Spectrum Policy:
Provisions in the 2012 Spectrum Act

Linda K. Moore
Specialist in Telecommunications Policy
May 22, 2014
Congressional Research Service
7-5700
www.crs.gov
R43256


Spectrum Policy: Provisions in the 2012 Spectrum Act

Summary
The Middle Class Tax Relief and Job Creation Act of 2012 (P.L. 112-96, signed February 22,
2012) contained provisions in Title VI that expedite the availability of spectrum for commercial
mobile broadband. The provisions in Title VI—also known as the Public Safety and Spectrum
Act, or the Spectrum Act—cover reallocation of spectrum, new assignments of spectrum rights,
and changes in procedures for repurposing spectrum used by the federal government. The act
established a process for television broadcasters to release spectrum licensed to them for auction
as commercial licenses. The act also included provisions to apply future spectrum license auction
revenues toward deficit reduction; to establish a planning and governance structure to deploy
public safety broadband networks, using some auction proceeds for that purpose; and to assign
additional spectrum resources for public safety communications.
Broadband capacity to support popular mobile services and devices, such as real-time viewing of
video on smartphones, can be improved in several ways. Examples include (1) providing new
spectrum for networks to expand; (2) investing in denser infrastructure; (3) developing new
technologies, or (4) expanding opportunities for sharing spectrum. Provisions of the Spectrum Act
focus on increasing the amount of spectrum as the key policy tool for spectrum management.
Going forward, other policy tools may need to be considered in order to make spectrum access
more inclusive. Many policy makers and Members of Congress are concerned, for example, that
the current structure of auctions to assign spectrum licenses does not provide enough
opportunities for competition or new entrants into mobile communications markets. These
concerns include the availability of spectrum for uses such as telemedicine or driverless vehicles.
The spectrum needs of emerging technologies that some believe may be key drivers of future
economic growth are not specifically addressed in the Spectrum Act and appear to receive scant
attention from policy makers. In addition to autonomous vehicles, growth industries that are, at
least in part, spectrum dependent include advanced robotics, cloud computing, and machine-to-
machine communications (the Internet of Things).

Congressional Research Service

Spectrum Policy: Provisions in the 2012 Spectrum Act

Contents
What Is Spectrum? ........................................................................................................................... 1
Spectrum Policy Provisions in the Middle Class Tax Relief and Job Creation Act of 2012 ........... 2
Deficit Reduction ....................................................................................................................... 2
Distribution of Proceeds from Auctions Required by the Spectrum Act ............................. 3
The Public Safety Trust Fund .............................................................................................. 3
Directed Auctions ...................................................................................................................... 4
Incentive Auctions ..................................................................................................................... 5
Federal Spectrum Use and Reallocation .................................................................................... 7
Commercial Spectrum Enhancement Act of 2004 .............................................................. 7
NTIA Plans to Make Federal Spectrum Available for Commercial Use ............................. 8
GAO Cost Estimates for Spectrum Reallocation ................................................................ 9
Unlicensed Spectrum ................................................................................................................. 9
Conclusion ..................................................................................................................................... 10
Geographic Coverage of Spectrum Licenses ........................................................................... 10
Spectrum Caps ......................................................................................................................... 11
Planning for Future Needs ....................................................................................................... 12

Contacts
Author Contact Information........................................................................................................... 12

Congressional Research Service

Spectrum Policy: Provisions in the 2012 Spectrum Act

What Is Spectrum?
Electromagnetic spectrum, commonly referred to as radio frequency spectrum or wireless
spectrum, refers to the properties in air that transmit electric signals and, with applied technology,
can deliver voice, text, and video communications. The allocation and assignment1 of radio
frequency spectrum are managed by the Federal Communications Commission (FCC) for
commercial and other nonfederal uses and by the National Telecommunications and Information
Administration (NTIA) for federal government use.
Wireless broadband,2 with its rich array of services and content, requires new spectrum capacity
to accommodate growth. Spectrum capacity is necessary to deliver high speed, high quality
communications to consumers and businesses and also to support the communications needs of
industries that use spectrum-dependent technologies.
Although radio frequency spectrum (air) is abundant, usable spectrum is currently limited by the
constraints of applied technology. Spectrum policy therefore requires making decisions about
how radio frequencies will be allocated and who will have access to them. Current spectrum
policy is based on managing channels of radio frequencies to avoid interference.3 The FCC, over
many years, has developed and refined a system of exclusive licenses for users of specific
frequencies. Auctions are a market-driven solution to assigning licenses to use specific
frequencies and are a recent innovation in spectrum management and policy. Previously, the FCC
granted licenses using a process known as “comparative hearings” (also known as “beauty
contests”), and has used lotteries to distribute spectrum licenses. The FCC also allocates spectrum
for designated purposes, such as WiFi, without assigning a license to a specific owner (unlicensed
spectrum).
For purposes of allocation and assignment, spectrum is segmented into bands of radio frequencies
measured in cycles per second, or hertz. Standard abbreviations for measuring frequencies
include kHz—kilohertz or thousands of hertz; MHz—megahertz, or millions of hertz; and GHz—
gigahertz, or billions of hertz. The designation can refer to an entire band, such as the 700 MHz
band, or to specific frequencies within a band. Most licenses are issued on a geographic basis,
serving a specific area (license coverage). More than one license, therefore, is likely to have the
same frequency designation.
Technology for commercial mobile services generally is designed to operate most efficiently on
frequencies below 3 GHz, although the ceiling has moved higher as technology has changed, so
that frequencies through 5 GHz are now considered desirable for commercial network
deployment. Similarly, the bandwidth of assigned frequencies is increasing. With new technology,
wider bandwidths have been shown to reduce interference and mitigate other problems hampering
the efficient use of spectrum.

