One Small Step for Auctions, One Giant Leap for the Spectrum Relocation Fund

President Obama has now signed into law the Bipartisan Budget Act of 2015, which puts into force a title specific to radio spectrum auctions. Telecom legislation is a rare bird, and many were excited to see authorization for the next tranche of spectrum auctions. There is some good and some bad—here is a rundown of what’s in the new law, and what we at ITIF would have liked to see.

First the good. The title of the legislation specific to spectrum, a.k.a. the “Spectrum Pipeline Act of 2015,” makes much needed changes to what is known as the spectrum relocation fund, or “SRF.” The SRF is a pot of money managed by the Office of Management and Budget to pay for federal entities to transition radio systems when their spectrum is repurposed for other uses. Eight years after the creation of the fund in 2004, the 2012 Tax Relief Act—which extended the FCC’s auction authority and set the upcoming 600 MHz incentive auction in motion—expanded the types of costs which federal agencies could recover from the SRF. However, those funds were still limited to planning and research directly related to upcoming, specific auctions.

The Spectrum Pipeline Act passed earlier this week goes one step further, allowing SRF funds to be used “for research and development, engineering studies, economic analyses, . . . or other planning activities intended to improve the efficiency and effectiveness of the spectrum use of Federal entities in order to make available frequencies.” This expansion of the SRF, allowing federal agencies to spend money up front for the R&D necessary to see improvements to federal radio systems, should be celebrated progress.

Another welcomed change to the SRF is in the relaxation of which federal entities are able to dip into the SRF. As federal users vacate bands for commercial use, they have to go somewhere as well. The Spectrum Pipeline Act allows for those down the domino line to spend money also. Hopefully for some systems we can rely on new technologies or different architectures to significantly reduce demand for this resource, but the reality is federal users will continue to rely on spectrum. Coordinating coexistence between federal users who will be packed closer together will be necessary.

The engineering and analysis necessary to even begin thinking about transitioning radio systems is considerable, but absolutely crucial to successful reallocation. The challenges in repurposes federal spectrum are great enough—lack of funds to simply suss out the realm of the possible should not be one of them. Many deserve credit for seeing these changes come to pass, but Senator Tom Udall (D-NM) and Senator Jerry Moran (R-KS) deserve special praise for leading the charge with their Spectrum Relocation Fund Act of 2015.

Now for the bad. In short, the law requires a laughably small amount of spectrum—only 30 megahertz—to be auctioned off by 2024. To put that in context, industry has claimed an additional 350 megahertz of licensed spectrum will be needed by 2019 in order to meet growing demand. Not that industry should automatically get everything they want (finding 350 megahertz is a difficult task), but in a world where everyone recognizes the surging demand for mobile services, access to spectrum is generally the most economical way to increase capacity, and there is broad bipartisan consensus around transitioning old systems to new, more socially beneficial purposes, it seems odd that congress would require auctioning less than a tenth of the spectrum in twice the timeframe industry says is necessary.

To be fair, the legislation only requires auctioning of 30 megahertz; policymakers are authorized to do more—and hopefully they will. Also, the Pipeline Act sets the stage for auctioning another 100 megahertz, but that timeframe will look even longer. Nevertheless, it would have been nice to have seen a bit more aggressive action here. There is talk of another piece of spectrum legislation in the works; hopefully this will be aimed at even larger reforms to fundamentally change the long process by which we repurpose federal spectrum and also put a significantly larger chunk of spectrum in the pipeline.

All and all, the Pipeline Act accomplishes big strides with regard to the SRF—hopefully big enough to overtake the baby steps in the spectrum it requires to be auctioned.