Telecommunications: Comprehensive Review of U.S. Spectrum
Management with Broad Stakeholder Involvement Is Needed
(31-JAN-03, GAO-03-277).
The radiofrequency spectrum--a natural resource used for wireless
communications--is a critical input to various commercial and
government functions. Because of expanding commercial and
government demand for spectrum, there is increasing debate on how
best to manage this resource to meet current and future needs.
GAO was asked to examine whether future spectrum needs can be
met, given the current regulatory framework; what benefits and
difficulties have arisen with the application of market
mechanisms to spectrum management; and what barriers exist to
reforming spectrum management.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-03-277
ACCNO: A06026
TITLE: Telecommunications: Comprehensive Review of U.S. Spectrum
Management with Broad Stakeholder Involvement Is Needed
DATE: 01/31/2003
SUBJECT: Radio frequency allocation
Strategic planning
Telecommunication
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GAO-03-277
a
GAO United States General Accounting Office
Report to Congressional Requesters
January 2003 TELECOMMUNICATIONS Comprehensive Review of U. S. Spectrum
Management with Broad Stakeholder Involvement Is Needed
GAO- 03- 277
In the past, the United States relied primarily on a command and control
approach to spectrum management, wherein the federal government largely
dictated the use of spectrum. This approach generally met commercial and
government users* needs for spectrum. However, increased use of commercial
wireless services, such as mobile telephones, and expanding government
agency missions have created growing demand for spectrum resources. GAO
found that concerns exist as to whether the current spectrum- management
approach can adequately meet future needs for spectrum.
Spectrum Serves Many Commercial and Government Needs 3kHz 300GHz Submarine
communication Amateur
radio Mobile phone Weather
radar AM radio Military
tactical radio Satellites Military and commercial
satellites Marine communication Military
applications Broadcast
TV FM radio
Federal and public safety
Source: GAO. The United States and most other countries that GAO spoke
with are incrementally adopting market- based mechanisms for spectrum
management. By invoking the forces of supply and demand, market- based
mechanisms can help promote the efficient use of spectrum, especially in
an environment with increasing and unpredictable demand. A prominent
example of a market- based mechanism is the requirement for commercial
spectrum users to bid at auction for the right to use spectrum. However,
because of mission and system requirements, there is some question as to
whether these mechanisms can or should be applied to certain government
functions. Also, legal and technical limitations can, in some instances,
hinder the application of these mechanisms to commercial users.
GAO found several barriers to reforming spectrum management in the United
States. While active dialogue among key stakeholders is ongoing, differing
priorities have led to little consensus on appropriate reforms. In
addition, the current spectrum- management structure* with multiple agency
jurisdictions and a slow decisionmaking process* has hindered
consideration of whether fundamental reform is needed. In the past,
commissions* such as the Defense Base Closure and Realignment Commission*
have been used to look at major policy change when complex problems arise.
TELECOMMUNICATIONS
Comprehensive Review of U. S. Spectrum Management with Broad Stakeholder
Involvement Is Needed
www. gao. gov/ cgi- bin/ getrpt? GAO- 03- 277 To view the full report,
including the scope and methodology, click on the link above. For more
information, contact Peter Guerrero at (202) 512- 2834 or guerrerop@ gao.
gov. Highlights of GAO- 03- 277, a report to
Congressional requesters
January 2003
The radiofrequency spectrum* a natural resource used for wireless
communications* is a critical input to various commercial and government
functions. Because of expanding commercial and
government demand for spectrum, there is increasing debate on how best to
manage this resource to meet current and future needs. GAO was asked to
examine
whether future spectrum needs can be met, given the current regulatory
framework; what benefits and difficulties have arisen with the application
of market
mechanisms to spectrum management; and what barriers exist to reforming
spectrum management. GAO recommends that the
Chairman of FCC and the Assistant Secretary of Commerce for Communications
and Information, in consultation with other agencies and congressional
committees,
develop a plan for the establishment of an independent commission with
wide representation to determine whether overarching spectrum management
reform is needed. GAO received comments from FCC and NTIA stating that
they would
take this recommendation into consideration. Because the agencies did not
specifically agree
to implement our recommendation, we have added a matter for congressional
consideration regarding the establishment of such an independent
commission.
Page i GAO- 03- 277 Telecommunications Letter 1 Results in Brief 3
Background 6 Concerns Exist That Future Needs for Spectrum Will Be
Difficult
to Meet 9 Many Countries Are Adopting Market- Based Mechanisms to Help
Meet Future Spectrum Needs 20 Market Mechanisms May Not Be Effective in
All Contexts and May Be Difficult to Implement 29 Diversity of Views among
Stakeholders and Current Regulatory Structure Are Barriers to Meeting
Future Spectrum Needs 34 Conclusions 44 Recommendations for Executive
Action 44 Agency Comments 45 Matter for Congressional Consideration 45
Appendix I Scope and Methodology 47
Appendix II Stakeholders* Views on Auctions and Spectrum Royalties 50
Stakeholders Identified Several Positive Attributes of Auctions 50 Despite
Success in Wireless Markets, Concerns Have Been Raised about Certain
Possible Effects of Auctions 50 Few Stakeholders Favor Royalty System of
Spectrum Auctions 53 Appendix III Technological Advancements Could Help to
Relieve Spectrum Scarcity 55
Appendix IV Suggestions for Issues for Consideration by a Commission 57
Commission Structure Considerations 57 Potential Goals and Objectives of
Commission 57 Possible Policies to Consider 57 Potential Regulatory
Structure Options to Explore 58 Lessons Learned 59 Contents
Page ii GAO- 03- 277 Telecommunications Appendix V More Details on
Spectrum Management in Foreign
Countries Studied 60
Appendix VI Participants in GAO*s Expert Panel on Spectrum Issues 64
Appendix VII Comments from the Department of Commerce 65
Appendix VIII Comments from the Federal Communications Commission 67
Appendix IX Key Contacts and Major Contributors 69 GAO Contacts 69 Staff
Acknowledgments 69 Tables
Table 1: Market- Based Mechanisms Adopted by Countries for Both Government
and Commercial Users 23 Table 2: Market- Based Mechanisms Adopted by
Countries for
Commercial Users Only 27 Table 3: Examples of Commissions Examining Major
Policy Issues 42 Table 4: National Spectrum Regulators 60 Table 5:
Spectrum- Decision Authority and Techniques for Resolving Disagreements
Regarding Spectrum Management 61 Table 6: Funding for Relocation 62 Table
7: Spectrum- Management Reviews 63
Page iii GAO- 03- 277 Telecommunications Figures
Figure 1: Number of Mobile Telephone Minutes Used per Month, on Average,
1996* 2001, in Billions 10 Figure 2: Countries Studied as Part of GAO*s
Review 22 Abbreviations
3G third- generation wireless services CSIS Center for Strategic and
International Studies DOD Department of Defense DOJ Department of Justice
FAA Federal Aviation Administration FEMA Federal Emergency Management
Agency FCC Federal Communications Commission IRAC Interdepartment Radio
Advisory Committee ITU International Telecommunication Union MHz Megahertz
NTIA National Telecommunications and Information
Administration
This is a work of the U. S. Government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. It may contain
copyrighted graphics, images or other materials. Permission from the
copyright holder may be necessary should you wish to reproduce copyrighted
materials separately from GAO*s product.
Page 1 GAO- 03- 277 Telecommunications January 31, 2003 The Honorable
Conrad Burns
The Honorable Ernest F. Hollings The Honorable Daniel K. Inouye The
Honorable John F. Kerry United States Senate
The radiofrequency spectrum is a natural resource that is used to provide
an array of wireless communications services critical to the U. S. economy
and to a variety of government functions, such as scientific research,
national defense, homeland security, and other public safety activities.
As new technologies and services are brought to market in the private
sector and new mission needs unfold among government users of spectrum,
nearly all parties are becoming increasingly concerned about the
availability of spectrum for future needs, because most of the usable
spectrum in the United States has already been allocated. Along with this
concern, there is a growing view that current spectrum management in the
United States may not be able to respond adequately to the rapidly
changing needs and competing demands of spectrum users.
To promote a more efficient use of spectrum, many countries, including the
United States, are incrementally adopting market- oriented approaches to
spectrum management. Examples of these approaches include requiring
commercial spectrum users to bid at auction for the right to use spectrum,
charging spectrum users market- based fees to use spectrum, and allowing
greater flexibility in how spectrum is used. However, market- oriented
mechanisms are not universally supported among interested parties. As a
result, increasing debate is emerging on how best to manage this scarce
spectrum resource to meet critical commercial and government needs, both
now and in the future.
As agreed with your offices, this is our final report in response to your
request that we study a variety of spectrum- management issues. Our first
report, released in September 2002, provided an overview of the
development of the legal and regulatory framework for spectrum management
at the federal level and assessed key issues associated with Contents
United States General Accounting Office Washington, DC 20548
Page 2 GAO- 03- 277 Telecommunications spectrum management at federal
agencies. 1 That report contained four recommendations: (1) that the
Chairman of the Federal Communications
Commission (FCC) and the Secretary of Commerce, who oversees the National
Telecommunications and Information Administration (NTIA), jointly develop
a clearly defined national spectrum strategy; (2) that the Secretary of
State, the Secretary of Commerce, and the Chairman of FCC jointly review
the adequacy of the preparation process for the 2003 World
Radiocommunication Conference; (3) that the Secretary of Commerce direct
NTIA to analyze the human capital needs of federal agencies for spectrum
management, as well as develop a strategy for addressing any identified
shortcomings; and (4) that the Secretary of Commerce develop a strategy
for enhancing its oversight of federal agencies* use of spectrum. FCC,
NTIA, and the Department of State generally agreed that these
recommendations should be implemented. This report builds on that effort
by examining market- oriented approaches to spectrum management and other
issues. Specifically, this report discusses (1) concerns about whether
future spectrum needs can be met, given the current regulatory framework;
(2) the advantages of marketbased mechanisms and how they have been
applied to help meet future spectrum needs; (3) whether there are
difficulties with using market- based mechanisms; and (4) if it is found
that fundamental spectrum reform is needed, whether the current regulatory
environment is conducive to facilitating such reform. In addition, in
appendix II we provide information on certain stakeholders* views on
auctions and spectrum royalties.
To respond to these objectives, we reviewed a broad array of technical,
economic, and legal research related to spectrum management. For example,
we reviewed spectrum- management reports completed by several foreign
governments. In addition, we interviewed experts on spectrum issues and
officials from companies and from government agencies, including FCC and
NTIA. We also conducted semistructured interviews and analyzed the results
of these interviews with spectrummanagement officials in 12 other
countries: Australia, Canada, Finland,
1 See U. S. General Accounting Office, Telecommunications: Better
Coordination and Enhanced Accountability Needed to Improve Spectrum
Management, GAO- 02- 906 (Washington, D. C.: Sept. 30, 2002).
Page 3 GAO- 03- 277 Telecommunications France, Hong Kong, 2 Italy, Japan,
Mexico, New Zealand, Spain, Sweden, and the United Kingdom. We selected
these countries based on their
geographic size, gross national product per capita, population density,
level of mobile telephone penetration, primary methods for assigning
spectrum, and whether the country uses market incentives to encourage
government conservation of spectrum. For Canada and the United Kingdom,
which have both recently adopted certain market- based mechanisms, we
conducted more in- depth case studies of spectrummanagement practices,
interviewing not only spectrum managers but also government users and
commercial firms. We also surveyed representatives to the Interdepartment
Radio Advisory Committee (IRAC), which represents 20 federal agencies that
use spectrum, regarding their spectrum use and their views on certain
policy issues. Finally, we invited 10 experts
to participate in an expert panel (see app. VI for a list of panel
members). These experts participated in a day- long conference at GAO and
discussed a series of issues on spectrum- management concerns. For more
detailed information on how we chose the countries we reviewed, the
panelists we
invited to serve on the expert panel, and other aspects of our research
methodology, see appendix I. We conducted our review from January 2002
through December 2002 in accordance with generally accepted government
auditing standards.
Today, there are considerable concerns about whether the current
regulatory framework will be able to provide future access to spectrum to
meet the needs of commercial and government users. In the past, commercial
wireless providers* access to spectrum has accommodated rapid growth and
competition in wireless markets. Additionally, most of the government
spectrum users we spoke with and surveyed said they have had access to
sufficient spectrum to meet the critical mission needs of their agencies.
Looking to the future, however, commercial wireless markets are expected
to continue to grow, and new services and technologies may require
additional spectrum as well. Likewise, the events of September 11, 2001,
highlighted the importance of wireless
2 We recognize that Hong Kong is a special administrative region of China.
However, the structure and policies used to manage spectrum in that region
are independent of the spectrum policies of mainland China, and thus
resemble the policies of an individual country. For ease of exposition, we
will be including Hong Kong when we discuss countries in several places in
this report. Results in Brief
Page 4 GAO- 03- 277 Telecommunications communications for homeland
security and national defense; federal government and public safety users
have stated that these events
exacerbated their already growing needs for spectrum. The rapid growth and
evolution of the wireless sector has led many experts and industry
participants to question whether a spectrum- management structure that
relies largely on *command and control* methods* that is, policies wherein
government largely dictates the use of spectrum* can adequately address
today*s complex issues. Recently, there have been numerous
forums, initiatives, and hearings to address spectrum issues. It appears
that many parties believe there are significant challenges to meeting the
growing demands for spectrum within the current regulatory framework and
are seeing spectrum- management reform as essential.
Spectrum managers as well as many experts we interviewed identified a
variety of advantages to implementing market mechanisms as part of
spectrum- management policies. In the past 10* 15 years, the United States
and several other countries have adopted certain market- based
mechanisms as part of the spectrum- management structure. These mechanisms
are generally designed to allow the normal workings of the marketplace*
that is, the forces of supply and demand that promote economic and
technical efficiency* to have a greater impact on spectrum decisions than
was typically the case in the past. In part, the intent of employing these
policies is to improve the efficiency of spectrum use. Some countries have
implemented market- based mechanisms for both government and commercial
users, while others have adopted these tools solely for commercial users.
While many of the experts we spoke with believe that the adoption of
market- based mechanisms may help to address future demands for spectrum,
the application of these methods may not be desirable or effective in
certain contexts. Charging government users for the spectrum they use
could, in theory, encourage more efficient use, but because of the
primacy of certain government functions* such as homeland security and
national defense* it may not be desirable. Further, some observers believe
that, in practice, fees charged to government users will not, in all
cases, be effective in promoting efficiency in spectrum use. One
difficulty can arise when government use, such as air traffic control, is
dictated by international spectrum allocations that limit the ability of
certain government spectrum users to change their spectrum use in response
to assessed fees. Also, applying a market- based mechanism in the case of
government services that have no commercial corollary* and therefore no
observable price* can be difficult. Additionally, some users and experts
believe that increasing flexibility in commercial spectrum use* a
Page 5 GAO- 03- 277 Telecommunications commonly discussed market- based
mechanism that allows spectrum licensees more freedom to change how they
use their assigned spectrum without administrative approval* will result
in more radio interference among users. Finally, some experts note that
market- based mechanisms work only if each user*s *rights* in the use of
spectrum are clearly defined;
such definitions may be difficult to establish. Under the current
framework for managing spectrum, it has been difficult to resolve
conflicts among existing spectrum users. While various stakeholders have
been actively searching for ways to improve spectrum management to meet
future spectrum needs, certain key conflicts among these stakeholders have
limited their ability to find solutions that are satisfactory to all. For
example, considerable conflicts exist between incumbent spectrum users and
potential new commercial providers, and no consensus exists on how best to
balance the needs of the private sector
with those of the public sector. While FCC and NTIA have worked to resolve
issues, at times their resolution of key policy issues has been protracted
and contentious. Moreover, in the current regulatory environment, no one
agency has been given ultimate decisionmaking authority over all spectrum
in the United States or the authority to impose fundamental reform.