1 Spectrum is allocated for a type of use, such as television broadcasting or advanced wireless services, and assigned as
licenses to specific users.
2 Broadband refers here to the capacity of the radio frequency channel. A broadband channel can quickly transmit live
video, complex graphics, and other data-rich information as well as voice and text messages, whereas a narrowband
channel might be limited to handling voice, text, and some graphics.
3 With technologies that rely on channel management, two signals can interfere with each other even if they are not at
the same frequency, but are close in frequency. To avoid harmful interference, the signals must have frequencies that
are sufficiently different, known as a “minimum separation.”
Congressional Research Service
1

Spectrum Policy: Provisions in the 2012 Spectrum Act

Spectrum Policy Provisions in the Middle Class Tax
Relief and Job Creation Act of 2012

Provisions of Title VI of the Middle Class Tax Relief and Job Creation Act of 2012 (P.L. 112-96,
signed into law on February 22, 2012) included expediting auctions of licenses for spectrum
designated for mobile broadband; authorizing incentive auctions, which would permit television
broadcasters to receive compensation for steps they might take to release some of their airwaves
for mobile broadband; requiring that specified federal holdings be auctioned or reassigned for
commercial use; and providing for the availability of spectrum for unlicensed use. Many of the
provisions in Title VI, frequently referred to as the Public Safety and Spectrum Act, or Spectrum
Act, focus on spectrum assignment within the existing regulatory framework, in which licenses
for designated radio frequencies are awarded through competitive bidding systems (auctions).
Major provisions in the Spectrum Act that are summarized in this report cover
• Deficit reduction;
• Directed auctions;
• Incentive auctions for television broadcasters;
• Reallocation of spectrum from federal to commercial use; and
• Unlicensed spectrum.
Other provisions in the act, not covered in this report, include simplifying the approval of zoning
requests for modification of cell towers at the state and local level4 and putting in place measures
to facilitate antenna placement on federal property. The act also has provided for the
establishment of a new authority to plan and develop a nationwide public safety broadband
network (FirstNet) and has included other measures in support of improved emergency
communications.5
Deficit Reduction
The Spectrum Act has addressed the interlaced issues of spectrum access and deficit reduction.
The issues are connected because, when radio frequency spectrum licenses are auctioned for
commercial purposes by the FCC, the net proceeds are deposited in the U.S. Treasury.6 The act
has extended the FCC’s auction authority until the end of FY2022. Because the FCC’s authority
would have expired at the end of FY2012, revenue from auctions held after FY2012 is considered
new revenue.

4 Discussed in CRS Report RS20783, Broadband Deployment: Legal Issues for the Siting of Wireless Communications
Facilities and Amendments to the Pole Attachment Rule
, by Kathleen Ann Ruane.
5 Measures in the act that apply to public safety are covered in CRS Report R42543, The First Responder Network
(FirstNet) and Next-Generation Communications for Public Safety: Issues for Congress
, by Linda K. Moore.
6 47 USC §308 (j) (8). Net proceeds are the auction revenues minus the FCC’s expenses. Congress has twice in the past
amended the provision in order to use auction proceeds for other purposes by creating special funds to hold and
disburse auction proceeds. The Commercial Spectrum Enhancement Act, Title II of P.L. 108-494, created the Spectrum
Relocation Fund; the Deficit Reduction Act of 2005 created the Public Safety and Digital Television Transition Fund.
Congressional Research Service
2

Spectrum Policy: Provisions in the 2012 Spectrum Act

The legislation that first authorized the FCC to establish “competitive bidding systems”7 for a
limited period was included in the Omnibus Budget Reconciliation Act of 1993 (P.L. 103-66).
The Balanced Budget Act of 1997 gave the FCC auction authority until September 30, 2007. This
authority was extended to September 30, 2011, by the Deficit Reduction Act of 2005 and to 2012
by the DTV Delay Act (P.L. 111-4). The Deficit Reduction Act of 2005 also specified that $7.363
billion of proceeds from auctions required by the act be applied to deficit reduction.
Distribution of Proceeds from Auctions Required by the Spectrum Act
Most of the proceeds from auctions of licenses in designated spectrum as specified in the act are
to be deposited directly into a Public Safety Trust Fund, created by the act, with nearly $28 billion
designated for purposes defined in the act,8 including $20.4 billion for deficit reduction.9
Proceeds from the sale of licenses of repurposed federal spectrum identified in the act will be
directed first to the Spectrum Relocation Fund, to cover costs of moving federal users, with the
balance going to the Public Safety Trust Fund. Proceeds from the sale of advanced wireless
service licenses in the other spectrum bands identified by the act will go directly to the Public
Safety Trust Fund. Proceeds from the auction of new licenses created by the release of television
broadcasting spectrum will go to cover costs specified in the act, with the balance to the Public
Safety Trust Fund.10 Balances remaining in any fund created by the act will revert to the Treasury
in 2022.11
The Public Safety Trust Fund
The law provides for transfers from a Public Safety Trust Fund that is created by the act to receive
revenues from designated auctions of spectrum licenses. A major beneficiary of funding is
FirstNet (First Responder Network Authority), the nationwide broadband network to be
developed for public safety communications.
Auction proceeds are to be distributed in the following priority:
• To the NTIA, to reimburse the Treasury for funds advanced to cover the initial
costs of establishing FirstNet: not to exceed $2 billion.
• To the State and Local Implementation Fund for a grant program, as part of
FirstNet: $135 million.
• To the Network Construction Fund for FirstNet, for costs associated with
building the nationwide network and for grants to states that qualify to build their
own networks: $7 billion, reduced by the amount advanced to establish FirstNet
in the first round of funding.

