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Spectrum Conundrum

by Brandon Arnold / /

Last year’s “Middle Class Tax Relief and Job Creation Act” extended a number of tax provisions, including payroll tax reductions, unemployment insurance, and Medicare payment rates.  Most of the legislation has since expired, but buried deep in the bill’s 102 pages was perhaps its most important provision – one that remains very relevant today.

Sections 6101 to 6103 of the law require the Federal Communications Commission (FCC) to auction off a large chunk of electromagnetic spectrum. This may sound like technical gobbledygook, but these auctions of federally-owned airwaves could foster economic growth and tremendously benefit both the deficit-plagued government by raising billions of dollars without hiking taxes, as well as telecommunications consumers by allowing for further deployment of advanced broadband networks.

Deficit reduction, job creation, telecommunications improvements – it sounds like a huge win for everyone. But these benefits could be undermined by the bureaucracy.  In April, the Department of Justice recommended that the FCC limit the auction to effectively bar the largest two telecommunications companies – Verizon and AT&T – from participating. This threatens both the optimal deployment of the spectrum as well as the financial benefits that the federal government could reap. 

In fact, a new paper from Georgetown University’s Center for Business and Public Policy says the cost of following DOJ’s approach could be $12 billion of federal revenues and over 118,000 jobs. And due to complicated auction rules, less of the spectrum would likely be available for advanced broadband technologies, meaning consumers would lose out, too. This is unacceptable.

The spectrum auction is important to economic growth and technological advancement. The FCC should not follow DOJ’s advice and rig the process to benefit some companies at the expense of taxpayers and consumers.