Article Title

Spectrum Bids, Bets, and Budgets: Seeking an Optimal Allocation and Assignment for Domestic Commercial Electromagnetic Spectrum Products, Services, and Technology

Authors

William Kummel, Indiana University School of Law

Document Type

Note

Publication Date

3-1996

Publication Citation

48 Federal Communications Law Journal 511 (1996)

Abstract

This Comment analyzes the Federal Communications Commission's (FCC's) allocation and assignment of commercial electromagnetic spectrum licenses through competitive bidding auctions as authorized under Sections 921 to 927 of the National Telecommunications and Information Administration Organization Act (NTIAO Amendment) and Section 309(j) of the Federal Communications Act of 1934.

In five parts, this Comment analyzes (1) the FCC's statutory mandate, (2) spectrum's unique physical properties, (3) allocation and assignment methodologies, (4) traditional and nontraditional bidding systems, and (5) the preferred simultaneous multiple round electronic (SMRE) bidding structure. This Comment recommends a policy reorientation to promote spectrum capacity.

To promote efficient use and public benefit of commercially usable spectrum, Congress, through the NTIAO Amendment and Section 309(j), authorized the Commerce Department and the FCC to respectively transfer and auction federal government frequencies for commercial use. The physical properties of spectrum—instantly renewable, nondepletable, degradable, and finite—make auctions an effective assignment method regardless of scarcity.

The FCC selected SMRE bidding as the preferred assignment method. Auctions advance public interest, convenience, and necessity better than other assignment mechanisms with mechanisms such as first-come/first-served, comparative hearings, user fees, and random selection. SMRE bidding is more likely to award licenses to the highest value user than traditional (oral ascending, oral descending, sealed bid and second-price) or other nontraditional (Japanese and sequential sealed bid) auction structures. To further deter opportunistic behavior including overbidding, collusion, and default, the FCC introduced disclosure, deposit, transferability, build-out, aggregation, and bid group requirements.

Recommended Citation

Kummel, William (1996) "Spectrum Bids, Bets, and Budgets: Seeking an Optimal Allocation and Assignment for Domestic Commercial Electromagnetic Spectrum Products, Services, and Technology," Federal Communications Law Journal: Vol. 48: Iss. 3, Article 6.
Available at: https://www.repository.law.indiana.edu/fclj/vol48/iss3/6