Therefore, FCC and NTIA may not be in the best position to conduct an
overarching review of spectrum- management structure that would consider a
full range of possible structural changes. In the past, presidential or
congressional commissions have been established to find solutions to
complex problems such as those faced in reforming the spectrum- management
system in the United States.
In order to develop solutions to key spectrum- management issues, this
report recommends that the Chairman of FCC and the Assistant Secretary of
Commerce for Communications and Information, in consultation with
officials from the Department of State, Office of Management and Budget,
Office of Science and Technology Policy, and pertinent congressional
committees, work together to develop and implement a plan for the
establishment of a commission that would conduct a comprehensive
examination of current U. S. spectrum management. This commission would
examine, among other things, whether structural reform of our current
system is needed. The commission should be independent and involve all
relevant stakeholders* including commercial interests,
government agencies, regulators, and others* to ensure that the diversity
of views on key spectrum- management issues are represented. The review
should be time- limited and, if change is needed, should have as its
primary objective the establishment of a framework to implement that
change. Although the commission could be established by statute, executive
order,
Page 6 GAO- 03- 277 Telecommunications or other means, a statutory basis
for the commission may provide the most appropriate framework for
achieving a wide- ranging review of issues that
may ultimately need legislative solutions. In appendix IV, we have
presented possible issues and stakeholder concerns that a commission could
consider as part of its comprehensive examination.
We provided a draft of this report to FCC, the Department of Commerce, and
the Department of State for their review and comment. Regarding our
recommendation for an independent commission to evaluate the need for
overarching spectrum reform, FCC and the Department of Commerce stated
that they would take our recommendation into consideration. The Department
of State did not provide comments on this report.
Because FCC and the Department of Commerce did not specifically agree to
implement our recommendation, the Congress may wish to consider taking
appropriate action to ensure that the question of whether overarching
spectrum- management reform is needed is fully examined. This could take
the form of holding hearings or enacting legislation to establish an
independent commission that would conduct a comprehensive examination of
current U. S. spectrum management.
The radiofrequency spectrum is the medium that enables wireless
communications of all kinds. Although the radio spectrum spans the range
from 3 kilohertz to 300 gigahertz, 90 percent of its use is concentrated
in the 1 percent of frequencies that lie below 3.1 gigahertz, 3 because
these frequencies have properties that make this portion of the spectrum
well suited for many important wireless technologies.
Spectrum is used to provide a variety of services in the United States.
Companies are licensed to provide mobile telephone, paging, broadcast
television and radio, and various satellite services. Additionally, some
companies maintain spectrum licenses for a variety of private tasks,
including communication in a particular location (such as a large
industrial complex) or among remote vehicles of a company. A variety of
government users also employ spectrum to provide public safety services
and other functions of federal, state, and local government agencies. For
3 Radio waves are a form of electromagnetic radiation that propagate in
space as the result of particle oscillations. The number of oscillations
per second is called *frequency,* which is measured in units of hertz. The
term *kilohertz* refers to thousands of hertz and *gigahertz* to billions
of hertz. Background
Page 7 GAO- 03- 277 Telecommunications example, local and state police
departments, fire departments, and other emergency services use spectrum
to transmit and receive critical voice
and data communications. Federal agencies use spectrum for varied mission
needs, such as law enforcement, weather services, aviation communication,
and national defense.
Since the beginning of radio communications, concern about interference
among users has been a driving force in the management of spectrum at the
national and international levels. Interference among spectrum users can
occur when two or more radio signals interact in a manner that disrupts or
degrades the transmission and reception of messages. Spectrum managers
have worked to minimize interference through their two primary spectrum-
management functions, the *allocation* and the *assignment* of radio
spectrum. 4 The allocation process begins with the International
Telecommunication
Union (ITU), a specialized agency of the United Nations, where member
nations identify spectrum bands for about 40 broad categories of wireless
services. The Department of State coordinates and mediates the views of
FCC and NTIA to reach a U. S. position on spectrum issues for
international discussions. Once spectrum- allocation decisions are made at
the ITU, regulators within each country will, to varying degrees, follow
the ITU decisions when allocating spectrum for particular types of radio
services or classes of users to meet domestic needs. In the United States,
spectrum allocation is handled primarily by two agencies: FCC* an
independent agency that regulates spectrum use for nonfederal users,
including commercial, private, and state and local government users* and
NTIA, an agency within the Department of Commerce that regulates spectrum
for federal government users. NTIA works in consultation with IRAC, which
is composed of representatives from federal agencies, to manage the
federal spectrum use.
Once spectrum is allocated for specific uses, the spectrum- management
agencies assign portions of spectrum to specific users. Spectrum
assignment has generally been very proscriptive regarding how a specified
portion of spectrum can be used. That is, generally a license or
assignment
specifies the frequencies the license holder may use, the length of time
the license covers, the geographic areas the license covers, and the
services 4 Our September 2002 report, GAO- 02- 906, provided an extensive
discussion of the organization of spectrum management in the United
States.
Page 8 GAO- 03- 277 Telecommunications that may be provided. FCC assigns
licenses for commercial enterprises, state and local governments, and
others. NTIA makes frequency
assignments to federal agencies. In addition to licensed uses for
spectrum, FCC authorizes unlicensed use of spectrum in some frequencies.
Unlicensed spectrum has traditionally been used for low- powered devices
that operate in a limited geographic range, such as cordless phones, baby
monitors, and garage door openers, and it is increasingly being used to
provide services such as wireless access to the Internet.
Over the years, FCC has used a variety of methods to assign spectrum for
commercial users. Sometimes spectrum has been assigned on a first- come,
first- served basis. When more than one party applies for the same
license, FCC has used several alternative approaches to assign the
license. FCC
historically used comparative hearings, which give competing applicants a
quasi- judicial forum in which to argue why they should be awarded a
license instead of other applicants. In 1981, partially in response to the
administrative burden of the comparative hearing process, the Congress
authorized the use of lotteries, which allowed FCC to randomly select
licensees from the qualified applicant pool. 5 In the Omnibus Budget
Reconciliation Act of 1993, the Congress authorized FCC to use auctions to
award spectrum licenses for certain wireless communications services.
Auctions, a market- based mechanism, grant a license to the company that
has bid the highest price for specific bands of spectrum. Since auctions
were put into place, FCC has conducted 42 auctions.
Since nearly all of the usable radio spectrum in the United States has
been allocated already, accommodating more services and users often
involves having more than one user sharing spectrum, or reallocations of
spectrum from one use to another. *Spectrum sharing** one method of
accommodating more services and users* enables more than one user to
transmit or receive radio signals on or near the same frequency band.
Within the United States, about 56 percent of the spectrum is shared by
federal and nonfederal users, while about 31 percent is designated
exclusively for nonfederal use and about 14 percent exclusively for use by
federal agencies. 6 Another method of accommodating new users and
technologies is *band clearing,* or reclassifying a band of spectrum from
5 In 1981, Congress added Section 309( i) to the Communications Act to
give FCC the authority to assign a broad range of licenses by lottery. In
1997, Congress eliminated FCC*s authority to issue licenses by lotteries,
with certain exceptions.
6 NTIA officials told us that, even within the exclusive bands, some
sharing may take place.
Page 9 GAO- 03- 277 Telecommunications one set of radio services and users
to another, which requires moving previously authorized users off of the
band. Band- clearing decisions that
affect federal and nonfederal users may require coordination between FCC
and NTIA to ensure that moving existing users off of a band is technically
feasible and meets the users* needs. Such moves often involve costs
because existing users of the band may need to modify or replace existing
equipment.
In addition to spectrum- management policies directed at the allocation
and assignment of spectrum, advances in technology could also help to
accommodate more services and users. For example, by compressing pieces of
information, digital technologies are able to use less spectrum than would
analog technologies to transmit a given amount of spectrum. Also, with
appropriate technical standards, ultrawideband devices* which use very low
power over very large bandwidths* can operate using spectrum occupied by
existing radio services, in some cases, without causing interference. This
permits scarce spectrum resources to be used more efficiently, as more
than one service can use the same spectrum. See appendix III for more
discussion of technological advancements that could help relieve spectrum
scarcity.
In the past, the spectrum available to commercial users has accommodated
rapid growth in wireless telephone markets and supported a competitive
structure in that market. In addition, many government agencies* spectrum
managers say that, in the past, government users* needs for spectrum have
generally been met. However, concerns exist about the ability to meet the
growing needs of both commercial and government users. In addition, some
observers are particularly concerned that some spectrum is not currently
used as efficiently as possible. Many are also concerned that current
spectrum- management practices, which generally take a command and control
approach* that is, policies wherein government largely dictates how
spectrum is used* may not work effectively as spectrum needs rapidly
change. Key stakeholders are voicing these concerns as they search for
ways to meet these needs. Concerns Exist That Future Needs for
Spectrum Will Be Difficult to Meet
Page 10 GAO- 03- 277 Telecommunications Many industries that rely on
spectrum to provide services have grown dramatically over the past 20
years, including mobile telephone service
and varied satellite- provided services. In particular, the availability
of spectrum has accommodated the dramatic growth of mobile telephone
service since it was first launched in the 1980s. Between 1985 and 2001,
subscribership increased from approximately 340,000 to over 128 million,
and wireless use (measured in minutes) grew by almost 800 percent between
1996 and 2001 (fig. 1). This growth resulted from an increase in
subscribership as well as a marked increase in the average number of
minutes used by each subscriber. In terms of revenues, the industry has
also mushroomed: in 1985 annual revenues were $482 million, and by 2001
annual revenues stood at over $65 billion. Finally, the number of people
employed in the mobile telephone sector grew from about 3,000 in 1985 to
over 200,000 by 2001.
Figure 1: Number of Mobile Telephone Minutes Used per Month, on Average,
1996* 2001, in Billions
Spectrum Allocated to the Commercial Sector Has Accommodated Rapid Growth
and Competitive Structure in Some Wireless Markets
19 96
19 97
1998 19
99 20
00 2001 Minutes of use (billions)
Source: GAO's analysis of Cellular Telecommunications and Internet
Association's data.
0 5
10 15
20 25
30 35
40 45
Years
Page 11 GAO- 03- 277 Telecommunications In addition to the rapid growth in
wireless services, most observers believe that wireless phone markets are
highly competitive. According to a recent
FCC report, 7 94 percent of the U. S. population lives in counties with
access to 3 or more mobile telephone service providers, and 80 percent
lives in counties with at least 5 providers. 8 Officials from the wireless
companies we spoke with and participants on our expert panel
overwhelmingly perceived wireless markets as competitive. Twelve of the 13
wireless service providers that we interviewed said that mobile markets
are competitive. Even in rural areas wireless markets appear competitive.
For example, officials at the 3 rural companies we spoke with reported
that
they were among 3 to 6 competitors in the small and rural markets they
serve. Similarly, all 10 of the participants on our expert panel reported
that wireless markets are *extremely* or *moderately* competitive.
A number of policy decisions implemented by the Congress and FCC have
helped to accommodate the rapid growth and competitiveness of wireless
markets. In the 1990s, the Congress mandated the transfer of over 200
megahertz (MHz) of spectrum from government use to nonfederal use. This
provided additional spectrum for commercial wireless services. Since 1994,
FCC has conducted 42 auctions for spectrum dedicated to various kinds of
wireless services. Additionally, FCC*s licensing scheme for mobile
telephone service helped ensure that many providers were available in each
market region. In every region, FCC authorized up to eight different
mobile telephone licenses.
Our survey of the 20 IRAC agencies asked whether agencies were able to
meet their critical mission needs, given their current spectrum resources.
Of the 16 agencies that responded to this question on our survey, 13 said
that all or most of their critical mission needs were being met; 3
agencies responded that some critical needs were not being met. Moreover,
officials at FCC and NTIA stated that spectrum needs of government users
have generally been met.
7 See Federal Communications Commission, Seventh Annual CMRS Competition
Report,
FCC 02- 179 (Washington, D. C.: July 3, 2002). 8 FCC notes in its Seventh
Annual CMRS Competition Report that, as a result of treating providers
that serve any part of a county as if they served the entire county, the
report likely overstates the number of providers serving consumers in
various locations. Government Spectrum
Managers Say Government Users* Needs Have Generally Been Met
Page 12 GAO- 03- 277 Telecommunications Officials at three of the four
government agencies we interviewed in greater depth told us that their
agencies have generally received the
spectrum necessary to meet their mission needs. Officials at the Federal
Aviation Administration (FAA) told us that their agency has been able to
meet aviation requirements with the currently available spectrum.
Officials at the Department of Defense (DOD) said that their missions had
not yet been compromised because of a lack of spectrum. 9 The Federal
Emergency Management Agency (FEMA), which most often uses spectrum
allocated to the U. S. Army, also told us that it has been able to obtain
spectrum when needed. 10 The Department of Justice (DOJ), however, stated
that in just the past few years, as the use of wireless surveillance
activities has increased, congestion has increased, resulting in increased
occurrences of interference.
Agency officials we interviewed noted that they have taken measures to
achieve mission requirements in the absence of new spectrum assignments.
For example:
Officials stated that their agencies share considerable spectrum with
other federal agencies, as well as with nongovernmental users. FAA
officials noted that spectrum allocated for certain systems, such as
radar, is shared among a number of users, including FAA, DOD, the U. S.
Customs Service, and the National Weather Service; DOJ officials also
noted that they share spectrum in the government bands and are in the
design phase of a plan to implement greater sharing with a variety of
users having similar missions.
FAA and DOD officials noted that they perform internal audits of
spectrum use within their agency. FAA told us that the results of these
internal audits are used to make more efficient use of the available
spectrum; DOD said that it has relinquished use of underutilized spectrum
that has been identified during these audits. All four government
agencies told us that, when possible, they use
commercial vendors* who use spectrum assigned for commercial uses* to
provide nonsafety* related spectrum services, such as mobile telephone
service.
9 DOD pointed out that reallocation of spectrum under the Omnibus Budget
Reconciliation Act of 1993 did not affect bands in which DOD had extensive
operations. Reallocation of spectrum under Title III of the Balanced
Budget Act of 1997, which did identify bands in which DOD has operations,
has not yet taken place.
10 Since FEMA did not exist when current wideband channels were allotted,
FEMA*s operational units were transferred to FEMA from the U. S. Army,
along with the attendant frequencies.
Page 13 GAO- 03- 277 Telecommunications Officials at both DOJ and DOD
told us that they attempt to economize on spectrum use by implementing new
technologies. DOJ is planning on
making greater use of trunking technology; 11 DOD is investigating new
technologies that use spectrum more efficiently, or do not depend on
spectrum. Commercial users have expressed a need for more spectrum in
certain
highly congested areas, as well as to accommodate new services. This
spectrum is needed to accommodate the expected growth in the demand for
wireless voice services as well as for additional services that will be
provided over telephone handsets, including the transfer of data at higher
speeds than current wireless devices are able to do* so- called
thirdgeneration wireless services (3G). Also, certain commercial users
have argued that additional spectrum should be made available for
unlicensed use by low- powered devices. These users, as well as staff at
FCC, have
stated that more spectrum for unlicensed services is particularly helpful
in trying to bring new technologies, such as local area Internet access,
to the market. In a recent speech, an FCC Commissioner noted that a
research study had predicted that 21 million Americans will be using
wireless local area networks* a service that can be provided without a
license* by 2007.
Officials of the United Telecom Council, an organization that helps
utilities and railroads to manage their spectrum needs, told us that these
entities also need more spectrum for the wireless communications used by
their
maintenance personnel. These officials told us that since 1997, utilities
have increasingly had to share spectrum assignments with certain other
users. 12 Moreover, within these arrangements, no limit exists as to the
number of licenses that can be assigned for use on any particular
frequency. As a result, they told us, these frequencies are either too
congested to be used safely or are in imminent threat of such congestion.