7 47 USC §308 (j) (3).
8 P.L. 112-96, §6413.
9 P.L. 112-96, §6413, 126 STAT. 235-236.
10 P.L. 112-96, §6401 126 STAT. 223-224.
11 P.L. 112-96, §6413, 126 STAT. 236.
Congressional Research Service
3

Spectrum Policy: Provisions in the 2012 Spectrum Act

• To the National Institute of Standards and Technology (NIST) for public safety
research: $100 million.
• To the Treasury for deficit reduction: $20.4 billion.
• To the NTIA and the National Highway Traffic Safety Administration for a grant
program to improve 911 services: $115 million.
• To NIST for public safety research, phase two: $200 million.
• To the Treasury for deficit reduction: any remaining amounts from designated
auction revenues.
Directed Auctions
The Spectrum Act required the FCC and the NTIA to identify specific bands for auction from
spectrum designated for commercial advanced wireless services and for federal use, and in most
cases to commence the auction process within three years. The act mandated spectrum license
auctions for frequencies at 1915-1920 MHz; 1995-2000 MHz; 2155-2180 MHz; an additional 15
MHz to be identified by the FCC; and 15 MHz of spectrum between 1675 and 1710 MHz, subject
to conditions in the act. The Secretary of Commerce was required to submit a report to the
President identifying 15 MHz of spectrum between 1675 and 1710 MHz for reallocation from
federal to nonfederal use.12 The NTIA has reaffirmed an initial recommendation to reassign 1695-
1710 MHz and submitted a report, as required by the act, recommending that the FCC reallocate
the band for commercial use.13
The act required that these auctions be completed and licenses issued by February 22, 2015,
which would require that the auctions commence no later than the third quarter of 2014.14 These
licenses would provide an additional 65 MHz of spectrum for commercial broadband.
The FCC scheduled the first designated auction for January 2014. Frequencies at 1915-1920 MHz
and 1995-2000 MHz, known as the H Block, were offered in Auction 96. The reserve price was
set at $1.56 billion, that is, the combined final bids for all licenses offered must total at least $1.56
billion.15 The licenses cover 176 Economic Areas.16 Auction 96 was completed on February 27,
2014, with a total winning bid of $1.564 billion.17

12 P.L. 112-96, §6401, 126 STAT. 223.
13 Department of Commerce, Identification of 15 Megahertz of Spectrum Between 1675 and 1710 MHz for
Reallocation from Federal Use to Non-Federal Use Pursuant to Section 640 (a) of the Middle Class Tax Relief and Job
Creation Act of 2012; Report to the President, February 2013, at http://www.ntia.doc.gov/report/2013/report-president-
identification-15-mhz-spectrum-between-1675-mhz-and-1710-mhz-reallocati.
14 See FCC, “Remarks of Commissioner Jessica Rosenworcel, CTIA 2013—The Mobile Marketplace, Las Vegas,
Nevada, May 22, 2013, at http://www.fcc.gov/document/commissioner-rosenworcels-speech-ctia-2013.
15 FCC Public Notice, “Auction of H Block Licenses in the 1915-1920 MHz and 1995-2000 MHz Bands,” AU Docket
No. 13-178, September 13, 2013, http://www.fcc.gov/article/da-13-1885a1.
16 An Economic Area (EA) is a geographic area established by the Bureau of Economic Analysis of the Department of
Commerce and used by the FCC to define the coverage of spectrum licenses for certain services. There are 172 EAs,
plus three EA-like areas, encompassing the Northern Mariana Islands, Guam, American Samoa, the United States
Virgin Islands, and Puerto Rico. FCC map at http://wireless.fcc.gov/auctions/data/maps/ea.pdf.
17 FCC Public Notice, “Winning Bidder Announced for Auction 96,” DA 14-279, February 28, 2014,
http://transition.fcc.gov/Daily_Releases/Daily_Business/2014/db0228/DA-14-279A1.pdf.
Congressional Research Service
4

