Spectrum Management and Special Funds
Spectrum Management and Special Funds
Linda K. Moore
Analyst in Telecommunications and Technology Policy
Resources, Science, and Industry Division
Summary
Congress has acted to create two special funds to hold the revenue of certain
spectrum auctions for specific purposes. These funds represent a departure from
existing practice, which requires that auction proceeds be credited directly to the
Treasury as income. The Deficit Reduction Act of 2005 (P.L. 109-171, Title III)
required the auctioning of licenses for spectrum currently used by TV broadcasters for
analog transmissions. It established the Digital Television Transition and Public Safety
Fund to receive this auction revenue and use some of the proceeds for the transition to
digital television, public safety communications, and other programs. The Commercial
Spectrum Enhancement Act (P.L. 108-494, Title II) established a Spectrum Relocation
Fund to hold the proceeds of certain spectrum auctions for the specific purpose of
reimbursing federal entities for the costs of moving to new frequency assignments. The
spectrum being vacated by federal users has been sold for commercial use. Passage of
the Spectrum Enhancement Act set a precedent in national policy for spectrum
management by linking spectrum auction proceeds to specific funding programs.
Among bills related to special funds that were introduced during the 110th Congress
are: the Spectrum Relocation Improvement Act of 2008 (H.R. 7207, Inslee): the
RESPONDER Act of 2008 (S. 3465, Wicker); and The Public Safety Interoperability
Implementation Act (H.R. 3116, Stupak).
Background
Radio frequency spectrum allocation policy within the United States is coordinated
primarily through the Federal Communications Commission (FCC) — for private use,
including state and local public safety wireless communications — and the National
Telecommunications and Information Administration (NTIA) — for federal use.
Spectrum management goals include balancing diverse concerns such as technical quality,
economic benefit, fairness, access, security, and global competitiveness. Many economic
models for providing the “highest and best use” for spectrum exist and have been tried,
both in the United States and worldwide. Spectrum for what is widely described as
“prime” frequencies (300 MHz - 3000 MHz)1 is judged by many to be the most
commercially desirable and is widely sought after at auction.2 The Congressional Budget
Office has estimated that auction proceeds for fiscal years 2007-2011 will total $28
billion.3
Spectrum Management and Auction Proceeds
Current broadcast and wireless communications technology requires the assignment
of specific frequencies to prevent interference among transmissions. Preventing
interference while fostering spectrum policies that promote public benefits and economic
growth have been key bulwarks of spectrum policy and management for the FCC since
its creation. Using auctions as a market-driven approach to spectrum allocation is a fairly
recent innovation. The Communications Act of 1934, as modified primarily by the
Balanced Budget Act of 1997, governs spectrum allocation and auction requirements in
the United States. It directs the FCC to hold auctions and to deposit the proceeds in the
general fund of the Treasury. Spectrum policy that designates auction proceeds for
specific uses is a departure from this requirement.
Whenever spectrum reallocation is desirable or necessary because of changes in
technology, spectrum value, or other factors, some mechanism — such as a trust fund —
might be considered a component of spectrum management and policy in order to
compensate organizations that cannot recover costs through pricing. On the assumption
that spectrum reallocation is an integral part of spectrum management, and recognizing
that relocation costs can climb to billions of dollars in some sectors, the need to create
reimbursement programs could be considered part of spectrum policy.
Spectrum Relocation Fund
The purpose of the Spectrum Relocation Fund is to create a mechanism whereby
federal agencies can recover the costs of moving from one spectrum band to another. The
interest in relocating federal users — and accelerating the process by assuring
reimbursement for the costs of moving — centers on valuable spectrum (relative to
auction prices for comparable spectrum in the United States and other countries) now
used by federal agencies, especially the Department of Defense. In particular, spectrum
in bands within the 1710-1850 MHz range is sought by wireless telecommunications
companies to facilitate the implementation of next-generation wireless technologies.
including high-speed mobile services (3G). After much study, the NTIA and the FCC,
aided by an Intra-Government 3G Planning Group, announced plans that would transfer
spectrum in the 1710-1755 MHz range from federal agencies and make it available to the
private sector through spectrum auctions conducted by the FCC. As part of the effort, the
1 Spectrum is segmented into bands of radio frequencies and typically measured in cycles per
second, or hertz; one million hertz = 1 megahertz (MHz); 1 billion hertz = 1 gigahertz (GHz).