In a recently released report, NTIA stated that the events of September
11,
11 Trunking is like a time- share system that allows several users to
share spectrum. Under a trunking system, several users share a given set
of frequencies under the assumption that it would be a rare occurrence for
all users to need the spectrum at the same time. Thus, less
spectrum can be provided to meet the users* needs than if each were
assigned discrete sets of frequencies reserved exclusively for its own
use.
12 Prior to 1997, utilities and railroads had spectrum allocated
exclusively for their industries. But in 1997, in an effort to increase
the efficient use of spectrum, FCC consolidated 20 previously exclusive
Private Land Mobile Radio services into two pools* the Public Safety Pool
and the Industrial/ Business Pool. The frequencies within the Industrial/
Business Pool are specified in 47 CFR S: 90.35 (b)( 3). Commercial and
Government Users See Future Spectrum Needs Growing
Page 14 GAO- 03- 277 Telecommunications 2001 have underlined the
importance of these industries and the roles they play in times of
disaster response and recovery.
Officials at most of the federal government agencies we spoke with also
told us that they face increasing needs for spectrum and are concerned
that adequate spectrum will not be available in the future. Furthermore,
of the 17 IRAC members who responded to our survey, 12 believed that their
spectrum needs would at least moderately increase over the next 2 to 3
years. Fifteen of the 17 respondents felt that they would have at least
some difficulty meeting their future critical mission needs because of
insufficient spectrum, whether or not they were meeting those needs at
this time.
Two of the four agencies that we interviewed in depth also revealed an
expectation of increased spectrum needs. In particular:
Officials at DOJ believe that they will need access to additional
spectrum to support homeland security, accommodate increased border
patrol, and provide for additional surveillance. Defense spectrum use
has grown exponentially since Desert Storm in
1991, according to DOD spectrum managers we interviewed. A DOD official
testified before the Senate Committee on Commerce, Science, and
Transportation in June 2002 that DOD*s spectrum usage is projected to
grow by more than 90 percent by 2005* and this estimate was made prior to
September 11, 2001. According to DOD officials we interviewed, since
September 11th, DOD*s spectrum needs have further increased.
Finally, public safety officials with whom we spoke said they needed
additional spectrum. In particular, these officials said that small bits
of spectrum located in various bands have been allocated for public safety
use, and that some of these slices of spectrum have been allocated very
close to certain commercial providers. Public safety officials told us
that this situation has resulted in there being some interference between
public safety users and commercial vendors, and they noted their continued
need
for more contiguous blocks of spectrum to provide critical safety- of-
life services. 13 13 While a 24 MHz block of spectrum has been allocated
to public safety users, it is currently occupied by broadcasters, who may
not vacate that spectrum for some time. For a further
discussion of the digital television transition see U. S. General
Accounting Office,
Telecommunications: Additional Federal Efforts Could Help Advance Digital
Television Transition, GAO- 03- 7 (Washington, D. C.: November 2002).
Page 15 GAO- 03- 277 Telecommunications Given the concern about the
growing need for spectrum, stakeholders are particularly concerned that
some users may not be applying the most
spectrally efficient technologies. 14 If that is the case, then spectrum
scarcity may be exacerbated by this inefficient use. As such, policies to
promote more spectrally efficient technologies can help to meet future
spectrum needs by freeing up unneeded spectrum.
Some observers, including several of our expert panel members, commercial
users, and regulators we spoke with in certain other countries, expressed
concern that government users do not have adequate incentives to conserve
their use of spectrum and therefore may not deploy this valuable resource
efficiently. NTIA, which manages federal spectrum, is responsible for
promoting the efficient use of that spectrum to the
maximum extent feasible. Our September 2002 report noted that it is not
clear that NTIA is able to ensure that spectrum is being used efficiently.
NTIA currently charges federal government users a small spectrummanagement
fee for each frequency assignment the government user holds. However, it
is not clear how much these fees, which are designed to recover 80 percent
of the administrative costs in NTIA*s spectrummanagement budget, encourage
government users to economize on their use of the spectrum. Officials from
two federal agencies that use spectrum noted that the current charges*
approximately $55 per assignment* were
not high enough to cause them to economize on their use of spectrum.
Recently, NTIA has expressed an interest in examining a fee structure that
provides a greater incentive to promote efficient use of spectrum than is
currently being used by NTIA.
Federal agency officials told us that they have some nonfinancial
incentives to conserve spectrum. Officials from two of the agencies we
interviewed reported that because they are unlikely to get substantial new
spectrum from NTIA, they face internal pressures to conserve and reshuffle
current spectrum resources to meet new needs. Also, DOD
14 This discussion focuses primarily on the concept of *technical
efficiency** that is, getting the most use, or *output,* out of a portion
of spectrum, given the mission or market context of its use. Other
important aspects of efficiency are also relevant in spectrum management.
In particular, economic efficiency relates to whether spectrum is
allocated across various uses in a way that maximizes society*s welfare.
In free markets, economic incentives give signals to firms and consumers
that help to ensure that resources flow to their most valued use. With
spectrum, this free flow of resources is not fully functional, so the
question of whether spectrum is allocated in an economically efficient
manner is also an important focus of analysis. Concerns Exist about
Inefficient Spectrum Use in the Public and Private Sectors
Page 16 GAO- 03- 277 Telecommunications officials stated that the
department*s internal goal of being a responsible steward of America*s
resources drives it to use spectrum efficiently.
Agencies we spoke with noted that NTIA requires that federal agencies
review their assignments every 5 years. However, in our first report,
released in September 2002, we noted that one agency official said that
these reviews are often perfunctory, there is no independent verification
of the reviews, and there is no other evidence that these reviews are
effective. Those we spoke with for this report did cite other audits of
spectrum use in the federal government* including spectrum reviews by the
White House* as incentives to use spectrum efficiently. Finally, NTIA has
required the adoption of certain technologies* such as narrowbanding 15
and trunking* that conserve spectrum. However, NTIA officials told us
that, in practice, it is difficult for NTIA to invoke its enforcement
authority because its primary enforcement tool is the ability to remove
frequency assignments from agencies not complying with certain
requirements. Because license removal is a radical measure that could
interfere with government agencies* ability to carry out important
missions, it is difficult for NTIA to use this approach.
Some of those we spoke with also expressed concern that public safety
users do not employ the most efficient technologies and are therefore
wasteful with their spectrum. The head of a commercial wireless
organization noted that public safety communications equipment is often
antiquated. One public safety official we interviewed stated that public
safety officials often do not have adequate funding to update their
equipment to be more spectrally efficient.
Concerns also exist that some nongovernmental users do not have incentives
to be efficient. In August 2001, FCC commenced an audit of private land
mobile radio stations licensed on frequencies below 512 MHz. These license
holders included industrial/ business users and public safety users. 16 As
part of the audit, FCC sent letters to over 260,000 licensees
seeking information to determine whether they (1) were meeting required
construction deadlines and (2) were operational. As of October 2002, FCC
15 Narrowbanding is a technique for reducing the amount of spectrum
(bandwidth) needed to transmit a radio signal, thereby freeing up spectrum
to meet future growth. 16 Specifically, these licenses apply to the
Industrial/ Business Radio Pool (for example, entities engaged in
commercial activities; operating educational institutions; operating
hospitals, clinics, or medical associations) and the Public Safety Radio
Pool (for example, state and local governments, entities providing rescue
and disaster relief services).
Page 17 GAO- 03- 277 Telecommunications had received responses from over
228,000 licensees, and these licensees reported that over 33,000 licenses
(7.9 percent of licenses) were not being
used and could be canceled. FCC officials told us that they would like to
undertake more spectrum audits such as this.
Additionally, some concerns exist that certain commercial users may not
employ spectrally efficient technologies. Members of the expert panel and
government users have stated that they believe the television broadcasting
industry does not employ spectrally efficient technologies. Several
stakeholders noted that in part this is attributable to a lack of receiver
standards. Some expert panel members and some government users also noted
that mobile satellite services, radio broadcasters, and the mobile
telephone industry are also not necessarily using the most spectrally
efficient technologies. 17 For most of the history of wireless
transmissions, the national governments of the countries we reviewed have
used centralized
administrative techniques* often called command and control* to allocate
and assign spectrum. An important focus of this regulatory approach has
generally been to minimize interference among users. Using the ITU
allocation tables as a starting point, individual countries have
traditionally allocated spectrum for particular uses and assigned spectrum
to particular users by licensing them to use the spectrum in specific
ways.
Until the past 10 to 15 years, when some countries started using auctions
to assign spectrum, countries throughout the world assigned spectrum on a
first- come, first- served basis, or used some other administrative device
(such as comparative hearings) to decide among applicants who wanted the
same spectrum. In the United States, FCC used comparative hearings and,
later, used lotteries to assign spectrum to competing commercial carriers.
One of the benefits of using market forces to allocate and assign spectrum
resources is that these methods help to ensure that spectrum moves into
the services that are most highly valued by consumers, as measured by
their willingness to pay higher prices for those services. When resources
move to more valued uses, a form of efficiency known as *allocative
17 FCC officials noted that analog television is being replaced by digital
television, which is far more efficient, that analog mobile telephone
service has largely transitioned to digital service, and that, regarding
mobile satellite services, FCC is in the process of considering rule
changes to enable these providers to become more efficient. Concerns Exist
That
Primary Reliance on Administrative Management May Not Be Effective in
Today*s Rapidly Changing Environment
Page 18 GAO- 03- 277 Telecommunications efficiency* is advanced. For
example, if, because of the development of cable and satellite television,
broadcast television were to lose viewers
and its spectrum were to become more valuable for other uses in higher
demand, such as mobile telephone service, then market forces* that is,
market mechanisms in spectrum management* would naturally lead to a
reallocation of some of that spectrum to these other uses. However,
without market forces helping to direct resources, spectrum managers would
have to predict the most valued use of the resource in order to make
decisions designed to allocate spectrum to the services that would best
serve society*s interests.
Because of the growing demand for spectrum and the inability to predict
where technology will lead, spectrum managers in some countries, as well
as many other interested parties, are questioning the continued
appropriateness of relying largely on traditional command and control
methods for allocating and assigning spectrum. In October 2001, FCC*s
Chairman underlined the need to move away from reliance on command and
control methods when he stated that it is becoming an *impossible task*
for government officials to determine the best use for spectrum and to
repeatedly adjust allocations and assignments of spectrum to accommodate
new spectrum needs and new services. Similarly, in June 2002, the
Assistant Secretary of Commerce for Communications and Information at NTIA
indicated her support of market- oriented approaches for commercial users
when she stated that NTIA is hoping that FCC will move forward fairly
rapidly with its efforts to promote secondary markets for spectrum.
Because stakeholders are concerned that the current system may not be able
to meet the country*s future needs for spectrum, they have been having
discussions and looking to find solutions for these concerns. These forums
and initiatives are indicative of a general sense among many interested
parties that managing spectrum is difficult, complex, and challenging, and
that significant reforms to the current processes may be needed. These
initiatives include a variety of task forces and working groups,
including:
FCC: In June 2002, the Spectrum Policy Task Force, composed of senior
FCC staff, was announced. The task force*s mission was to identify and
evaluate changes in spectrum policy to increase public benefit. The task
force released its report in November 2002, with four key recommendations:
(1) To provide an incentive for spectrum holders to be technically
innovative and economically efficient, FCC should move Key Stakeholders
Are
Discussing Ways to Meet Future Spectrum Needs
Page 19 GAO- 03- 277 Telecommunications toward more flexible, market-
oriented policies, which would require FCC to clearly define spectrum
users* rights and responsibilities. (2) FCC
should adopt a new standard for judging acceptable interference, to be
called the *interference temperature.* (3) FCC should increasingly
consider the dimension of time to make allocation and assignment
decisions, so that spectrum users could better share unused and underused
spectrum. (4) FCC should begin basing its spectrum policy on the *commons*
and exclusive use models rather than on the command and control model,
except in cases where there is a compelling public interest, such as
public safety. 18 NTIA: In April 2002, NTIA held a Spectrum Management
and Policy
Summit. The purpose of this conference was to discuss how spectrum
management could be more effective and to find ways of meeting future
spectrum needs. Additionally, NTIA included in the Department of
Commerce*s fiscal year 2003 budget a proposal for an NTIA Spectrum
Management Reform initiative. The fiscal year 2003 appropriation request
for the program, which is expected to take about nine years to be
implemented, was $1.425 million. The purpose of this initiative would be
to review the management processes that are currently being used to
allocate and distribute spectrum, including those used by NTIA, FCC, and
the individual federal agencies that manage spectrum. Public Safety
Wireless Advisory Committee: This committee, established
by FCC and NTIA in response to concerns voiced by the Congress that the
agencies* individual reporting of public safety*s spectrum needs may be
insufficient, outlined public safety*s spectrum needs through the year
2010. The committee suggested focusing on obtaining new spectrum
allocations for public safety, implementing technologies to allow more
efficient
spectrum use and sharing, and encouraging public safety users to utilize
commercial services when possible. The Center for Strategic and
International Studies (CSIS): Recognizing
increasing demands on the spectrum allocation process, CSIS conducted a
series of roundtable discussions in the past 2 years on spectrum
allocation and long- term spectrum- management needs and goals for the U.
S.
government and economy. In addition, CSIS has convened a Commission on
Spectrum Management to further examine the issue and expects to release a
report on spectrum management in mid- 2003. In addition, both the Senate
and the House of Representatives are looking at ways to better meet future
spectrum needs. Issues being examined
18 See FCC*s *Spectrum Policy Task Force Report: ET Docket No. 02- 135,*
November 2002, for a more in- depth discussion of each recommendation. FCC
has issued a public notice asking for comments on this report. The comment
period ended on January 27, 2003.
Page 20 GAO- 03- 277 Telecommunications include creating funds for
reallocating spectrum from one use or user to another and setting aside
unlicensed spectrum for broadband use.
Hearings have been held to examine the current process and the impact of
this system on the implementation of 3G technologies* which include
transferring data at higher speeds than current technologies generally
permit. Also, a variety of bills introduced in the 107th Congress
addressed diverse spectrum- related issues. 19 There appears to be general
agreement among many regulators and
experts that a more dynamic system for allocating and assigning spectrum
is needed. To promote the movement of spectrum to those uses where it is
most highly valued, the United States and some other countries have
adopted some market- based mechanisms in their management of the spectrum.
According to spectrum managers we spoke with in various countries, some
have adopted these mechanisms for both government and commercial users,
while others have adopted mechanisms only for commercial users. Spectrum
managers in the remaining countries we studied said that they were not
using these market- based mechanisms, but some reported that they were
exploring using these mechanisms.
While spectrum users have been shielded historically from the normal
workings of the marketplace, market- based approaches to spectrum
management invoke mechanisms or policies that leverage the information
normally available in markets* such as prices of goods or services* to
promote the efficient use of spectrum. Regulators can implement
marketbased mechanisms in a variety of ways. They can:
Create a market where none previously existed. For example, markets for
spectrum have been created over the past 10 to 15 years by adopting
auctions as a method for assigning spectrum licenses to mobile telephone
and other wireless service providers. Remove or relax rules and
regulations that created barriers to the full
functioning of spectrum markets. For example, some countries reported that
they are considering rules and regulations to permit users to more readily
purchase or lease spectrum from other license holders, allowing a
19 Legislation addressing spectrum policy introduced in the 107th Congress
included S. 2869, H. R. 5638, H. R. 4738, and H. R. 4641. Many Countries
Are
Adopting MarketBased Mechanisms to Help Meet Future Spectrum Needs
Many Countries Identified Advantages to Using Market- Based Mechanisms for
Spectrum Management
Page 21 GAO- 03- 277 Telecommunications more robust secondary market. 20
Similarly, with more flexibility, spectrum licensees can more readily make
business decisions to change how they
use their assigned spectrum without having to get regulatory approval.
Implement a policy that artificially mimics the functions of a market. For
example, in some countries, regulators have developed fees that are based
on information about prices for spectrum that would likely exist under a
free market. These *incentive- based fees* differ from other regulatory
fees that are assessed only to recover the cost of the government*s
management of spectrum. Incentive- based fees are designed to promote the
efficient use of spectrum by compelling spectrum users to recognize the
value to society of the spectrum that they use. Mechanisms such as these
might have the most applicability for users that do not function within a
commercial context.