Spectrum Policy: Provisions in the 2012 Spectrum Act

The FCC is preparing to auction spectrum licenses for an additional 65 MHz of frequencies
(Auction 97) that would complete the mandate for certain auctions by 2015.18 The frequencies
cover 1695-1710 MHz; 1755-1780 MHz; and 2155-2180 MHz. The proposed reserve price
(minimum acceptable bid value) is $10.6 billion, of which $5.1 billion is to be applied to the costs
of relocation or sharing of frequencies now used by the federal government.
Incentive Auctions
The Spectrum Act has permitted the FCC to conduct incentive auctions, that is, to establish a
mechanism whereby spectrum capacity may be relinquished for auction by some license-holders,
who would then share in the proceeds.19 Many commercial wireless licenses can be resold
directly by their license-holders for comparable uses; the purpose of incentive auctions is to
reward license-holders, such as television broadcasters, who repurpose their spectrum for a
different use. Although incentive auctions might be used for other types of license-holders, the act
specifically addresses spectrum assignments for over-the-air television broadcasters.
The act established procedures and guidelines for the FCC to follow in reallocating television
broadcasting spectrum licenses for commercial auction. Through a reverse auction process, the
broadcasters would establish the amount of compensation they are willing to accept for the
spectrum they voluntarily release for auction. Additionally, broadcasters that do not voluntarily
relinquish spectrum rights, but are required to relocate or incur certain other costs, may be
compensated. In lieu of cash payments as compensation for relocation, broadcasters may choose
to accept regulatory relief that would allow new uses for their spectrum.
Spectrum voluntarily released by TV broadcasters would be repurposed for commercial
broadband communications, with licenses sold through what the law refers to as a “forward
auction.” At least one successful reverse auction is required to set minimum prices for a forward
auction. For the results of a forward auction to be valid, auction proceeds must at a minimum
cover (1) payments to broadcasters that relinquished spectrum for auction, (2) the costs to the
FCC of conducting the auctions, and (3) the estimated costs for relocation of other broadcasters,
which are not to exceed $1,750 million, deposited in a TV Broadcaster Relocation Fund for
relocation costs. If auction revenues do not cover costs as specified in the act, the FCC may not
assign new licenses and planned reassignments and reallocations may not occur. If the reverse
auction and forward auction conditions are met, the FCC may “make such reassignments of
televisions channels” as appropriate in its consideration, subject to certain conditions. Examples
of conditions include a general prohibition against reassigning licenses to frequencies from one
band to a band below an existing assignment, and obligations to determine that a reassigned
channel is not adversely affected by cross-border channel assignment agreements with Canada
and Mexico. The auction and channel reassignment process may only occur once.
Among the many challenges the FCC faces in establishing incentive auctions is identifying a
band plan that will meet the many goals and requirements of the legislation. The band plan must
identify which portion of the broadcaster spectrum should be released and how it will be divided
into licenses that can be successfully auctioned.

18 FCC, Auction of Advanced Wireless Services Licenses Scheduled for November 13, 2014; Comment Sought on
Competitive Bidding Procedures for Auction 98, Docket No. 14-78, May 19, 2014, http://transition.fcc.gov/
Daily_Releases/Daily_Business/2014/db0520/DA-14-669A1.pdf.
19 P.L. 112-96, §6402, 126 STAT. 224.
Congressional Research Service
5

Spectrum Policy: Provisions in the 2012 Spectrum Act

To increase participation in the Broadcast Incentive Auction,20 actions the FCC announced on
May 15, 2014,21 include
• Creating smaller license coverage areas within EAs (called Partial Economic
Areas, PEAs) ;22
• Assigning licenses for 5 MHz of paired spectrum, with an initial term of 12
years;
• Applying various measurements of spectrum ownership intended to handicap the
ability of Verizon and AT&T to acquire licenses in certain areas.
• Reconsidering qualifications for Designated Entities based on a separate
proceeding that may subsequently be applied to the Broadcast Incentive Auction;
• Requiring interoperability across the entire 600 MHz band;
• Applying to the 600 MHz band the same technical rules as for the 700 MHz
band.
A separate Report and Order will establish new guidelines on the amount of spectrum that any
one carrier may hold.23 This evaluation, which imposes limits on ownership to avoid market
concentration, often referred to as a spectrum screen, is presently made on a case-by-case basis
for merger activity. The FCC plans to apply its new criteria to the incentive auction by placing
restrictions on bidding activity. The majority of the 700 MHz band commercial licenses were
purchased at auction in 2008 (Auction 73) by Verizon and AT&T,24 which together also hold
approximately 70% of commercial spectrum licenses below 1000 MHz.25 The other two national
carriers, Sprint (majority-controlled by SoftBank, Corp., a Japanese telecommunications
provider), and T-Mobile, Inc. (wholly-owned by Deutsche Telekom, AG) own 15% of
commercial licenses below 1000 MHz and did not participate in Auction 73.
The outcome of the forward auction for spectrum licenses depends on the results of the reverse
auction in which the broadcasters agree to the price at which they will release spectrum. Based on
the amount of spectrum released by the broadcasters, a block of spectrum will be set aside in each
market with competitive bidding open to Sprint, T-Mobile, and any entrant deemed not to have
national network coverage. If, for example, 60 MHz of spectrum is made available by
broadcasters, 20 MHz will be reserved; as described by the staff report, all registered bidders
would be eligible to compete for licenses in the remaining 40 MHz. Verizon and AT&T may also
be allowed to bid on reserved licenses.