2 Federal Communications Commission, Office of Plans and Policy, OPP Working Paper Series
No. 38, “A Proposal for a Rapid Transition to Market Allocation of Spectrum,” November 2002,
at [http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-228552A1.pdf].
3 Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2008-2017, p.
need was identified for new legislation that would permit affected federal agencies to
recover costs directly from these auction proceeds. To meet this need, in mid-2002 the
Department of Commerce proposed the creation of a Spectrum Relocation Fund. This
fund could provide a means to make it possible for federal agencies to recover relocation
costs directly from auction proceeds when they are required to vacate spectrum slated for
commercial auction. In effect, successful commercial bidders cover the costs of
relocation. To accomplish the NTIA and FCC goals required modification of the
Communications Act of 1934, to permit the agencies direct access to auction funds. This
was accomplished with the passage of the Commercial Spectrum Enhancement Act, Title
II of P.L. 108-494, in 2004.
Among key provisions of the act were requirements that the auctions must recoup
at least 110% of the projected costs,4 and that unused funds would revert to the Treasury
after eight years.5 Specific frequencies mentioned included not only the 1710-1755 MHz
band but also other federally used frequencies scheduled for reallocation and possible
auction.6 The Communications Act of 1934 was therefore amended to create a Spectrum
Relocation Fund within the Treasury to hold auction proceeds as designated.7 The fund
is administered by the Office of Management and Budget.8 Following procedures
required by the act, the FCC scheduled an auction for Advanced Wireless Services
(AWS), designated Auction 66, which was completed on September 18, 2006.9 The AWS
auction attracted nearly $13.9 billion in completed bids, substantially above the cost
established by the NTIA of almost $936 million for the move.10 The FCC ruled that
auction winners wishing to put acquired licenses to immediate use would in most cases
be able to share with current federal users under guidance from the FCC.11 At a
Washington, DC, conference in September 2007, John Kneuer, Director of the NTIA at
the time, told the audience that there were some “issues” on relocating federal users to
clear space for commercial license-holders.12
4 P.L. 108-494, Title II, Sec. 203 (a) (3) and (b).
5 P.L. 108-494, Title II, Sec. 204, ‘Sec. 118 ‘(d) ‘(3).
6 P.L. 108-494, Title II, Sec. 202 ‘(2).
7 P.L. 108-494, Title II, Sec. 204, ‘Sec. 118.
8 P.L. 108-494, Title II, Sec. 204, ‘Sec. 118 ‘(a).
9 “FCC’s Advanced Wireless Services (AWS) Spectrum Auction Concludes,” FCC News,
September 18, 2006.
10 See [http://www.ntia.doc.gov/osmhome/reports/specrelo/index.htm]. Viewed January 2, 2008.
11 “Coordination Procedures in the 1710-1755 MHz Band,” FCC Public Notice, FCC 06-50, April
12 Fourth Annual Conference on Spectrum Management, Washington, DC, September 17-18,
Digital Television Transition and Public Safety Fund
To facilitate the clearing of spectrum for revenue-generating auctions, the 109th
Congress included measures in a budget reconciliation bill13 to create a fund to hold the
proceeds from Congressionally mandated auctions of licenses in the 700 MHz band.14
The fund and disbursements are administered by the NTIA, which is directed in the act
to make specific disbursements. These are: $7,363 million from the auction of spectrum
licenses at 700 MHz is slated go to reduce the budget deficit15 as specified in H.Con.Res.