According to the spectrum managers in the 13 countries we reviewed (see
fig. 2), many have adopted a variety of market- based mechanisms including
auctions and incentive- based fees, more flexible licenses, and secondary
markets. Managers in many countries told us that they are moving away from
administrative processes and adopting market- based mechanisms for a
variety of reasons. Spectrum managers in the countries we studied shared
their views on the advantages of market- based policies,
which included their usefulness in facilitating the reallocation and
reassignment of spectrum to its most
efficient use; allowing the market to handle the assignment and
allocation of spectrum, which some believe the market can do better than
managers can; requiring government agencies to pay market prices for
spectrum just as
they do for other resources, such as land and electricity; and
addressing the challenges of spectrum management under conditions of
increasing demand and rising unpredictability of new opportunities for
using spectrum. 20 In its current Notice of Proposed Rulemaking and its
Policy Statement on Secondary
Markets, issued concurrently, FCC established guiding principles for the
development of secondary markets. Their goals include the establishment of
clear definitions of spectrum usage rights for assignees and the ability
of assignees to be able to easily transfer, aggregate, and divide their
licenses and spectrum usage rights. The countries we studied have followed
these principles to varying degrees.
Page 22 GAO- 03- 277 Telecommunications Figure 2: Countries Studied as
Part of GAO*s Review
According to spectrum managers in Australia, Canada, 21 and the United
Kingdom, these countries have adopted market- based mechanisms as part of
their spectrum- management approaches for both government and commercial
users. As table 1 shows, in addition to holding auctions, these countries
have instituted incentive- based pricing* which is designed specifically
to provide an incentive to conserve on spectrum* for commercial and
government spectrum. These countries have also introduced greater
flexibility and secondary markets for spectrum holders. Of these three
countries, Australia was the first to institute market
21 While Canada*s fees do not attempt to closely mimic a market, we define
these as marketoriented because the fees are set using certain *market
indicators* and are set to recoup more than the cost of administering the
licenses. Some Countries Have
Adopted Market- Based Mechanisms for Government and Commercial Users
Some Countries Have Adopted Market- Based Mechanisms for Government and
Commercial Users
Australia Finland Finland
New Zealand Italy
Sweden France
United Kingdom
Spain
Source: (c) 1998 Cartesia MapArt.
Mexico Canada
United States
Japan Hong Kong, China
Page 23 GAO- 03- 277 Telecommunications mechanisms, adopting auctions in
1994 and incentive- based pricing in the early 1980s. Canada and the
United Kingdom started using auctions at a
later time* in 1999 and 2000, respectively. With regard to incentive-
based pricing, Canada has been using this mechanism since the late 1980s
and the United Kingdom since 1998. See appendix V for more information on
spectrum management in all of the countries we reviewed.
Table 1: Market- Based Mechanisms Adopted by Countries for Both Government
and Commercial Users Countries Details on the Use of Market- Based
Mechanisms Australia Canada United Kingdom
Auctions (for commercial users only) Year of first auction or tender a
1994 1999 2000 Number of auctions or tenders to date 18 2 2
Incentive- based pricing (for commercial and government users) Time when
country instituted pricing Early 1980s Late 1980s 1998
Revenue from spectrum fees as a percentage of management costs b 400% 500%
130%
Flexibility and secondary markets (for commercial users only) Degree to
which spectrum licensees have
flexibility in terms of how they use licensed spectrum without regulatory
approval
Some licenses have flexibility regarding which technologies can be used
with the spectrum.
Licenses acquired in auctions have more flexibility in use of the
spectrum.
All licenses restricted to use specified at the time spectrum was
obtained.
Degree to which spectrum licenses can be traded in secondary markets
without regulatory approval
All licenses have clearly defined rights and are tradable without
regulatory approval.
Some licenses have clearly defined rights and are tradable without
regulatory approval.
Licenses cannot be easily traded.
Source: Spectrum managers interviewed in each country. Note: GAO*s
analysis of information elicited from interviews with spectrum managers. a
The term *tender* can have different meanings with regard to spectrum
management. For our
purposes, tender refers to a simple form of auction in which participants
bid a price they are willing to pay for a spectrum license. b If this
ratio is 100, it means that spectrum fees are covering only the
administrative costs of spectrum management. The percentages do not
include auction revenues.
The incentive- based pricing systems in these countries were designed to
encourage government spectrum users to recognize the market value of the
spectrum they use. 22 Although officials told us that these fees have been
successful in providing incentives for government agencies to use
22 These countries are also imposing incentive- based pricing for some
commercial uses.
Page 24 GAO- 03- 277 Telecommunications spectrum efficiently, part of that
success was attributed to other factors. In particular, political
pressures and budgetary policies were key to
helping promote efficient spectrum use. In Australia, the fees paid by
government and nongovernmental users
(including the military) are based on a formula that includes factors such
as the demand for frequency, amount of spectrum assigned, geographic
location, and power of transmission. Australian officials report that
government users appear to be able to fulfill their missions despite
having to pay for spectrum. When asked to explain the mechanism by which
these fees provide an incentive for government users to conserve on
spectrum, the spectrum manager we spoke with told us that the impact in
Australia is
largely the result of synergy between the spectrum fees and declining
government agency budgets. Since the 1970s, budgets have been constrained
because of the government*s attempt to recover some of the benefits of the
gains in efficiency arising from various government management reforms.
The official we spoke with believes that this budgetary pressure, combined
with more appropriate pricing of spectrum licenses, leads government users
to be more efficient with their spectrum. This greater efficiency may
manifest itself in government users*
relinquishing spectrum that they do not currently need. Spectrum
managers in Canada reported that they charge incentive- based
fees for most uses of spectrum, including many government uses. Although
the fees are currently based on the amount of equipment in use, Canada is
considering changing its fee structure to be based more on other factors
such as bandwidth, geography, and the degree to which spectrum is shared.
Spectrum managers in Canada reported that the fees have
helped some government agencies to use spectrum more efficiently and that
a number of licenses have been returned as a result of the fees. They
reported that some of these results might also have come about because of
their close working relationship with licensees. The United Kingdom
developed an approach for determining spectrum fees for all users, except
those who had purchased their spectrum at auction and certain providers of
exempted services (such as certain military functions). The approach
considers alternative means to provide a service that is currently being
provided with certain assigned spectrum. Then, an evaluation is made of
how that service could be provided by
using alternative spectrum, or without any spectrum at all, if possible. A
key evaluation is made of the difference in cost between the current means
of providing the service and the next best means. Adjusted for certain
other factors, this difference represents the *opportunity cost* of the
spectrum to the user* that is, the value of the spectrum to that user. As
such, this dollar value is the basis for the incentive- based portion of
the fee the user must pay. Officials in the United Kingdom believe that
Page 25 GAO- 03- 277 Telecommunications spectrum fees are working to
improve the efficiency of government spectrum use because agencies are
generally facing budgetary restrictions
and therefore cannot easily finance spectrum fees through the budgetary
process. 23 For commercial users, these countries are working to provide
more
flexibility in licensing and to establish or improve secondary markets for
spectrum. In Australia, licenses may be traded, sold, or sublet. 24 Some
of these can
also be traded, sold, or sublet in portions based on geography, time, or
bandwidth. Australian spectrum managers have not been satisfied with the
speed of development of secondary markets in that country, however, and
spectrum managers are considering measures to stimulate these markets.
Payments among users are also allowed as part of the spectrum- clearing
process. Although government funding for moving incumbent spectrum holders
to alternative spectrum is not provided, new spectrum licensees are
allowed to pay incumbent license holders to induce more rapid clearing of
spectrum. In Canada, licenses acquired through auctions have greater
flexibility of
use than those acquired in other ways, which enables spectrum licensees to
more freely decide to modify how they use their assigned spectrum. For
example, licenses gained through the auction process have a broader class
of services that can be provided with the spectrum than licenses gained
through other assignment mechanisms. According to officials there, Canada
is planning to extend this flexibility to spectrum obtained in comparative
hearings as well. Although holders of auction- based licenses can also
participate in the secondary market, officials report that secondary
markets are not well developed. The United Kingdom is in the process of
increasing the flexibility allowed
by its spectrum licenses. Its recent major review of spectrum management
recommends allowing more flexibility in the services that spectrum users
can provide and the technologies they use. The United Kingdom is planning
to issue future licenses with as much flexibility as possible, while
recognizing that international coordination and interference management
23 In March 2002, the United Kingdom released the results of its
independent review of spectrum management. 24 Only one type of license, a
class license, cannot be traded, sold, or sublet. Although class licenses
are referred to as licenses in Australia, they are actually open, standing
authorities
that allow anyone to operate certain low- power devices, similar to
unlicensed spectrum in the United States. Device users do not have to
apply for a class license and do not pay a fee.
Page 26 GAO- 03- 277 Telecommunications may sometimes limit flexibility.
The United Kingdom also sees the development of a robust secondary market
as a valuable tool for ensuring
that spectrum flows to its most valued use. 25 According to the spectrum
managers we spoke with in each country, the United States, New Zealand,
Mexico, Italy, and Hong Kong have adopted market- based mechanisms for the
commercial sector only (see table 2). For various reasons, these countries
do not charge government users more than cost recovery for their use of
the spectrum. In the United States, NTIA and FCC do not have the authority
to impose fees that exceed the costs of spectrum management. Similarly,
managers in Italy are currently prohibited from charging fees above a
cost- recovery level. 26 Officials in
New Zealand reported that they had considered charging government users an
incentive- based value for spectrum, but decided against it because they
were concerned that determining the value of spectrum not bought and sold
in a commercial market would be too difficult.
25 No European Union member states use secondary markets because, prior to
2003, the European Commission prohibited their use. Since this prohibition
will be phased out by July 2003, some of these countries are thinking
about implementing secondary trading of spectrum licenses.
26 Managers in Italy report that the law may soon be changed to allow for
spectrum holders to be charged a fee to account for the scarcity of
resources, thus allowing them to recover costs greater than the cost of
administering the spectrum. United States and Certain Other Countries Have
Adopted Some MarketBased Mechanisms for Commercial Users Only
Page 27 GAO- 03- 277 Telecommunications Table 2: Market- Based Mechanisms
Adopted by Countries for Commercial Users Only Countries
Details on the Use of Market- Based Mechanisms New Zealand United States
Mexico Italy Hong Kong, China Auctions Year of first auction or
tender 1989 1994 1996 2000 2001 Number of auctions or tenders to date 12
42 17 2 1
Flexibility and secondary markets Degree to which spectrum licensees have
flexibility in terms of how they use licensed spectrum without regulatory
approval
Many licenses have flexibility in use of the spectrum.
Some licenses have more flexibility in use of the spectrum.
Some licenses have more flexibility in use of
the spectrum. Licenses are
restricted to use specified at the time spectrum was
obtained. Licenses are
restricted to use specified at the time spectrum was obtained.
Degree to which spectrum licenses can be traded in secondary markets
without regulatory approval
Many licenses have clearly defined rights and are tradable without
regulatory approval.
Licenses cannot be easily traded. Licenses cannot be
easily traded. Licenses cannot be easily traded a Licenses cannot be
easily traded. Source: Spectrum managers interviewed in each country.
Note: GAO analyzed information elicited from interviews with spectrum
managers. a Italy recently approved a law that allows the trading of
certain broadcasting frequencies, with the
requirement that they are used exclusively for experimentation with
terrestrial digital video broadcasting.
The United States has used auctions since 1994, shortly after
congressional legislation first authorized auctions to be used for
commercial spectrum assignment. FCC has also adopted rules that afford
companies more flexibility regarding various license provisions* such as
the technologies that a company may use or the services that it may
provide with its licensed spectrum. FCC plans to increase the flexibility
of its licenses, and it is considering liberalizing the right to engage in
secondary markets. In recent congressional testimony, an FCC official
noted that flexible spectrum rules, which allow companies to respond to
market conditions without government intervention, are essential in
today*s dynamic world of wireless communications. With regard to secondary
market activity, spectrum trades in the United States generally require
regulatory approval from FCC. Despite this requirement, a majority
of companies we spoke with in the United States have either purchased
spectrum licenses from another company or traded spectrum licenses with
Page 28 GAO- 03- 277 Telecommunications another company. FCC has an
ongoing proceeding looking at ways to encourage the growth of secondary
markets. For example, FCC is seeking
to institute policies that would allow commercial users to sublease slices
of spectrum covered by a license for variable lengths of time.
With regard to the use of market- based mechanisms for commercial users in
other countries, spectrum managers told us the following: New Zealand
was the first country to implement a market- based
mechanism to assign spectrum. Today, New Zealand assigns *management
rights* to some spectrum it auctions. A winner of such a license is
allowed to assign the spectrum in various configurations to itself or
others. As such, auction winners essentially have a profit motive that
gives them an incentive to assign spectrum to its most valued use.
Although licenses are tradable in New Zealand without regulatory approval,
spectrum managers reported that because there is not a scarcity of
spectrum in that country, there is very little market activity. More
recently, Italy has begun to use auctions to assign spectrum, but as
with many other European countries subject to certain restrictions on the
regulation of spectrum under European Commission law, Italy is moving more
slowly than Canada, Australia, and New Zealand to adopt certain market
mechanisms. At this time, Italy issues very restricted licenses and has a
very limited secondary market for spectrum. Spectrum managers in Hong
Kong reported that they assigned spectrum for 3G services in 2001 using a
royalty- based auction, which is unique
among the countries we reviewed. Unlike most auctions in other countries
in which participants bid the total fixed cash price they are willing to
pay for spectrum, bidders in Hong Kong bid on the percentage of future
revenues* that is, a royalty rate* that they would pay to the government
on an ongoing basis. Officials in Hong Kong told us that they chose the
royalty method so that the government could share some of the risk
inherent in paying for spectrum in future years. They explained that the
risk exists because 3G services are new and their full potential cannot be
estimated accurately. They also reported that they were concerned that
requiring companies to spend large amounts of capital in a cash auction
requiring an up- front payment for spectrum would result in too large a
financial burden for potential bidders, who also require capital to roll
out their networks. Spectrum managers told us that the royalty auction
resulted in four incumbent providers of traditional wireless services
offering the minimum bid allowable (5 percent of revenue) for the four
Page 29 GAO- 03- 277 Telecommunications licenses to provide advanced
wireless services. 27 We further discuss Hong Kong*s use of royalty
auctions in appendix II.
Spectrum managers from five of the countries in our study* Japan, France,
Finland, Spain, 28 and Sweden* reported that they have not used mechanisms
that we have defined as being market- based in managing their spectrum.
Some of these countries, however, reported that they are considering
changing laws and regulations in the future to encourage more efficiency.
France, which imposes a large fee to participate in comparative hearings,
reported that it has legislation pending to require most users* including
government users but not broadcasters* to pay for spectrum. Similarly,
managers from Finland reported that they are currently reviewing their
policies to extend spectrum fees to more users. Finally, Sweden reported
that a committee has proposed changes to Swedish law to allow greater use
of market- based mechanisms.
While a move to market- based mechanisms could help to meet future
spectrum needs by encouraging users to better utilize spectrum, these
mechanisms may not be effective in some contexts and may be difficult to
implement. In particular, the context in which certain government users
function may not be conducive to the influence of market- based
mechanisms. For commercial users, implementing market- based mechanisms
may heighten concerns about interference among users. Moreover, market-
based mechanisms can work well only when license holders have clearly
defined *rights* regarding their use of spectrum. 27 For the first 5 years
after the auction, licensees are required to make the minimum
payment of 50 million Hong Kong dollars per year. After that, they must
begin making the royalty payments.