20 FCC Docket GN 12-268; the FCC provides information on the auction preparations at http://wireless.fcc.gov/
incentiveauctions/learn-program/.
21 Staff Summary: Incentive Auction Report and Order,” May 15, 2014, http://www.fcc.gov/document/staff-summary-
incentive-auction-report-and-order.
22 “Wireless Telecommunications Bureau Seeks Comment on a Proposal to License the 600 MHz Band Using ‘Partial
Economic Areas,’” FCC, DA 13-2351, December 11, 2013.
23 “FCC Adopts Revised Mobile Spectrum Holdings Policies,“ FCC News, May 15, 2014, http://www.fcc.gov/
document/fcc-adopts-revised-mobile-spectrum-holdings-policies.
24 The major auction of licenses for the 700 MHz band was Auction 73. Some information about the top 10 successful
bidders in Auction 73 is available at Wireless Strategy, FCC Auctions, http://www.wirelessstrategy.com/
700auction.html.
25 “Fact Sheet FCC Mobile Spectrum Holdings,” May 2014, FCC staff report, http://www.fcc.gov/document/fact-sheet-
fcc-mobile-spectrum-holdings-rules.
Congressional Research Service
6

Spectrum Policy: Provisions in the 2012 Spectrum Act

To increase innovation and usage of unlicensed spectrum, the FCC also announced steps intended
to maximize the amount of spectrum available for TV White Spaces.
Federal Spectrum Use and Reallocation
The Spectrum Act has addressed how spectrum resources might be repurposed from federal to
commercial use through auction or sharing, and how the cost of such reassignment would be
defined and compensated, among other provisions.26 The Commercial Spectrum Enhancement
Act of 2004 (P.L. 108-494, Title II) was amended to facilitate the transfer of spectrum rights to
commercial purchasers from the agencies relinquishing spectrum. (See following section.)
Expenditures incurred by federal agencies for planning may now be included among those costs
eligible for reimbursement as part of the transfer of spectrum to the commercial sector. Other
reimbursable costs cover a wide range of technical options, including spectrum sharing. Although
spectrum sharing to facilitate the transition from federal to commercial use is supported in the
act’s provisions, the NTIA has been required to give priority to reallocation options that assign
spectrum for exclusive, nonfederal uses through competitive bidding.
The act has required the establishment of a Technical Panel within the NTIA to review transition
plans that each federal agency must prepare in accordance with provisions in the act. The
Technical Panel is required to have three members qualified as a radio engineer or technical
expert. The Director of the Office of Management and Budget, the Assistant Secretary of
Commerce for Communications and Information, and the Chairman of the FCC have been
required to appoint one member each. A full discussion and interpretation of provisions of the act
as regards the technical panel and related procedural requirements such as dispute resolution have
been published by the NTIA as part of the rulemaking process.27
Commercial Spectrum Enhancement Act of 2004
The Commercial Spectrum Enhancement Act of 2004 put in place statutory rules for covering the
costs to federal agencies of relocating wireless communications facilities to new spectrum
assignments. The act created the Spectrum Relocation Fund to provide a means for federal
agencies to recover relocation costs directly from auction proceeds when they are required to
vacate spectrum slated for auction. In effect, successful commercial bidders cover the costs of
relocation. Among key provisions of the act were requirements that the auctions must recoup at
least 110% of the costs projected by the NTIA, and that unused funds would revert to the
Treasury after eight years. These provisions remain in effect. Specific frequencies were
designated for immediate auction28 by the Commercial Spectrum Enhancement Act but the law

26 P.L. 112-96, §6701, 126 STAT. 245 et seq.
27 NTIA, Notice of Proposed Rulemaking, July 17, 2012, and replies, docket no. 110627357-2209-03 at
http://www.ntia.doc.gov/federal-register-notice/2012/technical-panel-and-dispute-resolution-board-nprm. Final Rule,
January 25, 2013, at http://www.ntia.doc.gov/federal-register-notice/2013/spectrum-relocation-final-rule-technical-
panel-and-dispute-resolution-b.
28 Following the procedures required by the act, the FCC scheduled an auction for Advanced Wireless Services (AWS),
designated Auction 66, which was completed on September 18, 2006. The AWS auction attracted nearly $13.9 billion
in completed bids. The cost to move federal agencies to new spectrum locations was set at almost $936 million.
Congressional Research Service
7

