FEDERAL USERS WRESTLE WITH INCENTIVES FOR EFFICIENT SPECTRUM USE

Federal spectrum users stressed to an NTIA forum Tues. the delicate balance between creating incentives for more efficient govt. spectrum use and protecting existing systems such as GPS. Several spectrum experts told the daylong forum at the Commerce Dept. that while secondary markets might have some applications for govt. spectrum, congressional budget and other policies didn’t always create incentives for more efficient use. “It’s harder than you might think to get the incentives right,” Treasury Dept. economist Adele Morris said.

The forum stemmed from an executive memorandum President Bush signed in May to create a task force on how to stimulate more efficient spectrum use by federal operators. The steps included a forum for soliciting private sector input. The meeting marked the first opportunity for parties outside the govt. to participate in the process set out in the White House memorandum. An interagency task force, including the Departments. of Energy, Defense, Homeland Security and Transportation, has been meeting regularly to examine federal spectrum use issues. Bush called for legislative and other policy recommendations by June 2004.

Deputy Commerce Secy. Samuel Bodman pressed participants at the session’s start for specificity in policy recommendations. “We're not here to talk about how important the spectrum is. That’s a given,” he said. “We're here to elicit specific recommendations.” Acting NTIA Dir. Michael Gallagher told panelists he sought a list of policy recommendations pithy enough to fit on a sheet of paper. Bodman said the interagency spectrum policy task force, which he chaired, would meet this week for a 3rd time. He stressed that the point of the initiative was to foster economic growth and strengthen national security. “These recommendations will focus on improving the current spectrum management system, creating incentives for more efficient and beneficial use of spectrum and increasing predictability and certainty for incumbent spectrum users,” he said. Bodman said the Commerce Dept. would hold a meeting in Feb. with the Dept. of Homeland Security to solicit feedback from local and state public safety officials.

The NTIA forum focused on incentives for spectrum efficiency and on new wireless technologies under development. Besides searching for a definition for “efficient use,” panelists discussed how applicable secondary markets, now in private use, would be for govt. spectrum. The FCC adopted rules this year to let licensees, including PCS and Wireless Communications Service, more easily lease unused or unneeded spectrum. A further notice sought feedback on whether that increased flexibility should be applied to other services, including public safety and Instructional TV Fixed Service (CD Dec 9 p2). “The goal is to make sure you don’t pursue technological efficiency for its own sake,” Morris said. A separate panel composed primarily of engineers emphasized more technical definitions of efficiency, including the number of users per Herz per geographic area.

“The concern that I have being part of a regulatory agency is, does spectrum efficiency translate into making the most money as fast as you can?” said James Miller, deputy dir. of DoT’s Office of Navigation & Spectrum Policy. While DoT doesn’t make money on the spectrum it uses, it provides services such as GPS free to all users, he said. The question for such agencies is what trade-off to make for more efficient spectrum use. Morris said public safety agencies must consider possible risks from incremental efficiencies. Miller drew a distinction between the role of the FCC and govt. agencies such as DoT: “The FCC is a market facilitator and the Department of Transportation is a safety regulator. So we have different missions. We need to find a balance.”

“I see a lot of stick but very little carrot,” Miller said. “If we are talking about spectrum efficiency in terms of federal government agencies’ giving up more, what are they getting in return? That is one of the questions we are seeking answers to.” Asked whether he would support a system of user fees for federal agencies, Miller didn’t rule it out but said he had concerns about how that would apply to govt. entities.

Morris suggested 2 possible categories of efficiency incentives for federal spectrum users: (1) “Administrative disciplines” that would make agencies track and account for spectrum use, as when budgeting. Morris said a possibility under such a system would be more oversight over how agencies used their frequency assignments and what their needs were. (2) Price incentives that could include user fees and would provide a cost for agencies of maintaining a frequency assignment. Morris said user fees for federal agencies that involve frequency assignments now are designed simply to cover administrative costs for NTIA. “The fees are not in any way related to the economic value of the resource. You slap kind of a flat fee on however many assignments you have,” she said. “That works great for cost recovery. But if you want a price incentive, you need to think about how you can do it a different way.” Another possibility would be for federal agencies to have a secondary market system in which they leased out spectrum not in use, Morris said. But she said that raised questions about the conditions under which that would be done, to whom such leasing would occur and whether agencies could preempt leased uses in a federal emergency.

Michael Calabrese, vp, New America Foundation, said he favored a system in which govt. entities paid fees but didn’t realize income for airwave use. On the private side, he said he would like to see the FCC lease spectrum inexpensively to users for completely flexible operations for a period. For govt. agencies, Calabrese suggested a “pay-or-play” approach in which an agency would have to pay a fee for spectrum use or invest an equivalent sum in more advanced communications technologies that used bandwidth more efficiently. Funds that govt. agencies elected to pay would go into a fund for next-generation technologies, such as the Defense Advanced Research Project Agency’s NeXt Generation Communications Program.

“I have a really big concern about turning the spectrum into a bake sale for the Forest Service and other agencies,” Calabrese said, and he wouldn’t support a secondary markets scheme in which agencies received funds for leased bands. Such a leasing system would “encourage the federal government to hoard the spectrum and to oppose opening it to unlicensed sharing.”

Another complication is the choices agencies face if they risk losing spectrum when they increase efficiency, said Greg Rosston, deputy dir. of the Stanford Institute of Economic Policy Research. Govt. agencies may decide not to use spectrum more efficiently because they may be planning ahead 5-10 years, when they will need more bandwidth, he said. “There is this tradeoff for the federal government,” he said.