28 On at least one occasion, Spain has considered financial criteria in
the process of awarding spectrum licenses. Several Countries Have
Not Adopted Market- Based Mechanisms at This Time, but Some May in the
Future
Market Mechanisms May Not Be Effective in All Contexts and May Be
Difficult to Implement
Page 30 GAO- 03- 277 Telecommunications Greater reliance on market- based
mechanisms may not be desirable or effective for some government users or
uses. The purpose of market- based
mechanisms is to provide users with an incentive to use spectrum as
efficiently as possible. This may result in users* considering alternative
methods of providing services by adopting technologies that either (1) use
less spectrum, (2) use less congested parts of the spectrum, or (3) do not
require spectrum at all. Because of the primacy of certain government
functions* such as homeland security and national defense* charging
government users for these functions may not be desirable. In addition, if
particular users are unable to adopt any alternative method in a
reasonable time frame, market- based mechanisms, such as incentivebased
spectrum fees, are not likely to result in reduced spectrum use. In other
words, market- based mechanisms can create an incentive for spectrum
conservation only if users can actually choose to undertake an alternative
means of providing a service. Government users provided
several examples of circumstances in which market- based fees might not
provide incentives:
Spectrum used for certain functions, such as air traffic control, has
been allocated internationally* the same bands of spectrum are allocated
for this service around the world. The benefit of this in the context of
air traffic control is that airplanes on international flights can use the
same radio equipment and systems in every country, making air travel safer
and less costly than it would be if countries provided services on
different bands. If FAA wanted to use bands that are different from those
allocated in these international agreements, airplanes from the United
States that are making international flights would require multiple
communications
systems and procedures, which would impose considerable additional costs
on carriers. In fact, the United Kingdom charges government users
incentive- based fees but exempts spectrum used for air traffic control
from these fees. It may also be inappropriate to apply market- based
mechanisms for
defense systems that involve international agreements. For example, the
United Kingdom does not charge the Ministry of Defence for spectrum
identified for North Atlantic Treaty Organization use. In addition, DOD
has publicly stated that the ability to operate certain systems depends on
international agreements with other countries that allow DOD to use
certain frequencies within other countries* borders. DOD officials note
that it is important for DOD to employ the same systems, and thus the same
portions of spectrum, inside the United States as it does overseas. DOD
officials said that it would be very difficult to renegotiate these
arrangements in response to spectrum reallocations, or to the
implementation of incentive- based fees for spectrum in the United States.
Greater Reliance on Market- Based Mechanisms
for Government Users May Be Undesirable, Ineffective, or Difficult to
Implement in Some Circumstances
Page 31 GAO- 03- 277 Telecommunications Many government defense systems
that use spectrum* such as large weapons systems, or satellite systems*
not only involve complex
international agreements, but are also large and complex from an
engineering perspective. These systems usually require years of
development, and spectrum may be only a small part of the total resources
used by a given system. Thus, once a system is designed and operational,
any benefits of conserving spectrum by redesigning these systems are
likely to be outweighed by the costs of making such modifications.
Consequently, imposing an incentive- based fee for spectrum employed in
projects with a long time horizon may not result in spectrum conservation.
In some cases, charging government users a market- based fee for spectrum
may have the potential to make spectrum use more efficient, such as in
situations where a government user is providing a service similar to that
of a commercial vendor. Nevertheless, implementing market- based
incentives may still be challenging, for several reasons:
It is difficult to place prices on goods and services that are not
traded in the marketplace. For commercial users, spectrum prices are
reflective of the value of the services provided with that spectrum, as
measured, in
part, by what consumers will pay for the service. Some government services
are unique and provide safety- of- life or national defense services. For
example, FAA*s air traffic control services and DOD*s precision weapons*
guidance systems rely on spectrum, yet there are no equivalent commercial
services. Government spectrum users have said that services without a
direct commercial corollary cannot be easily valued. One government
representative noted that the value to the nation of spectrum allocated to
government services is difficult to measure through market
mechanisms. If government users can obtain any needed funding for
spectrum fees
through the budgetary process, market- based incentives are not likely to
be effective in conserving spectrum. Two of the three countries that
believed that their incentive- based pricing systems were providing some
financial incentives for government users to conserve on spectrum
reported that one factor contributing to this conservation was a
requirement for agencies to reduce their overall budgets while paying for
spectrum. Thus, agencies could not easily finance the increased cost of
spectrum through the budgetary process. In the United States, most of the
limits or caps on discretionary spending contained in the Budget
Enforcement Act of 1990 expired in fiscal year 2002. These limits or caps
would have constrained discretionary spending, including amounts available
for using the spectrum, if government users were charged for that use.
Page 32 GAO- 03- 277 Telecommunications In the commercial sector, the
profit motive typically provides an incentive for individuals and
companies to use spectrum efficiently. Government
users do not have a similar financial incentive to conserve on spectrum,
because spectrum efficiency is not directly rewarded within government
agencies. Thus, imposing fees may create some pressure, but does not mimic
a profit motive. Linking spectrum- efficient decisions to performance
contracts and individual awards could create greater individual efforts to
make such decisions.
Another impediment to implementing market- based incentives for government
users may be the views of those users. Our survey of IRAC agencies found
that 7 of the 17 agencies responding to this survey did not support
greater flexibility of use for government spectrum users, 13 did not
support the practice of allowing agencies to buy or sell spectrum, 12 were
opposed to allowing agencies to lease spectrum, and 13 were opposed to
paying fees for spectrum that exceeded regulatory costs. However, 9
agencies were *greatly* or *moderately* supportive of allowing commercial
users to pay government license holders to relocate to alternative
spectrum, and 11 greatly/ moderately supported creating a trust fund to
pay for spectrum reallocation. Despite the potential benefits of adopting
market- based mechanisms for
spectrum management, some impediments have limited the implementation of
these methods for commercial users. Even though both FCC and NTIA support
the use of market- based mechanisms for commercial users, FCC*s
implementation of these tools has been limited. Impediments to more
widespread implementation of market- based mechanisms* such as auctions,
secondary markets, and flexibility of use* include statutory restrictions,
the degree to which the most highlyvalued spectrum is already assigned,
and the sometimes conflicting interests of commercial entities.
Auctions: FCC has auctioned off only a limited amount of the spectrum it
oversees. Because most of the spectrum is already assigned, the amount of
spectrum that could be auctioned without reallocating spectrum is quite
limited. Also, FCC has attempted to auction additional spectrum by
relocating some users to other parts of the spectrum. Relocation can
impose significant costs on the incumbent spectrum holder and sometimes
on the new entrant who may be required to fund the relocation. In
addition, FCC officials told us that there are statutory limits to their
ability to use auctions. Impediments Have Limited
Implementation of MarketBased Mechanisms for Commercial Users
Page 33 GAO- 03- 277 Telecommunications Secondary markets: Further
implementation of secondary markets in the United States will require that
the rights of licensees with regard to their
assigned spectrum be more clearly specified. In other resource markets*
such as those for land* commercial entities usually have the right,
without regulatory approval, to buy or sell the resource, or to lease the
resource from another entity that owns it. Although the Communications Act
of 1934 prohibits the ownership of spectrum, companies have generally been
able to buy and sell spectrum licenses with FCC*s approval. However,
according to an FCC official, it is unclear at this time whether, in
general, license holders can legally lease all or part of their spectrum
rights to other users for some limited period of time. The opposition of
some stakeholders, who are concerned that conferring any specific spectrum
rights will make it more difficult to release spectrum for new services
and technologies that might develop in the future, further complicates
providing rights to spectrum users. For over 2 years, FCC has been
considering these issues under a Notice of Proposed Rulemaking on
secondary markets and hopes to resolve some of these issues shortly.
Flexibility of use: Granting greater flexibility in the use of spectrum
would enable license holders to behave like other resource owners in
having the opportunity to make economic decisions that put their resource
to its most highly valued use. Although FCC is examining ways to improve
access to spectrum by providing additional flexibility, an FCC official
told us that only a small portion of the spectrum it assigns is held under
licenses that allow for considerable flexibility of use. FCC*s ability to
introduce additional flexibility has been limited because most of the
desirable spectrum has already been assigned, making it more difficult to
change the rules embodied in these licenses. Moreover, there are
considerable disagreements among commercial users over the appropriate
degree of flexibility. In particular, some interested parties are
concerned that allowing greater flexibility could result in more
interference among users. In its report, the FCC Spectrum Policy Task
Force made a number of recommendations for handling this potential
interference, including the
promotion of receiver requirements and creation of a new standard for
quantifying acceptable levels of interference, the *interference
temperature.*
Page 34 GAO- 03- 277 Telecommunications While a number of discussions and
activities are under way to help ensure that future spectrum needs can be
met, stakeholders appear to be having difficulty finding consensus that
balances the needs of various interest
groups. Regulatory actions aimed at providing solutions are often
protracted. Moreover, because of the bifurcated regulatory structure in
the United States, an examination of whether an overarching redesign of
spectrum management is required may best be undertaken by an entity
independent of the two regulatory agencies currently involved. In the
past,
Presidents and the Congress have appointed bipartisan commissions to
address difficult policy issues such as this.
Stakeholders have been actively searching for ways to improve spectrum
management and, thus, to alleviate concerns about meeting future spectrum
needs. However, certain conflicts among the stakeholders make it difficult
to find workable solutions that balance the needs of various spectrum
users. Many conflicts arise because of divergent economic interests among
users. For example: Concerns about the cost of reallocation. Incumbent
users are often
opposed to relocations of current users to new bands, because such moves
are likely to require the purchase of new equipment and may thus impose
significant costs and disruption on incumbents* although some of this cost
may be shared with the firms receiving licenses to use the cleared
spectrum. But firms with new services view reallocations as being
essential for bringing the benefits of wireless services, including
Internet services, to the American public. Concerns about interference.
Many conflicts with regard to spectrum decisions arise over concerns about
interference. A good example of this
concern arises with regard to unlicensed spectrum users. Many licensed
spectrum users, both commercial and government, have expressed concern
that allowing certain unlicensed uses* wherein devices operating at low
power and in fairly limited range use the same frequencies as licensed
providers* may create interference that compromises the quality of
services provided by licensed users. Conversely, those wanting to
introduce certain new technologies view access to unlicensed spectrum as
beneficial to the public interest and maintain that the degree of
interference created by certain unlicensed uses is not *harmful.*
Concerns about policies that influence markets* competitiveness. Many
policy initiatives can have an effect on the competitiveness of wireless
markets. For example, allowing greater flexibility for spectrum holders to
use spectrum in a variety of ways could create opportunities for firms to
enter markets for certain services, increasing the competitiveness of
those markets. In fact, some experts have noted that, at times, incumbent
firms Diversity of Views
among Stakeholders and Current Regulatory Structure Are Barriers to
Meeting Future Spectrum Needs
Stakeholders Have Major Disagreements on Spectrum Policy
Page 35 GAO- 03- 277 Telecommunications oppose certain spectrum policies,
in part, because of concerns about the effect on competition in the
market.
Another area where conflicts among spectrum stakeholders have arisen
relates to difficulties in determining how to balance the needs* or a
process to ensure a balancing of needs* between public- sector and
private- sector spectrum users. Government users have said that because
they offer unique and critical services that are not comparable to those
provided in the commercial sector, a dollar value cannot be placed on the
government*s provision of spectrum- related services. FCC officials,
commercial users, and others have stated that the ability of commercial
users to acquire adequate spectrum is also critical to the welfare of
society, because the commercial wireless sector makes important
contributions to a healthy, robust economy. FCC and Department of Commerce
officials acknowledge the difficulty of balancing the critical needs of
government and commercial spectrum users. To illustrate this
point, they refer to the difficulties experienced in negotiating two
recent agreements: the reallocation of spectrum from government to
commercial users for 3G services and the rules under which ultrawideband
devices will share spectrum with federal users.
Under the divided management framework, no one entity has been given
ultimate decisionmaking authority over all spectrum use. There must be
coordination and cooperation in order to determine how best to accommodate
users of spectrum. While any decisions involving spectrum can be
difficult, those involving spectrum allocations can be particularly
protracted. Because most of the desirable spectrum has already been
allocated, allocating spectrum for a new technology or service usually
requires that some existing users be moved to another part of the
spectrum. Since existing users are likely to experience costs for
relocating but little, if any, benefit, they are often reluctant to make a
move. Even within the jurisdiction of a single spectrum- management
agency,
reallocations of spectrum may require lengthy negotiations. Moreover,
decisions involving the reallocation of spectrum between federal and
nonfederal users, and thus between regulatory jurisdictions, can be even
more difficult. Some examples of protracted spectrum decisions both
within and across regulatory jurisdictions include:
The reallocation of spectrum in the 700 MHz band. In 1997, the Congress
directed FCC to reallocate to public safety services the 24 MHz of the
spectrum that will be recovered from the transition to digital television,
and to put up for auction the remaining recovered spectrum. In 1999, the
Regulatory Environment
Results in Protracted Policy Development and Implementation
Page 36 GAO- 03- 277 Telecommunications Congress directed that the
proceeds from these auctions were to be deposited with the Treasury by
September 30, 2000. Auctions for spectrum
in the 700 MHz band have been rescheduled several times. Several mobile
telephone companies supported a postponement of these auctions. Those in
favor of postponing the auction believed that because it was unclear when
the spectrum would be vacated, it would be difficult for companies to
determine the value of the spectrum. On June 18, 2002, the Congress passed
legislation removing the former statutory auction deadlines but requiring
FCC to auction, before September 19, 2002, 18 MHz of spectrum, some of
which was desired by rural carriers. This auction was completed
in September 2002. The auction of the remaining spectrum in the 700 MHz
range has been postponed indefinitely.
The narrowbanding initiative for federal spectrum users. In 1992, the
Congress directed NTIA to adopt and implement a plan for federal agencies
with existing mobile radio systems to use more spectrumefficient
technologies. In 1993, NTIA responded to the Congress with a report that
included a plan for implementing narrowbanding* a technology that would
use about half as much bandwidth as agencies are currently using. 29 NTIA
set interim deadlines for the narrowbanding requirements, which are to be
fully implemented by 2008. The plan required that some agencies move to
spectrum occupied by another agency. As a result, the plan provided a time
line according to which each agency would adopt narrowbanding because, as
NTIA officials pointed out, the implementation of narrowbanding by any
given agency depends, in part, on whether the other agencies have adhered
to the schedules laid out by NTIA. We recently asked NTIA about the
progress of agencies in meeting their narrowbanding requirements. NTIA was
not able to tell us how many agencies have complied with the interim
deadlines, because some agencies had not yet responded to NTIA*s June 2002
request for information on compliance with narrowbanding requirements.
NTIA officials noted that while they can legally remove frequency
assignments from spectrum users that are not complying with the plan, in
reality it is difficult for the agency to exercise its authority in
overseeing the adoption
of narrowbanding. 29 See National Telecommunications and Information
Administration, Land Mobile Spectrum Efficiency: A Plan of Federal
Government Agencies to Use More SpectrumEfficient Technologies, NTIA
Report 93- 300 (Washington, D. C.: October 1993).
Page 37 GAO- 03- 277 Telecommunications Allocation of spectrum for 3G
wireless services. Spectrum managers first considered the need for
spectrum to accommodate these new services in
1999, when FCC released its spectrum policy statement. In October 2000,
President Clinton directed that a plan be developed to select spectrum for
3G services, but this initial attempt was unsuccessful. In a letter in
June 2001, FCC*s Chairman wrote to the Secretary of the Department of
Commerce, *It is apparent that additional time is necessary to allow the
Commission and the Executive Branch to complete a careful and complete
evaluation of the various possible options* for making spectrum available
for 3G. FCC*s Chairman stated that the public interest would best be
served by providing additional time for informed consideration, even if
this resulted in some delay in reaching allocation decisions. Finally, he
requested relief from the 2002 statutory deadline for spectrum to be
auctioned. A task force was established, which included officials at the
Department of Commerce, FCC, Department of Defense, and other federal
agencies. In July 2002 the task force released a study concluding that 90
MHz of spectrum could be allocated to 3G without disrupting
communications services critical to national security. 30 The deadline set
for the band clearing to occur is now 2008, although certain provisions
need to be met before DOD would be expected to relinquish its portion of
those frequencies. On November 7, 2002, FCC officials released a Notice of
Proposed Rulemaking that suggests service rules for the reallocated
spectrum. FCC officials stated that they would likely adopt an order
establishing the service rules by mid- 2003 and would likely hold an
auction in 2004. Despite these developments, FCC officials have stated
that additional spectrum would need to be allocated to fully support 3G
services.
