Opinion

Long-anticipated Spectrum Action Will Benefit Taxpayers and American 5G Growth

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Posted: Dec 07, 2020 1:07 PM
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Long-anticipated Spectrum Action Will Benefit Taxpayers and American 5G Growth

Source: AP Photo/Mark Schiefelbein, File

After much hand wringing by frequency owners trying to impede the process, the Federal Communications Commission (FCC) will finally auction off spectrum in the C-band this week that will mean tens of billions of dollars for the Treasury and is expected to provide a boost for 5G growth in the U.S.

The auction will repurpose 280 MHz of spectrum for 5G and should generate billions of dollars in revenue. Some analysts expect this to surpass a 2015 auction that raised $45 billion to become the biggest in the FCC’s history.

But the sale has been a long-time coming with many roadblocks along the way.

The auction begins Tuesday and the spectrum has been subdivided into 5,648 licenses for prospective bidders to consider. The owners of the spectrum will receive nearly $10 billion in total compensation for giving up their frequencies. Intelsat and SES hold the majority of the spectrum and will respectively receive about $4.85 billion and $4 billion.

Despite the windfall, the holders of the spectrum (the C-Band Alliance) didn’t part with it easily. The CBA, made up of foreign satellite operators, were previously given the spectrum by the U.S. and wanted to sell the bandwidth via private sales to wireless companies.  There was no guaranteed money for taxpayers from a private sale and likely litigation by wireless companies who lost out on the private sale could have taken years to resolve.

Groups on both the left and right urged the FCC to conduct the auction instead for the sake of transparency and the benefit of American taxpayers. The auction is expected to raise as much as $60 billion to fund the reallocation of the spectrum.

Critics of the CBA were rightfully concerned about putting strategic American taxpayer assets that would fuel the growth of 5G in the hands of overseas businesses. Sen. John Kennedy (R-La.) wrote in a letter to President Trump that it would be unwise to “put our 5G future in the hands of foreign-owned companies who have every incentive to put their own financial self-interests above our own national security and economic priorities.”  Sen. Kennedy held hearings in 2019 urging the FCC to move forward with a public auction.

Groups that wouldn’t often agree with the political right, including Common Cause, Public Knowledge, and the Taxpayers Protection Alliance, as well as tech companies like Google, said the auction was the best plan for advancing American 5G efficiently.

Dissension arose in the CBA before the sale. Eutelsat pulled out of the alliance in part because it disagreed with other members about how much the group would voluntarily contribute to the U.S. Treasury after the sale. Eutelsat said after FCC Chairman Ajit Pai made his announcement on the auction plan that it agreed with the idea.

It was good to see that change of mind. This long-anticipated auction will benefit all. The holders of the spectrum will still see a windfall and Americans will enjoy the fruits of the next generation of wireless technology, made better by the unlocking of the spectrum. And, taxpayers will benefit with tens of billions of dollars going into the U.S. Treasury.

Johnny Kampis is investigative reporter and a senior fellow for the Taxpayers Protection Alliance Foundation.