Spectrum Policy: Provisions in the 2012 Spectrum Act

was written to apply to any federally used frequencies scheduled for reallocation and possible
auction.29
NTIA Plans to Make Federal Spectrum Available for Commercial Use
The NTIA, with input from the Policy and Plans Steering Group (PPSG),30 has produced a
10-year plan and timetable that identifies bands of spectrum that might be available for
commercial wireless broadband service. As part of its planning efforts, the NTIA prepared a “Fast
Track Evaluation” of spectrum that might be made available in the near future.31 Specific
recommendations were to make available 100 MHz of spectrum within bands from 3550 MHz to
3650 MHz. The fast track evaluation also recommended studying two 20 MHz bands to be
identified within 4200-4400 MHz for possible repurposing.
Working through the PPSG, the NTIA studied federal spectrum use by more than 20 agencies
with over 3,100 separate frequency assignments in the 1755-1850 MHz band.32 After evaluating
the multiple steps involved in transferring current uses and users to other frequency locations, the
NTIA concluded that it would cost $18 billion to clear federal users from all 95 MHz of the band.
Based on this assessment, the NTIA report included recommendations for seeking ways for
federal and commercial users to share many of the frequencies, although some frequencies were
identified to be cleared for auction to the private sector. DOD estimated that relocation of its users
from the 1755-1850 MHz band to clear spectrum would cost $12 billion if the bands were fully
cleared. Industry estimates have valued the licenses at as much as $12 billion.
The NTIA assumptions for the estimates of the cost of relocating federal agencies from the 1755-
1850 MHz band were challenged at a hearing of the House Committee on Energy and Commerce,
Subcommittee on Communications and Technology,33 leading to a request to the Government
Accountability Office (GAO) to examine the process. In particular, the NTIA was criticized
during the hearing by some committee members for not separately evaluating the 1755-1780
MHz band, which might be auctioned separately with another spectrum band already available for
commercial use. At the hearing, the GAO provided testimony regarding its preliminary findings
on spectrum sharing34 and followed up with a report.35 Both the hearing and the report indicated
that spectrum sharing technology and policies were largely undeveloped. Some of the options to

29 The creation of the Spectrum Relocation Fund is discussed in CRS Report RS21508, Spectrum Management and
Special Funds
, by Linda K. Moore.
30 Created in response to Department of Commerce recommendations to improve spectrum efficiency through better
management, see http://www.ntia.doc.gov/legacy/reports/specpolini/factsheetspecpolini_06242004.htm.
31 NTIA, An Assessment of Near-Term Viability of Accommodating Wireless Broadband Systems in the 1675-1710
MHZ, 1755-1780 MHz, 3500-3650 MHz, and 4200-4220 MHz, 4380-4400 MHZ Bands (President’s Spectrum Plan
Report)
, November 15, 2010, at http://www.ntia.doc.gov/report/2010/assessment-near-term-viability-accommodating-
wireless-broadband-systems-1675-1710-mhz-17.
32 U.S. Department of Commerce, An Assessment of the Viability of Accommodating Wireless Broadband in the 1755-
1850 MHz Band,
March 2012, at http://www.ntia.doc.gov/report/2012/assessment-viability-accommodating-wireless-
broadband-1755-1850-mhz-band.
33 Hearing, House of Representatives, Committee on Energy and Commerce, Subcommittee on Communications and
Technology, “Creating Opportunities Through Improved Government Spectrum Efficiency,” September 13, 2012.
34 GAO, Spectrum Management: Federal Government’s Use of Spectrum and Preliminary Information on Spectrum
Sharing
, September 13, 2012, GAO-12-1018T, at http://www.gao.gov/products/GAO-12-1018T.
35 GAO, Spectrum Management: Incentives, Opportunities, and Testing Needed to Enhance Spectrum Sharing,
November 14, 2012, GAO-13-7, at http://gao.gov/products/GAO-13-7.
Congressional Research Service
8

Spectrum Policy: Provisions in the 2012 Spectrum Act

encourage sharing spectrum, as identified by the GAO, include considering spectrum usage fees
to provide economic incentive for more efficient use and sharing; identifying more spectrum that
could be made available for unlicensed use; encouraging research and development of
technologies that can better enable sharing; and improving and expediting regulatory processes
related to sharing. Given the challenges for implementing spectrum sharing policies, the GAO
found that further study by the NTIA and the FCC was needed.
GAO Cost Estimates for Spectrum Reallocation
In a hearing before the Senate Committee on Armed Services, Subcommittee on Strategic
Forces,36 the GAO presented preliminary findings on DOD estimates of reallocation costs from
some radio frequencies.37 The GAO evaluated DOD relocation cost estimates of $12 billion for
frequencies at 1755-1850 MHz and reported that the “preliminary cost estimate substantially or
partially met GAO’s identified best practices.” In particular, the GAO noted the variable nature of
a number of assumptions for costs and revenues, such as the characteristics of the spectrum to
which services would be relocated, the availability of new technology, and market demand for
spectrum.
Unlicensed Spectrum
Unlicensed spectrum is not sold to the highest bidder and used for the services provided by the
license-holder but is instead accessible to anyone using wireless equipment certified by the FCC
for those frequencies. Both commercial and noncommercial entities use unlicensed spectrum to
meet a wide variety of monitoring and communications needs. Suppliers of wireless devices must
meet requirements for certification to operate on frequency bands designated for unlicensed use.
Examples of unlicensed use include garage door openers and WiFi communications. WiFi
provides wireless Internet access for personal computers and handheld devices and is also used by
businesses to link computer-based communications within a local area. Links are connected to a
high-speed landline either at a business location or through hotspots. Hotspots are typically
located in homes or convenient public locations.
New technologies are being developed by companies in various industry sectors to expand the
usefulness of unlicensed spectrum without causing interference. For example, to use unassigned
spectrum, known as white spaces, between broadcasting signals of digital television, geolocation
database technology is being put in place to identify unencumbered airwaves. Similar
technologies are being considered to expand the availability of spectrum for unlicensed use at 5
GHz. Commercial providers, such as for wireless Internet, currently share parts of the spectrum at
5 GHz with federal users. With the objective of improving future WiFi capacity, the Spectrum Act
has required new studies and evaluations of frequencies at 5 GHz.38 These would lay the
groundwork to expand commercial use of unlicensed spectrum within the federally managed 5
GHz band. The FCC has been required to commence a proceeding that might open access for