30 45 MHz of the spectrum being reallocated would come from government
users, and the additional 45 MHz from nongovernmental users.
Page 38 GAO- 03- 277 Telecommunications Recognizing that the absence of a
generally agreed upon national spectrum strategy can make it difficult for
FCC and NTIA to avoid
contentious, protracted negotiations when providing for future spectrum
needs, 31 we recommended in our September 2002 report that the Secretary
of Commerce and FCC should establish and carry out formal, joint planning
activities to develop such a strategy to guide decisionmaking. Both FCC
and NTIA responded positively to this recommendation, and they have
recognized the need to address concerns about current spectrum- management
policies and procedures by establishing task forces and working groups
within their own agencies. For example, the FCC Spectrum Policy Task Force
addressed some of these issues and released a report in November 2002, and
NTIA held a Spectrum Summit in April
2002 to gather information from stakeholders on the current problems with
the spectrum- management process. In response to our previous report, FCC
stated that a cornerstone of both these efforts is to improve coordination
between FCC and NTIA, to conduct joint planning, and to develop a national
spectrum- management strategy. NTIA officials told us
that their request for funding for spectrum reform as part of the
President*s fiscal year 2003 budget is also a result of their view that
the United States needs to take a broad view of the organizational
structure and processes for spectrum management.
Despite the increased amount of communication between FCC and NTIA, their
different jurisdictional responsibilities appear likely to result in
piecemeal efforts that lack the coordination to facilitate major policy
changes. In particular, FCC and NTIA*s recent policy evaluations and
initiatives tend to focus on the issues applicable to the users under
their respective jurisdictions. Thus, while these current efforts may be
beneficial within the current regulatory environment, an analysis of
whether there is a need for comprehensive reforms* such as changes in the
structure of spectrum management* may best be undertaken by an independent
body.
31 At NTIA*s Spectrum Management and Policy Summit, held in April 2002, it
appeared that stakeholders did not have a clear agreement on what would be
included in a national spectrum strategy. FCC and NTIA Are Attempting to
Work in a
More Coordinated Fashion to Address Difficulties in Spectrum Management,
but Jurisdictional Responsibilities Differ
Page 39 GAO- 03- 277 Telecommunications As we discussed in our September
2002 report, the current structure of spectrum- management functions
within the U. S. government has been in
place for many years. In particular, the bifurcated system was put into
place with the Radio Act of 1927, and in 1934 the Federal Communications
Commission was created to, among other things, oversee nonfederal
licensing of spectrum. The federal oversight of spectrum has moved within
the executive branch several times and has been the responsibility of NTIA
since it was created in 1978. Although the organization of spectrum
management has been static for many years, the application of spectrum in
providing services has evolved dramatically. In particular, a plethora of
new services and applications has emerged in the past 25 years, including
various types of mobile telephone service, paging services, wireless video
and data services, wireless local area networks, and Internet access. On
the government side, the past 25 years have seen untold new wireless
applications for public safety, national defense, and other key missions.
Additionally, new technologies, such as ultrawideband and softwaredefined
radio, would use radio spectrum in new ways.
Recognizing that the United States may not have an adequate regulatory
structure to address spectrum- management concerns, commercial and
government spectrum license holders, as well as other stakeholders, have
suggested various changes in the domestic spectrum- management structure.
The ideas range from temporary solutions to overarching systemic changes,
but they all aim at improving the efficiency of the way spectrum is
managed. Stakeholders* proposals for improving the process include:
Creation of spectrum allocation assessment commission: Several
stakeholders have suggested the creation of a politically independent
entity that would audit current spectrum allocations and make a
comprehensive reallocation proposal. Some have suggested using the Base
Realignment and Closure process as a model for creating an independent
commission to look at spectrum allocations and assignments. Move NTIA
out of the Department of Commerce: Some government
agencies that we interviewed suggested that NTIA would be better
positioned as a voice for all government spectrum users if it were moved
outside of the Department of Commerce. It has been suggested that making
NTIA either a commission or an executive office would provide it with a
level of independence it does not currently have within another government
agency. Eight out of 12 IRAC- member agencies that answered this question
on our survey were greatly or moderately supportive of making NTIA an
independent agency outside the Department of Commerce. Some Stakeholders
Have
Suggested That Changes to the Structure of SpectrumManagement Functions
May Be Needed
Page 40 GAO- 03- 277 Telecommunications Create a spectrum oversight
committee: Along with several government spectrum license holders and a
commercial user, a majority of those on
our expert panel who responded to a poll felt that creation of a formal
entity to provide FCC/ NTIA oversight may be appropriate. They said that
setting up an oversight committee would create an office where disputes
could be settled. It would also serve as a place to create a uniform
spectrum policy that both FCC and NTIA could follow.
Merging FCC and NTIA into one agency: Some expert panel members
suggested the merging of FCC and NTIA into one regulatory agency. Merging
the responsibilities would allow a single agency to create one policy for
the management of spectrum and create a single voice to address problems
when they arise between parties. Undertake an independent review of
spectrum- management practices:
Seven of our 10 panelists said they favored an independent review of
current spectrum- management practices, similar to that recently completed
in the United Kingdom.
The structure for managing spectrum in the United States is unlike those
in most countries that we examined. According to information obtained from
interviews with spectrum managers in other countries, most of the
countries have a single government entity that manages spectrum for all
users. For example, Industry Canada makes all final decisions about
spectrum for all Canadian users, and its decisions are not subject to
judicial review. Similarly, in New Zealand, the Ministry of Economic
Development is responsible for both government and nongovernmental users
of spectrum. Also, some countries have committees or advisory boards that
analyze conflicting requests and help spectrum managers make decisions.
For example, the United Kingdom Spectrum Strategy Committee prioritizes
spectrum needs and makes final decisions when any major conflicts arise.
Also, the Radio Advisory Board of Canada attempts to garner consensus on
issues so that Industry Canada does not have to analyze many different
filings with opposing views.
While other countries have adopted alternative spectrum- management
systems, they may have limited applicability for the United States for a
few key reasons. First, the role of the military in the United States is
unique in the world. Second, the divided structure in the United States
reflects the President*s responsibility for national defense and the
fulfillment of federal agencies* missions, along with the U. S.
government*s long- standing encouragement and recognition of private
investment in developing commercial radio and other communications
services. While alternative structures may not be fully pertinent to our
domestic structure, it is Spectrum- Management
Structures in Some Other Countries Differ from Those in the United States,
but These Alternative Structures May Not Be Applicable in the United
States
Page 41 GAO- 03- 277 Telecommunications interesting to note how other
countries have organized their spectrummanagement functions. For more
information on spectrum- management
structures in other countries, see appendix V. In the past, commissions
have been established to look at certain difficult policy issues. As table
3 shows, in the United States both the Congress and the Executive Branch
have created commissions to examine a variety of issues. In the United
States,
Commissions Have Been Used to Look at Major Policy Change When Complex
Policy Disputes Arise
Page 42 GAO- 03- 277 Telecommunications Table 3: Examples of Commissions
Examining Major Policy Issues Commission Established
by Date established Term Reporting Mission
President*s Commission on Administrative Management
(Brownlow Committee)
Executive Order March 1936 Approximately
10 months Report to the President on
January 1, 1937 Ensure that the President is chief
Administrator of an executive branch with institutional support and
reorganize the government along hierarchical lines, to provide clear lines
of authority and accountability Commission on Organization of the
Executive Branch of the Government (First Hoover Commission)
Act of Congress July 1947 Approximately
3 years Report to Congress by
January 13, 1951 Determine how to limit spending to
the amount consistent with efficient performance of essential services,
eliminate duplicative services, abolish unnecessary services/ activities,
and provide definition for and limitations of executive functions
Commission on Organization of the Executive Branch of the Government
(Second Hoover Commission)
Act of Congress July 1953 Approximately
2 years Report to the Congress by May
31, 1955 Address the policy issues that
underlay big government, identify desirable spending reductions, cut back
and eliminate services, and define responsibilities of executive branch
officials President*s
Commission on Postal Organization
Executive Order April 1967 1 year Final report to the
President within 1 year
Study the organization and structure of the postal service and report on
the feasibility of transferring it from the Post Office Department to a
government corporation or other such form of organization National
Commission on Social Security Reform
Executive Order December
1981 1 year, 2 months Report to the
President by January 20, 1983.
Review the condition of the Social Security trust funds, identify long-
term problems, and analyze potential solutions that will put Social
Security on a sound financial footing Defense Base Closure and Realignment
Commission
Act of Congress November
1990 Approximately 5 years 3 reports to the President and
Congress, 1 for each year that it meets
Provide a fair process that will lead to timely closure and realignment of
military installations within the United States
Amtrak Reform Council Act of
Congress December 1997 Approximately
5 years Annual reports to the Congress Evaluate Amtrak performance and
make recommendations for achieving cost containment, productivity
improvements, and financial reforms National Gambling Impact Study
Commission
Act of Congress August 1996 Approximately
2 years Report issued no later than 2 years
after the date of the Commission*s first meeting
Conduct a comprehensive study of the social and economic impacts of
gambling in the United States. Source: GAO.
Page 43 GAO- 03- 277 Telecommunications To ensure that various views and
opinions are incorporated, many of the past commissions have been set up
so that their members include a broad
variety of stakeholders. In a majority of the commissions highlighted in
table 3, the right to appoint commission members was divided between the
executive and legislative branches, and in several cases further divided
in the Congress between majority and minority party appointments in each
house. Furthermore, when creating commissions, the Congress has
chosen, at times, to stipulate certain requirements for panel members. For
example, the legislation setting up the Amtrak Reform Council stipulated
that presidential appointments should include representatives from both
labor and management. The commissions above were generally made up of
between 8 and 15 members.
In addition to the commissions discussed above, there is a historical
precedent for having a commission examine the spectrum- management
process; the First National Annual Radio Conference was established in
1922 by Secretary of Commerce Herbert Hoover. The group, made up of
manufacturers, broadcasters, amateur radio representatives, civilian and
military government radio communications personnel, and others, was
charged with studying radio interference caused by the rise of radio
broadcasting and the limitations of the Radio Act of 1912. The conference
made recommendations to alleviate the overcrowding of the radio waves.
Three subsequent conferences were held in each of the following years, and
legislation was introduced to implement various recommendations of the
conferences throughout this period. In 1927 a compromise was
reached that led to a bifurcated framework for the management of
radiofrequency spectrum by the federal government.
As spectrum management becomes more complex and difficult around the
world, several other countries we examined are also finding a need to
undertake a major reevaluation of their spectrum policies. Several
countries we reviewed are engaged in high- level examinations of their
spectrum- management systems. Canada is currently updating its 1993
Spectrum Policy Management Framework; spectrum managers there told us that
the review will take between 2 and 3 years. In the past few years several
other countries have completed comprehensive reviews of their policies.
Australia and the United Kingdom have each recently completed a 1- year
review and are in the process of addressing some of the recommendations
made in these studies. Officials in Finland, Italy, and Japan also told us
that they are currently involved in or have recently
completed some form of spectrum- management review.
Page 44 GAO- 03- 277 Telecommunications The availability of spectrum for a
myriad of applications is of central importance to the U. S. economy and
to the fulfillment of key government
functions. In the past, the spectrum- management structure in the United
States has served our interests well: spectrum for innumerable
applications has been allocated and assigned, government*s many important
missions are being fulfilled, and domestic wireless markets have grown
considerably. However, technology, consumer demand, and government needs
are growing rapidly. And as the world becomes more globally connected, new
spectrum needs are putting increased stress on the spectrum- management
structure. The need for attention to this problem is becoming acute.
We found that many countries have been responding to pressing
spectrummanagement requirements in recent years by undertaking major
reviews of spectrum issues and by instituting new policies and approaches.
In the United States, numerous discussions and reviews are underway, and
this activity is playing a vital role in drawing attention to and
stimulating discussion of options for change to the current spectrum-
management system. While spectrum reform is increasingly being discussed,
debated, and reviewed, it does not appear likely that timely reforms can
be agreed upon amid the diversity of views held by stakeholders. Moreover,
no single agency has been given ultimate decisionmaking authority over all
spectrum in the United States or the authority to impose fundamental
reform. FCC*s recent Spectrum Policy Task Force recommendations illustrate
that even a major initiative such as this, when conducted by one
regulatory agency, will focus on policies and issues under the
jurisdiction of that agency. That is, despite the forward- looking nature
of FCC*s recommendations, these policies impact only procedures of FCC and
the stakeholders it oversees; none of the task force*s recommendations
addresses the overarching structure of spectrum management or the possible
need for comprehensive reform. As such, a major independent examination of
spectrum- management policies and structure is needed.
In order to develop solutions to key spectrum- management issues, this
report recommends that the Chairman of FCC and the Assistant Secretary of
Commerce for Communications and Information, in consultation with
officials from the Department of State, Office of Management and Budget,
Office of Science and Technology Policy, and pertinent congressional
committees, work together to develop and implement a plan for the
establishment of a commission that would conduct a comprehensive
examination of current U. S. spectrum management. This commission would
examine, among other things, whether structural reform of our Conclusions
Recommendations for Executive Action
Page 45 GAO- 03- 277 Telecommunications current system is needed. The
commission should be independent and should involve all relevant
stakeholders* including commercial interests, government agencies,
regulators, and others* to ensure that the diversity of views on key
spectrum- management issues are represented. The review should be time-
limited and, if change is needed, have as its primary
objective the establishment of a framework to implement that change.
Although the commission could be established by statute, executive order,
or other means, a statutory basis for the commission may provide the most
appropriate framework for achieving a wide- ranging review of issues that
may ultimately need legislative solutions. In appendix IV, we have
presented possible issues and stakeholder concerns that a commission could
consider as part of its comprehensive examination.
We provided a draft of this report to the National Telecommunications and
Information Administration of the Department of Commerce, the Department
of State, and FCC for their review and comment. Both the Department of
Commerce and FCC stated that they are taking steps to coordinate their
spectrum- management processes and that each agency, on its own, is making
progress in developing spectrum policies that will be more responsive to
the rapidly changing environment. Regarding our recommendation for an
independent commission to evaluate the need for overarching spectrum
reform, both of these agencies stated that they would take our
recommendation into consideration. Additionally, the Department of
Commerce and FCC provided technical comments on our report that were
incorporated as appropriate. The comments of the Department of Commerce
appear in appendix VII and the comments of FCC appear in appendix VIII.
The Department of State did not provide comments on this report.
Because neither FCC nor the Department of Commerce specifically agreed to
implement our recommendation, the Congress may wish to consider taking
appropriate actions to address spectrum- management concerns. For example,
the Congress may consider holding hearings on this matter or enacting
legislation to establish an independent commission that would conduct a
comprehensive examination of current U. S. spectrum management.
We are sending copies of this report to the appropriate congressional
committees. We are also sending this report to the Secretary of State, the
Agency Comments
Matter for Congressional Consideration
Page 46 GAO- 03- 277 Telecommunications Chairman of the Federal
Communications Commission, and the Secretary of Commerce. We will also
make copies available to others upon request.
In addition, the report will be available at no charge on the GAO Web site
at http:// www. gao. gov. If you have any questions about this report,
please contact me at 202- 512- 2834 or guerrerop@ gao. gov. Key contacts
and major contributors to this report are listed in appendix IX.