95; up to $1,500 million on coupons for households toward the purchase of TV set top
boxes that can convert digital broadcast signals for display on analog sets;16 a grant
program of up to $1,000 million to improve communications capabilities for public safety
agencies;17 payments of up to $30 million toward the cost of temporary digital
transmission equipment for broadcasters serving the Metropolitan New York area;18
payments of up to $10 million to help low-power television stations purchase equipment
that will convert full-power broadcast signals from digital to analog;19 a program funded
up to $65 million to reimburse low-power television stations in rural areas for upgrading
equipment from analog to digital technology;20 up to $106 million to implement a unified
national alert system and $50 million for a tsunami warning and coastal vulnerability
program;21 contributions totaling no more than $43.5 million for a national 911
improvement program established by the ENHANCE 911 Act of 2004;22 and up to $30
million in support of the Essential Air Service Program.23 The NTIA was authorized to
finance some of the programs through loans from the Treasury, secured by the expected
proceeds of the auction required by the law. Some of the funding provisions were later
amended as regards timing of payments and use of funds but the amounts were not
changed.24
Total legislated disbursements are slightly more than $10 billion, to stay within an
estimate of auction revenue of approximately $12 billion, as originally provided by the
13 The Deficit Reduction Act of 2005; P.L. 109-171.
14 “There is established in the Treasury of the United States a fund to be known as the Digital
Television Transition and Public Safety Fund.” P.L. 109-171, Sec. 3004 (3) “(E) “(i).
15 P.L. 109-171, Sec. 3004 (3) “(E) “(iii).
16 P.L. 109-171, Sec. 3005.
17 P.L. 109-171, Sec. 3006.
18 P.L. 109-171, Sec. 3007.
19 P.L. 109-171, Sec. 3008.
20 P.L. 109-171, Sec. 3009.
21 P.L. 109-171, Sec. 3010.
22 P.L. 109-171, Sec. 3011.
23 P.L. 109-171, Sec. 3012.
24 An overview of changes in grants to public safety communications is provided in CRS Report
RL33747, Emergency Communications Legislation: Implications for the 110th Congress; changes
in 911 programs are discussed in CRS Report RL32939, An Emergency Communications Safety
Net: Integrating 911 and Other Services; both reports are by Linda K. Moore.
Congressional Budget Office. There is no provision in the act for disbursing auction
proceeds beyond that amount, although all the “proceeds (including deposits and upfront
payments from successful bidders) from the use of a competitive bidding system under
this subsection with respect to recovered analog spectrum” are to be deposited into the
fund.25 Any additional disbursements from the fund would be treated as new costs by the
Congressional Budget Office and would score as needing to be offset. Absent new
legislation, the surplus in the fund will be deposited in the Treasury as general revenue.
The fund, however, has no sunset date. The auction, Auction 73, concluded on March
Legislation in the 110th Congress
The Public Safety Interoperability Implementation Act (H.R. 3116, Representative
Stupak) would establish a separate fund within the Digital Television Transition and
Public Safety Fund that would be used for public safety communications grants. This
separate fund would receive the proceeds remaining from the auction required by the
Deficit Reduction Act, after the payments required by the act had been made. It would
also receive up to half of the net proceeds of future auctions, although this share could be
reduced. In addition a total of $1.5 billion would be authorized for appropriations over
three years, beginning with FY2008. The grant program would be administered by the
NTIA with a board created for that purpose, with five members appointed by the Secretary
of Commerce. Grants would go for communications critical to public safety, with a
preference for programs providing broad-based interoperability. The bill was introduced
July 19, 2007.
The Reliable, Effective, and Sustained Procurement of New Devices for Emergency
Responders (RESPONDER) Act of 2008 (S. 3465, Senator Wicker) would create a First
Responders Interoperable Device Availability Trust Fund to provide grants to purchase
interoperable radios for the new public safety network proposed for some of the channels
being released in the transition to digital TV. The network plan is linked to the auction
of a remaining block of analog spectrum, known as the D Block. The RESPONDER Act
would place the entire net proceeds of the D Block Auction in the Trust. Additional funds
would come from a percentage of future auctions. Auction authority for the Federal
Communication Commission would be extended to assure the continuation of revenue-
producing auctions. The bill was introduced September 10, 2008.
The Spectrum Relocation Improvement Act of 2008 (H.R. 7207, Representative
Inslee) would require that federal agencies covered by the Commercial Spectrum
Enhancement Act provide detailed, publicly available information about the spectrum
relocation plans and timelines covered under the act. In particular the availability of
frequencies for shared use would be documented. To be eligible to receive payments
from the Spectrum Relocation Fund, agencies would be required to complete the
transition within a specified time period, to report on progress, and to comply with other
requirements stated in the bill.
25 P.L. 109-171, Sec. 3004 (3) “(E) “(ii).