36 Hearing, Senate, Committee on Armed Services, Subcommittee on Strategic Forces, “Oversight: Military Space
Programs and Views on DoD Usage of the Electromagnetic Spectrum,” April 24, 2013.
37 GAO, Spectrum Management: Preliminary Findings on Federal Relocation Costs and Auction Revenues, April 24,
2013, GAO-13-563T, at http://www.gao.gov/products/GAO-13-563T. Full report, GAO-13-472 at http://www.gao.gov/
products/GAO-13-472.
38 P.L. 112-96, §6406.
Congressional Research Service
9

Spectrum Policy: Provisions in the 2012 Spectrum Act

some unlicensed devices in the 5350-5470 MHz band.39 The NTIA was required to prepare an
evaluation of spectrum-sharing technologies for the 5350-5470 MHz and 5850-5925 MHz
bands.40
Testimony at a November 13, 2013, hearing41 regarding uses of the three spectrum bands covered
by the act focused on issues such as recent advances in WiFi technologies, managing interference,
and assuring spectrum for continued use and development of the technologies used for
automobile safety. Currently, technologies for vehicle-to-vehicle and vehicle-to-infrastructure
communications42 operate on frequencies within the 5850-5925 MHz band.
Conclusion
Implementation of the Spectrum Act raises a number of policy issues such as how to structure
incentive auctions and how best to utilize spectrum assigned for federal use. Inherent to these
debates is the question of how to provide access to spectrum on a competitive basis. Numerous
parties have expressed concern that spectrum license auctions are likely to be dominated by the
two major wireless carriers, Verizon Wireless and AT&T Mobility.43
Proposals intended to improve competitive access to spectrum include modifying FCC auction
rules to provide licenses with smaller area coverage than currently proposed and to establish
limitations on the number of licenses available to Verizon or AT&T. Spectrum caps might limit
the amount of spectrum available through auction to the top two carriers in key auctions such as
those for repurposed television spectrum.
Geographic Coverage of Spectrum Licenses
A number of comments and petitions for reconsideration have been filed by the Rural Wireless
Association (RWA) and others to request that FCC auction rules include licenses for Cellular
Market Areas (CMAs). The geographic license coverage currently favored by the FCC is for the
larger geographic coverage of Economic Area (EA) licenses. The RWA and its supporters argue
that smaller licenses are more affordable to small, primarily rural, carriers and more nearly match
the location of their target customer base. Auction rules that allow only for EAs would create
about 176 licenses for auction as compared to 700 CMA licenses. A compromise solution has

39 FCC, Notice of Proposed Rulemaking: 5GHz Unlicensed Spectrum (UNII), FCC13-22, released February 20, 2013,
http://www.fcc.gov/document/increased-spectrum-available-unlicensed-devices-5-ghz-band.
40 Department of Commerce, Evaluation of the 5350-5470 MHz and 5850-5925 MHz Bands Pursuant to Section 6406
(b) of the Middle Class Tax Relief and Job Creation Act of 2012, January 2013, http://www.ntia.doc.gov/files/ntia/
publications/ntia_5_ghz_report_01-25-2013.pdf.
41 House of Representatives, Committee on Energy and Commerce, Subcommittee on Communications and
Technology, “Challenges and Opportunities in the 5 GHz Spectrum Band,” November 13, 2013.
42 The primary technology is Dedicated Short-Range Communications (DSRC). In August 2013, the Department of
Transportation completed a year-long test of DSRC, conducted with eight automakers. Analysis of the pilot program is
expected to inform new regulations permitting the use of DSRC.
43 The two market leaders have a combined market share of approximately two-thirds. One estimate, based on number
of subscribers for the third quarter 2013, gives the combined share (including the acquisition of Leap by AT&T) at
70%. Source: Statista, http://www.statista.com/statistics/199359/market-share-of-wireless-carriers-in-the-us-by-
subscriptions/.
Congressional Research Service
10