Peter Guerrero Director, Physical Infrastructure Issues
Appendix I: Scope and Methodology Page 47 GAO- 03- 277 Telecommunications
To respond to the objectives of this report, we gathered information from
a variety of sources. In particular, we gathered information by (1)
reviewing economic, legal, and public policy material relevant to spectrum
issues; (2) interviewing regulatory agencies at state, local, and federal
levels; (3) interviewing experts familiar with spectrum issues; (4)
interviewing 17 companies that hold spectrum licenses in the United
States; (5) interviewing spectrum managers in 12 foreign countries as well
as other spectrum stakeholders in the United Kingdom and Canada; and (6)
convening an expert panel to discuss several spectrum- policy issues.
To better understand the regulatory process and the differences in how
spectrum is managed for commercial companies and government users, we
interviewed officials who oversee spectrum allocation at both the Federal
Communications Commission (FCC) and the National Telecommunications and
Information Administration (NTIA) and obtained relevant documents from
both agencies. To acquire a more in- depth understanding of how spectrum
is managed within government agencies, we conducted interviews with
officials at the Department of Justice (DOJ), Federal Aviation
Administration (FAA), Federal Emergency Management Agency (FEMA), and
Department of Defense (DOD). We also distributed a survey to the
Interdepartment Radio Advisory Committee (IRAC) member agencies*
representatives, excluding NTIA and FCC. 32 The survey asked questions
about federal agencies* ability to meet mission needs, their anticipated
spectrum needs, and their views on several policy issues. Of the 20
surveys we distributed at an IRAC meeting, 17 were returned to us. At the
state and local levels, we talked to a national trade association
representing public safety officials, as well as officials managing state
and local public safety systems.
To get a more thorough understanding of the spectrum auction process,
including how companies value spectrum and determine their bidding
strategy, we conducted interviews with two financial companies that
specialize in spectrum auction consulting and one that specializes in
32 The following agencies are IRAC members: FEMA, Broadcasting Board of
Governors, Department of Veterans Affairs, DOJ, U. S. Postal Service,
Department of State, General Services Administration, National Science
Foundation, National Aeronautics and Space Administration, Department of
Interior, Department of Commerce, Department of the
Treasury, NTIA, Department of Energy, U. S. Army, Department of
Agriculture, U. S. Navy, Department of Health and Human Services, FAA, U.
S. Coast Guard, and U. S. Air Force, as well as FCC, in a nonvoting
capacity. Appendix I: Scope and Methodology
Appendix I: Scope and Methodology Page 48 GAO- 03- 277 Telecommunications
bringing wireless technologies to market. We also interviewed two
academics who have written and published articles on the subject.
To better understand how companies value spectrum and whether the cost of
their spectrum is a significant factor in setting end- user prices and
determining the deployment of new products and services, we interviewed
representatives of 17 commercial companies that have spectrum licenses.
These companies provide services in both urban and rural markets. Of the
17 companies, 2 were radio or television broadcasters, 11 were wireless
communications companies, 2 provided services via satellite, 1 provided
local telephone service using wireless rather than wire connections, and 1
was a paging company. The selection of companies was based on those
discussed in an FCC report concerning wireless issues.
To obtain information about spectrum management in other countries, we
interviewed officials in Australia, Canada, Finland, France, Hong Kong,
Italy, Japan, Mexico, New Zealand, Spain, Sweden, and the United Kingdom.
The criteria we used to select the countries included geographic size,
gross national product per capita, population density, level of mobile
telephone penetration, primary methods for assigning spectrum, and
whether the country uses market incentives to encourage government
conservation of spectrum. In choosing the countries, we also consulted
with NTIA and Department of State officials. For all countries, we were
interested in learning about the regulatory structure governing spectrum
management. We asked about the basic aspects of their management of
the spectrum, including how the resource is allocated and assigned to
government and commercial users, the mechanisms and regulatory structure
they have in place for reaching agreement on spectrummanagement issues,
how they see the level of competition in their wireless industry, and
whether they have employed market- based mechanisms in managing the
spectrum. For Canada and the United Kingdom, we conducted more in- depth
case studies of spectrum management by interviewing not only spectrum
managers but also government users and commercial service providers. In
these two countries* as well as in the United States* we interviewed
officials who manage spectrum for air traffic control, national law
enforcement, and local emergency service. We also interviewed commercial
wireless providers. For many of the countries studied, the information in
this report is based on statements provided by spectrum managers during
interviews and could not always be verified through documents or other
means.
To determine the validity of our preliminary research findings, we
assembled an expert panel. To identify potential panelists with recognized
Appendix I: Scope and Methodology Page 49 GAO- 03- 277 Telecommunications
expertise in spectrum- management issues, we solicited recommendations
from officials at FCC and reviewed research on spectrum- management
issues. From a pool of over 35 potential panelists, we selected 10
panelists who represented a cross- section of spectrum experts, including
federal regulators, government and commercial users, band managers,
financial analysts, economists, and engineers. The name and organizational
affiliation of each panel member is listed in appendix VI. During a day-
long meeting at GAO headquarters, the panelists discussed six topics that
we
provided in advance: (1) spectrum assignment and payment methods, (2)
flexibility of use and secondary markets, (3) the scarcity of spectrum,
(4) incentives for improving the technical efficiency of spectrum use, (5)
the competitiveness of wireless and wireless equipment markets, and (6)
ways to balance the needs of commercial and government users. After
discussing each topic, we asked the panelists to answer specific questions
on an anonymous ballot. The meeting was recorded and transcribed to ensure
that we had accurately captured the panel members* statements.
In addition to the information collected through the work efforts
described above, we also reviewed technical, legal and regulatory, and
economic research on relevant spectrum- management issues.
Appendix II: Stakeholders* Views on Auctions and Spectrum Royalties
Page 50 GAO- 03- 277 Telecommunications This appendix provides information
on (1) the positive attributes of auctions identified by stakeholders; (2)
concerns about the effect of
auctions on consumer prices for wireless services, the rapidity of
deployment of new technology, and the ability of small business to
participate in the provision of wireless services; and (3) stakeholders*
views on the merits of spectrum royalties.
Wireless companies that we spoke with and members of our expert panel
generally perceive auctions to be an improvement over comparative hearings
and lotteries for the assignment of spectrum. Auctions are generally
perceived to be faster and more transparent than comparative hearings.
Also, auctions were seen as promoting economic efficiency by assigning
spectrum to the party that values it the most. Finally, in contrast with
comparative hearings and lotteries, auctions capture part of the value
of the spectrum for the government in the form of winning bids. The
companies that we spoke with generally characterized auctions as being
superior to comparative hearings. Some companies described auctions as
quick, efficient, certain, and the best available mechanism.
Alternatively, some companies described comparative hearings as slow,
arbitrary, and
uncertain. Participants in our expert panel also were generally positive
about auctions. For example, one participant noted that no one has figured
out a better mechanism for the initial assignment of licenses.
Despite the growth and competitiveness of wireless markets, some concerns
have been expressed about whether the use of auctions as the primary
spectrum- assignment method has had a detrimental effect on certain
economic factors. In particular, some observers are concerned that the use
of auctions will raise consumer prices for wireless services, will
slow the deployment of wireless networks, and will make it difficult for
smaller businesses to compete for wireless licenses.
The effect of auctions on consumer prices. Some concerns have been raised
that the price companies are paying for spectrum under auctions could
drive up end- user customer prices. Some economists suggest that
one- time license payments* such as those associated with auctions or with
participation in comparative hearings* should not influence customer
prices, because these fixed costs do not vary with a firm*s output. As
such, they do not influence a firm*s decisions about how to set its
prices; such decisions are based on the firms* marginal, or incremental,
costs. However, other economists have pointed to reasons why auction
payments could influence consumer prices in certain cases. For example,
Appendix II: Stakeholders* Views on Auctions
and Spectrum Royalties Stakeholders Identified Several Positive Attributes
of Auctions
Despite Success in Wireless Markets, Concerns Have Been Raised about
Certain Possible Effects of Auctions
Appendix II: Stakeholders* Views on Auctions and Spectrum Royalties
Page 51 GAO- 03- 277 Telecommunications some or all companies might,
because of an increased need to borrow funds to participate in an auction,
see their cost of financial capital rise.
Moreover, these economists argue that while firms may temporarily set
prices based on marginal costs, firms cannot survive in the long run
without considering fixed costs, and hence auction payments will be
reflected in consumer prices.
Views among those we spoke with on this issue were mixed. Officials at six
of the companies we spoke with said that the assignment mechanism does not
influence prices. Similarly, three of the panel members reported that the
price paid for spectrum had *little/ no* influence on customer prices.
Additionally, two FCC studies that examined consumer prices for wireless
services found that the introduction of auctions for spectrum assignment
did not raise consumer prices. 33 On the other side, officials at eight
companies we interviewed suggested that the assignment mechanism does
influence prices; three of these companies reported that they must
set prices high enough to cover their debt and maintain margins.
Additionally, four of our expert panelists said that spectrum price had
*some* influence, and three said it had a *great* influence on customer
prices. While there is clear disagreement among those we spoke with about
the effect of auctions on consumer prices, the competitiveness of the
market is generally seen as a very important factor in determining
consumer prices. The companies that we spoke with overwhelmingly cited
competition as an important factor when setting consumer prices.
Competitive factors were more commonly cited as an important influence on
price than was the influence of auction payments. Similarly, participants
in our expert panel also indicated that competition was an important
consideration for companies when determining what prices they would charge
consumers.
The effect of auctions on the rate of infrastructure deployment. Some
observers argue that payment at auction for spectrum licenses would
encourage companies to deploy technologies and services faster, because
the companies would have devoted their own resources for the licenses
and would need to recoup the investment by using the spectrum in a 33 See
http:// wireless. FCC. gov/ auctions/ data/ papersAndStudies/ aucspec.
pdf, Evan Kwerel and Walt Strack, *Auctioning Spectrum Rights* (February
2001), and Evan Kwerel, *Spectrum Auctions Do Not Raise the Price of
Wireless Services: Theory and Evidence* (October 2000), FCC Staff Paper.
Appendix II: Stakeholders* Views on Auctions and Spectrum Royalties
Page 52 GAO- 03- 277 Telecommunications productive and innovative manner.
Others, however, argue that the auction payments for spectrum licenses
could slow the deployment of new
technologies and services by diverting financial resources away from
direct investments in infrastructure.
Officials at nine of the companies we spoke with said that the assignment
mechanism can influence the rate of deployment of new technologies and
services, because, for example, high auction prices can affect the firm*s
access to financial capital. Alternatively, five companies said that the
assignment mechanism does not influence the deployment of new technologies
or services. Panel members* views on whether the rate of deployment of
wireless infrastructure is affected by purchase of licenses in an auction
were also mixed. Six panelists generally reported that payments for
spectrum had *little/ no* or only *some* influence on the deployment of
new wireless technology, while four panelists reported that these payments
could have a greater influence on the rate of deployment. Finally, the
United Kingdom*s National Audit Office found that while companies paid
unprecedented amounts for 3G spectrum in that country, there was no strong
evidence that the level of proceeds from the auction would have a negative
impact on the wider economic benefit of 3G.
The companies that we spoke with told us that a number of other issues
have an influence on the rate of deployment of wireless infrastructures,
in addition to the purchase of spectrum licenses through auctions. These
issues include (1) difficulty with citing cell towers because of problems
associated with local zoning; (2) FCC mandates for items such as emergency
911 service, which require large financial investments that divert
resources away from the deployment of the firm*s network; 34 and (3) FCC
procedures, such as licensing spectrum that is encumbered (that is,
currently used by another licensee), that increase business uncertainty.
Finally, the United Kingdom*s National Audit Office noted that the
remaining difficulties to be overcome for the roll- out of 3G services in
that country are mainly technical: for example, the development of
suitable base station and hand- set equipment. The effect of auctions on
the ability of small businesses to obtain
spectrum licenses. Another concern about the adoption of auctions for the
34 Two rural companies that we spoke with said that FCC mandates are
especially burdensome on small companies, because the costs must be
recovered from a smaller customer base.
Appendix II: Stakeholders* Views on Auctions and Spectrum Royalties
Page 53 GAO- 03- 277 Telecommunications assignment of spectrum licenses is
that smaller companies will not be able to compete for licenses with
larger businesses. FCC addressed this
concern in a few ways. FCC allowed partitioning of some licenses into
relatively small pieces to facilitate small business participation in
wireless markets. Additionally, for some auctions, FCC provided special
bidding credits, allowed long- term installment payments, or designated
certain licenses as available only for acquisition by smaller companies,
in order to
facilitate their participation and increase their opportunity to acquire
spectrum licenses.
Among the companies and experts that we spoke with, several suggested
alternatives to the current spectrum- assignment mechanism to facilitate
small business participation. These alternatives included small geographic
areas, which can be better suited to the business models of small
companies, and revenue sharing. Alternatively, while FCC has taken steps
to promote small businesses in certain auctions, some observers do not
believe this necessarily leads to viable small business participation in
wireless markets. 35 Those who take this view argue that certain wireless
services have large economies of scale in their provision because of the
large costs associated with constructing wireless networks.
In response to concerns about auctions, some stakeholders have suggested
royalties as an alternative mechanism for assigning spectrum licenses.
With a royalty mechanism, a company would pay the government
a percentage of revenue on an ongoing basis, rather than pay the
government a one- time fee to obtain a spectrum license. For example, Hong
Kong spectrum managers reported that they used a royalty auction for 3G
spectrum in which companies bid on a percentage of their revenue to be
paid to the government. Spectrum managers in Hong Kong told us
that a royalty structure enables the financial risk associated with
purchasing spectrum at an auction to be shared between the government and
commercial sector.
We found little support for royalties among the companies that we spoke
with, the spectrum managers in other countries, or participants on our
expert panel. Officials at only four of the domestic companies that we
35 In the Personal Communications Service C- Block auction, participation
was limited to small businesses, and auction winners were permitted to pay
off their bids over a 10- year period at a low rate of interest. A number
of bidders, including the largest winner, NextWave Personal
Communications, have defaulted on their payments. Few Stakeholders
Favor Royalty System of Spectrum Auctions
Appendix II: Stakeholders* Views on Auctions and Spectrum Royalties
Page 54 GAO- 03- 277 Telecommunications spoke with thought the royalty
method merited consideration. These companies told us that royalties* in
lieu of upfront auction payments*
could help small businesses enter the wireless market by reducing the
financial resources associated with acquiring spectrum licenses in an
auction. However, eight companies that we spoke with did not favor
royalties. Some of these companies noted that royalties would effectively
function as a tax that would raise consumer prices and possibly increase
business uncertainty. Participants on our expert panel were uniformly
opposed to a royalty mechanism. Finally, officials with most foreign
governments that we spoke with told us that their governments had
considered and decided against royalties or had not considered royalties
at all.
Appendix III: Technological Advancements Could Help to Relieve Spectrum
Scarcity Page 55 GAO- 03- 277 Telecommunications Because spectrum is a
finite resource and demand for it is rising, it is
increasingly scarce. The radiofrequency bands most usable for new wireless
services in land mobile radio, wireless telephony, and ultrawideband
applications are the most congested portions of the radio spectrum. But
advances in technology hold promise for enabling greater efficiency in the
use of this prime spectrum. The move from analog to digital technologies
has already greatly
conserved the use of prime spectrum and holds further promise for the
future. Digital technologies increase the amount of information that can
be transmitted within a given amount of bandwidth. For example, by using
certain digital techniques, wireless telephony networks can now handle
more calls in a given bandwidth than was possible with analog cellular.
These benefits are also spreading to other applications. Similarly, the
transition from analog to digital television will eventually release some
portion of the broadcast spectrum to be available for other uses. Federal
users are also required to adopt narrowbanding techniques by 2008* a move
that will economize on the use of spectrum.
Ultrawideband technologies also offer opportunities to conserve on
spectrum use, by allowing a given band to be allocated to multiple uses.
