caps, and therefore the deficit.

Despite the many advantages of spectrum costs, I do not think that they are useful or appropriate to apply to commercial users, either licensed or unlicensed. First, most commercial spectrum customers have already paid for their spectrum in one form or another. While some have bought licenses at an FCC auction, others effectively paid for their spectrum when original licenses were made available around the secondary market. Second, many commercial spectrum holders are in the middle of spectrum re-evaluations and subject to market pressures. For example , television tv producers are about seven months from the broadcast incentive auction, where Our elected representatives established a different regime for promoting spectrum efficiency. Lastly, the tried application of spectrum fees to commercial users was a contributing factor in preventing their establishment in past debates. As such, the correct thing to do is to concentrate on the government users.

Installing greater accountability to an agency’s use of a precious reference will produce spectrum efficiencies and finally reduce government users’ spectrum stock. Agency Spectrum Fees can do this particular and it’s a step that we should consider.


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