Increasing Spectrum Efficiency Through the Secondary Market

With the release of the National Broadband Plan, there have been many discussions about what needs to be done in order to accommodate the need for additional spectrum given the finite supply of resources. While we are taking steps in the right direction as far as reallocating additional spectrum for commercial use through the radio spectrum inventory act, these bands are slated to be released over the next 10 years – in which time, the already overwhelming demand for bandwidth is expected to surpass the amount of spectrum available. However, these numbers do not necessarily take into account the inefficiency of existing spectrum use. In a recent interview with the Wall Street Journal, FCC Chairman Genachowski said, “We’ve got to work on spectrum policies that generate greater efficiency. For example, creating new and better markets for secondary markets in spectrum…Literally trading spectrum.”

At Spectrum Bridge, we understand the importance of utilizing a secondary market to help increase the efficiency of existing spectrum resources – there simply is not enough bandwidth for all of the applications consumers utilize on a day-to-day basis. In an effort to help bring more spectrum to the market and help to solve the spectrum scarcity issue, we filed a proposal with the FCC recommending two alternatives to the existing process of auctioning off licensed spectrum.
• The FCC lists the spectrum on an on-line secondary market exchange at the current market value, allowing for competitive bidding.
• The FCC proceeds with an auction as proposed, raising the minimum bid to the fair market value. Once the auction is completed, list all unsold licenses on an online secondary market exchange to allow for competitive bidding.

Both of these alternatives would promote access to unused and underutilized spectrum, consistent with the National Broadband Plan recommendations.

What’s the difference between holding a spectrum auction and placing it on an electronic exchange?

As the FCC stated in the NBP, “The goal of the FCC’s current secondary market policies is to eliminate regulatory barriers that might hinder access to, and permit more efficient use of, valuable spectrum resources.” While the auction process has been in place for many years, it is not necessarily the most efficient way to transact spectrum. The existing process hinders the creation of a competitive marketplace that an online exchange can address. In many cases, valuable spectrum resources that are auctioned off are not efficiently utilized after purchase, but may sit idle until the next spectrum auction. By taking spectrum off of the auction block, and placing it directly in front of buyers on an electronic spectrum exchange, a larger, more competitive buying pool is created.

To read our comments to the FCC regarding maximizing spectrum efficiency through the use of a secondary market for spectrum, click here.

- Joe Hamilla, COO