After a number of years of research and development in the use of wideband
transmission for surveillance, obstacle detection, and groundpenetrating
radars, and after consultation with NTIA, FCC agreed to allow experimental
wideband systems on an unlicensed basis. Because these technologies use
low power over wide swaths of spectrum, they are able to share bands
currently in use by many federal and nonfederal systems that are using
higher power levels and compatible transmission techniques.
In the more distant future, users and experts are looking to the
development of software- defined radios to more effectively use spectrum.
As many experts have noted, much of the radio spectrum is not actually
being used at a given time. Software- defined radio technology, in which a
radio receiver searches for unused frequencies at a given time and tunes
to an available channel, offers the opportunity to use temporarily unused
spectrum by allowing spectrum to be allocated to various uses and assigned
to various users dynamically* minute by minute. Softwaredefined radio
technology promises to offer a way for numerous radio systems that are
operating in varied frequency bands and different modes (push- to- talk,
broadcast, secure, and so forth) to operate on a common platform. Not only
will software- defined radio allow spectrum to be assigned on a minute-
by- minute basis, but it may also help solve some of Appendix III:
Technological Advancements
Could Help to Relieve Spectrum Scarcity
Appendix III: Technological Advancements Could Help to Relieve Spectrum
Scarcity Page 56 GAO- 03- 277 Telecommunications the problems related to
the interoperability of various systems, a wellrecognized problem in
public safety and search- and- rescue applications.
Appendix IV: Suggestions for Issues for Consideration by a Commission Page
57 GAO- 03- 277 Telecommunications This appendix discusses issues that
would need to be considered in setting
up a commission if one is established. This is not intended to be an
exhaustive list of possible topics for consideration, nor should it be
interpreted as recommending any specific course of action for spectrum
management.
When designing a commission to examine the U. S. spectrum- management
process, the following should be considered:
Appointment authority: Commissions often have both Congress and the
President designate members to serve. Several have gone further to achieve
political balance, allowing both majority and minority congressional
leadership to make appointments. Federal Advisory Committee Act:
Consideration should be given to
whether the commission will be established as a federal advisory
committee. Eligibility: In order to ensure that all of the diverse
stakeholders* opinions
are heard, there should be broad representation on the commission. For
example, the commission should include representation from the government,
commercial, and technical sectors. Staff, timeframe, and budget: The
size and qualifications of the staff, the
budget for the commission, as well as the time frame of the commission*s
work will need to be considered. Commission status: A decision on
whether the commission should expire
upon the issuance of its report or have a predetermined recurring status
should be considered.
Promote technically efficient use of spectrum; Promote economically
efficient use of spectrum; Ensure that government missions requiring
spectrum are accomplished; Promote growth of the private sector;
Minimize interference among users; Maximize the rapidity with which
spectrum management can respond to
changing needs; and Recommend future policy and management structures.
Whether the current policies should be continued; Whether mechanisms
that create economic incentives to encourage users
to use spectrum more efficiently could be developed: If it is
appropriate to apply these mechanisms to all users or only to
subsets of users, including government users; Appendix IV: Suggestions for
Issues for
Consideration by a Commission Commission Structure Considerations
Potential Goals and
Objectives of Commission
Possible Policies to Consider
Appendix IV: Suggestions for Issues for Consideration by a Commission Page
58 GAO- 03- 277 Telecommunications Possible mechanisms to consider
include:
Requiring users to pay for spectrum licenses in the marketplace;
Allowing users to sell spectrum in the market place;
Allowing users to lease spectrum from other users;
Charging an incentive- based fee that is designed to mimic a market where
one does not exist;
Increasing the flexibility of use embedded in a license;
Providing more spectrum for experimental and unlicensed uses;
Increasing the use of band managers. Increasing the information
available to policy makers and regulators
regarding spectrum use by: Auditing its use on a regular basis;
Measuring its value through some form of accounting. Making spectrum
conservation a high level policy goal throughout the
government; Funding research on technologies that are spectrally
efficient; Establishing rules for determining spectrum- use priorities;
Setting up a formal spectrum- planning process; Determining whether
there should be a major one- time reallocation of
spectrum; and Developing rules for reallocating spectrum both within and
across
regulatory jurisdictions. Determining whether the current regulatory
structure should be
continued; Creating a mechanism for better coordination of NTIA, FCC,
and IRAC
functions by any of the following means: Requiring agencies to develop a
single spectrum plan that would be
reviewed regularly; Making coordination among spectrum- management
agencies a critical objective in the strategic plan of each agency;
Establishing other policies and procedures that require ongoing
coordination; Creating a single agency to manage spectrum; and Letting
the federal agencies manage their own spectrum. Potential Regulatory
Structure Options to
Explore
Appendix IV: Suggestions for Issues for Consideration by a Commission Page
59 GAO- 03- 277 Telecommunications When examining landmark commissions
that led to government reforms in
the past, 36 we have cited three main lessons learned that those looking
to examine the spectrum- management structure should keep in mind:
Successful commissions have established useful goals for what is to be
achieved and have had a narrow focus; Reorganization efforts need to
recognize the unique federal government
purpose/ structure (that is, that policies have political, legal, and
organizational facets to them); and Efforts have to be made for the
congressional and executive branches to
reach agreement about the need for and type of reform. Furthermore, it is
best when the Congress and executive agencies work in cooperation to
implement these reforms.
36 These commissions include the Brownlow Commission (1936* 1937), First
and Second Hoover Commissions (1947* 1949, 1953* 1955), Ash Council (1969*
1971), Carter Reorganization Project (1977* 1979), Grace Commission (1982*
1984), and National Performance Review I (1993* 1994). Lessons Learned
Appendix V: More Details on Spectrum Management in Foreign Countries
Studied
Page 60 GAO- 03- 277 Telecommunications Each of the 12 foreign countries
we studied was asked a variety of questions relating to its management of
the spectrum. We asked each
country general questions about its spectrum- management structure and
methods for resolving conflicts, about how it assigns spectrum to
government and commercial users, and for specific details of other aspects
of its spectrum- management system. Some of the information gathered from
these countries has been reported in the body of this report and thus is
not included in this appendix.
Table 4 lists the government entities primarily responsible for the
management of the spectrum in each country.
Table 4: National Spectrum Regulators Country National spectrum regulators
Australia Australian Communications Authority (ACA) Canada Industry Canada
Finland Finnish Communications Regulatory Authority (FICORA)
France National Agency for Frequencies Hong Kong, China Office of the
Telecommunications Authority (OFTA) Italy General Direction for
Frequencies Allocation and Management, General Direction for Licensing and
Assignment Japan Ministry of Public Management, Home Affairs, Posts, and
Telecommunications Mexico Comision Federal de Telecomunicaciones New
Zealand Ministry of Economic Development Spain General Directorate for
Telecommunications Sweden Swedish Post and Telecom Agency (PTS)
United Kingdom Radiocommunications Agency Source: Spectrum managers
interviewed in each country.
We asked spectrum managers how they resolve conflicts that arise regarding
spectrum allocations and assignments. Many countries told us that they
have one agency that makes all final spectrum decisions. Other countries
reported that they have advisory boards or committees that help resolve
disputes. Table 5 summarizes responses to this question. Appendix V: More
Details on Spectrum
Management in Foreign Countries Studied Spectrum Management and Conflict
Resolution
Appendix V: More Details on Spectrum Management in Foreign Countries
Studied
Page 61 GAO- 03- 277 Telecommunications Table 5: Spectrum- Decision
Authority and Techniques for Resolving Disagreements Regarding Spectrum
Management Country Spectrum- decision authority and techniques for
resolving disagreements regarding spectrum
management
Australia The Australian Communications Authority regulates the
radiofrequency spectrum and reports to the Australian Minister for
Communications. Potentially contentious issues are resolved by the ACA or
the Minister in consultation with users, or among users within an ACA
framework. Canada Industry Canada makes all final decisions with the help
of the Radio Advisory Board of Canada. The
Radio Advisory Board of Canada, which consists of representatives from
most spectrum users in Canada, provides the government with broadly based
advice regarding spectrum management. Finland FICORA, an agency within the
same administrative sector as the Ministry of Transportation and
Communications, is responsible for managing both military and civil use.
FICORA depends on national level advisory boards to function as discussion
forums and to provide opportunities for cooperation. One particular board,
the Radio Advisory Board, advises the Ministry on spectrum policy and
creates working groups to address specific spectrum- management issues.
France The National Agency for Frequencies makes final decisions regarding
all spectrum policy, and the
Prime Minister formally approves these proposals. If necessary,
arbitration is available for agencies to reach agreement; however,
officials told us that arbitration is very rare. Hong Kong, China The
Office of the Telecommunications Authority manages spectrum for all users
with the help of the
Radio Spectrum Advisory Committee. The committee* which consists of
representatives of public network operators, major radiocommunications
users, and independent professionals* provides advice to OFTA regarding
spectrum- management strategies, policies, and procedures. Italy The two
agencies involved in spectrum management have independent responsibilities
and make final
decisions on spectrum management for issues under their jurisdiction.
Japan The Radio Regulatory Council acts as an advisory body to the
Ministry of Public Management, Home
Affairs, Posts, and Telecommunications, which makes all final spectrum-
management decisions. Mexico Secretariat of Communications and
Transportation makes all final decisions. New Zealand The Radio Spectrum
Management Group, a part of the Ministry of Economic Development,
allocates
and assigns all spectrum, including spectrum for government users. Spain
General Directorate for Telecommunications makes all decisions. Sweden The
Swedish Post and Telecom Agency makes final decisions for all users
(except broadcasters). It is
possible to appeal PTS decisions in court. United Kingdom The
Radiocommunications Agency makes spectrum decisions for commercial users,
and the spectrum
managers in each government agency set policy for their individual
functions. However, a single committee* the United Kingdom Spectrum
Strategy Committee* exists to prioritize and make final decisions about
spectrum needs when any conflicts arise. In particular, this committee*
which is a Cabinet Office committee jointly chaired by the Chief Executive
of the Radiocommunications Agency and a representative from the Ministry
of Defence* addresses strategic spectrum- management issues that affect
the interest of more than one government department and those that revolve
around balancing spectrum needs of government and commercial users.
Source: Spectrum managers interviewed in each country.
We asked spectrum managers whether spectrum users in their country have
been forced to move to different bands and if the government provided
funding for relocating users. 37 Countries reported many examples 37 This
question refers to funding provided by spectrum managers in the form of a
trust fund or other mechanism, rather than by individual agencies paying
their own relocation
expenses.
Appendix V: More Details on Spectrum Management in Foreign Countries
Studied
Page 62 GAO- 03- 277 Telecommunications of moving certain users to make
room for new services or uses of the spectrum. These cases often involved
moving government users out of
spectrum to make room for new technologies. Table 6 includes information
on government funding for moves, as well as other information about
funding arrangements.
Table 6: Funding for Relocation Country Provides government
funding for relocation Other funding information
Australia No Auction winners can pay for incumbents to be relocated.
Canada No New licensees may pay incumbents* both commercial and government
users* to
relocate. Finland No New spectrum holders have compensated incumbents for
their relocation costs.
When the relocation has been a result of national implementation of an
internationally approved frequency usage plan, compensation has not been
paid. France Yes Government users are completely reimbursed for relocation
costs. Commercial users
can be funded to upgrade technology to accelerate relocation timelines.
Hong Kong, China No Italy No Some users have had to compensate the
Ministry of Defense for spectrum relocation costs.
Japan No A study group recently looked into funding relocation. Mexico No
If equipment from the previous user is less than 10 years old, the new
user needs to
indemnify the previous user for relocation costs. New Zealand No One move
was facilitated by the government offering new spectrum rights to the
incumbent in exchange for displacement. Spain No In some cases, the new
user has paid for the cost of relocation. Sweden No United Kingdom No
Officials are exploring funding options for relocations.
Source: Spectrum managers interviewed in each country.
We asked spectrum managers whether they were in the process of completing
or had recently completed a review of spectrum management in their
country. Some countries were undergoing or had recently conducted
comprehensive reviews and others were involved in more focused studies.
Table 7 summarizes the responses to our question on spectrum- management
reviews.
Appendix V: More Details on Spectrum Management in Foreign Countries
Studied
Page 63 GAO- 03- 277 Telecommunications Table 7: Spectrum- Management
Reviews Country Spectrum management reviews
Australia In 2002, the Productivity Commission completed a comprehensive
spectrum- management review, which took 12 months. Canada The Canadian
government is in the process of updating its Spectrum Policy Management
Framework.
The original framework was developed in 1993 and has been amended somewhat
since that time. The current study is expected to extensively revise and
create a new framework for spectrum management in the next 2* 3 years.
Finland Managers reported that they are involved in a continuous process
to review their spectrummanagement policies and working methods. They are
currently involved in a comprehensive project to
change their fee structure. France The National Agency for Frequencies has
an ongoing process to review the use of the spectrum and
make proposals to improve spectrum management. Hong Kong, China OFTA does
not see a need to conduct a comprehensive spectrum- management review for
the time
being. Italy There is currently a study on implementing fees being
conducted. Japan In 2002 a study group examined certain issues, including
reallocation and financial help for
relocations. Mexico Managers reported that in 2003 they plan to review the
rules for frequency grants and the status of the
spectrum. New Zealand In 1987, National Economic Research Associates was
hired as a consultant to the Ministry to conduct
a review of spectrum management and make recommendations. The Ministry
received the report and, after public consultation, used the work to craft
the Telecommunications Act of 1989. In the mid1990s, the Ministry reviewed
the impact of the new law and passed an amendment based on its findings.
Spain None Sweden Managers reported that they are not doing or planning to
do any large- scale studies at the moment.
However, they noted that spectrum- management policies are continually
reviewed. United Kingdom In March 2002 the United Kingdom released the
results of its independent review of spectrum
management. Source: Spectrum managers interviewed in each country.
Appendix VI: Participants in GAO*s Expert Panel on Spectrum Issues Page 64
GAO- 03- 277 Telecommunications Vice President & Global Strategist,
Precursor Group (a company providing investment research)
Vice President, Regulatory Policy, Cellular Telecommunications & Internet
Association
President, Access Spectrum (a company providing band- management services)
Attorney, Hogan & Hartson (a law firm with expertise in government
regulation and policy)
Chair, Department of Interdisciplinary Telecommunications, University of
Colorado at Boulder
President, Association of Public Safety Communications Officials *
International
Chief, Office of Plans and Policy, Federal Communications Commission
Deputy Assistant Secretary of Defense for Spectrum and C3 Policy, Office
of the Secretary of Defense Senior Vice President, National Economic
Research Associates
Associate Administrator (Acting), Office of Spectrum Management, National
Telecommunications and Information Administration, Department of Commerce
Appendix VI: Participants in GAO*s Expert
Panel on Spectrum Issues Rudy Baca Diane Cornell Mark Crosby Michele
Farquhar Dale Hatfield Glen Nash Robert Pepper Steven Price David Salant
Fred Wentland
Appendix VII: Comments from the Department of Commerce
Page 65 GAO- 03- 277 Telecommunications Appendix VII: Comments from the
Department of Commerce
Appendix VII: Comments from the Department of Commerce Page 66 GAO- 03-
277 Telecommunications
Appendix VIII: Comments from the Federal Communications Commission Page 67
GAO- 03- 277 Telecommunications Appendix VIII: Comments from the Federal
Communications Commission
Appendix VIII: Comments from the Federal Communications Commission Page 68
GAO- 03- 277 Telecommunications
Appendix IX: Key Contacts and Major Contributors Page 68 GAO- 03- 277
Telecommunications
Amy D. Abramowitz, (202) 512- 4936 Nancy S. Barry, (617) 565- 8871 In
addition to those named above, Steve Brown, Michael Clements, Randall
Fasnacht, Lynn M. Musser, Rebecca L. Medina, Hai Tran, Mindi Weisenbloom,
and Nancy Zearfoss made key contributions to this report. Appendix IX: Key
Contacts and Major
Contributors GAO Contacts Staff Acknowledgments Appendix IX: Key Contacts
and Major
Contributors
(545008)
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