Spectrum Policy: Provisions in the 2012 Spectrum Act

been proposed by the Common Carriers Association44 that would allow the FCC to create 350
Partial Economic Area licenses. This plan would allow for a greater choice between urban and
rural coverage among bidders for licenses.
Spectrum Caps
Auction rules that limit participation of the two major carriers might impose some form of
spectrum cap. The history of spectrum caps as a policy to promote competition dates to
preparations for the first spectrum license auctions. The FCC decided to set caps on the amount of
spectrum any one company could control in any geographically designated market. The FCC’s
support of spectrum capping was based on the theory that each license has an economic value and
a foreclosure value. The economic value is derived from the return on investment in spectrum
licenses and network infrastructure. The foreclosure value is the value to a wireless company that
already has substantial market share and wants to keep its dominant position by precluding
competition. Spectrum caps were chosen as the method to prevent foreclosure bidding. The intent
was to ensure multiple competitors in each market and to restrict bidding to only the licenses that
could be used in the near term.
Beginning in 2001, spectrum policy placed increased emphasis on promoting spectrum and
market efficiency. The FCC ruled to end spectrum caps, citing greater spectral efficiency from
larger networks as one benefit of the ruling. Spectrum caps were seen as barriers to mergers
within the wireless industry, to the growth of existing wireless companies, and to the benefits of
scale economies. The spectrum caps were eliminated on January 1, 2003.45 Auction rules
requiring the timely build-out of networks became a key policy tool to deter hoarding. The FCC
instituted a policy for evaluating spectrum holdings on a market-by-market, case-by-case basis—
a practice referred to as spectrum screening—as a measure of competitiveness.
Current proposals to reinstate spectrum caps reflect different perspectives on competition and the
role of spectrum license auctions. Although some would like to see Verizon and AT&T excluded
from participation in the incentive auctions of TV spectrum, the Spectrum Act prohibits exclusion
of any qualified bidder.46 The FCC therefore plans to revise existing policies for spectrum screens
and aggregation to limit the amount of spectrum that any bidder may acquire.47 How this
approach might be implemented and how limitations might affect auction revenue have been the
topic of spirited debate. Numerous position papers have argued effectively that any form of
spectrum cap would depress auction revenues or, from a different perspective, that spectrum caps
would have no impact on revenue and might even enhance it.48 The Department of Justice has
filed comments regarding the important role of spectrum access for competition and innovation. It
has urged the FCC to promulgate auction rules that would prevent bids based on the foreclosure

44 CCA, “Smaller Geographic License Sizes and Spectrum Aggregation Limits Must be Ensured for a Successful
Auction,” November 27, 2013, http://competitivecarriers.org/press/rca-press-releases/smaller-geographic-license-sizes-
and-spectrum-aggregation-limits-must-be-ensured-for-a-successful-auction/9112774.
45 FCC News, “FCC Announces Wireless Spectrum Cap to Sunset Effective January 1, 2003,” November 8, 2001.
Report and Order FCC-01-328. See Docket No. 01-14, Notice of Proposed Rulemaking, released January 23, 2001, at
http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-01-28A1.pdf.
46 47 U.S.C. 309 (j) (17) (A).
47 As specifically permitted by the Spectrum Act, 47 U.S.C. (j) (17) (B).
48 Many of these papers have been filed with the FCC and can be accessed under the docket for Policies Regarding
Mobile Spectrum Holdings
, WT Docket N0. 12-269.
Congressional Research Service
11

Spectrum Policy: Provisions in the 2012 Spectrum Act

value of spectrum and that would enhance bidding opportunities for smaller carriers. The third-
and fourth-ranked carriers, Sprint and T-Mobile, are likely to be significant beneficiaries of
spectrum caps for the auction of TV spectrum.49
Planning for Future Needs
The Spectrum Act employs three key policy tools for increasing the availability of radio
frequency spectrum for wireless broadband: allocating additional spectrum; reassigning spectrum
to new users; and opening up spectrum for unlicensed use. Other policy options that may be
employed to increase spectrum capacity include requiring that wireless network infrastructure be
shared; changing the cost structure of spectrum access; moving to more spectrum-efficient
technologies; and sharing spectrum. Facilitating the adoption of new wireless technologies that
enable spectrum sharing is emerging as a major policy consideration for spectrum management.
Policies to auction licenses for exclusive use of spectrum appear to have generally prevailed in
spectrum management planning. However, a number of new spectrum-dependent industries are
emerging that do not seem well served by current policies. These industries include advanced
robotics, autonomous vehicles, cloud computing, and machine-to-machine communications (the
Internet of Things). Spectrum resources are also needed, for example, for smart grid
communications, railroad safety,50 water conservation,51 the safe maintenance of critical
infrastructure industries,52 and for many other applications that may not have an immediate
commercial value but can provide long-lasting value to society as a whole.
Without abandoning competitive auctions, spectrum policy may benefit from including additional
ways to assign or manage spectrum that might better serve the deployment of a broader range of
wireless technology and the implementation of national policies. Congress may consider these
and other policy options as it evaluates how to meet future spectrum needs.

Author Contact Information

Linda K. Moore

Specialist in Telecommunications Policy
lmoore@crs.loc.gov, 7-5853


49 Ex parte submission to the FCC by the Department of Justice, In the Matter of Policies Regarding Mobile Spectrum
Holdings
, WT Docket No. 12-269, April 11, 2013.
50 The railroad industry uses wireless communications as part of their information networks to monitor activity.
51 For example, sensors buried at the level of plant roots recognize when watering is needed and communicate this
information over wireless networks.
52 In general, critical infrastructure industries facilitate the production of critical goods and services such as safe
drinking water, fuel, telecommunications, financial services, and emergency response. A discussion of key issues
appears in CRS Report RL30153, Critical Infrastructures: Background, Policy, and Implementation, by John D.
Moteff.
Congressional Research Service
12