Brattle Economist Coleman Bazelon Finds that Spectrum Auctions under the Draft Mobile Broadband Enhancement Act of 2011 will Generate $64 Billion in Revenue
A report issued today by Coleman Bazelon, a principal of The Brattle Group, finds that over ten years the spectrum proposed to be auctioned under the Draft Mobile Broadband Enhancement Act of 2011 is likely to generate approximately $64 billion in revenue, net of all reallocation and clearing costs.
The National Broadband Plan (NBP) emphasizes that 500 MHz of new commercial spectrum allocations are desperately needed in the next ten years. The NBP and National Telecommunications and Information Administration (NTIA) have identified over 2,000 MHz of radio spectrum as potential candidates for spectrum reallocation. Based on these targeted bands, the Draft Mobile Broadband Enhancement Act of 2011 identifies 470 MHz of spectrum to be reallocated for commercial wireless broadband uses. The draft legislation would have the Federal Communications Commission (FCC) assign licenses for this spectrum through a series of six auctions, scheduled at 18 month intervals over the next nine years. In the report, Dr. Bazelon evaluates each of the six auctions and finds that the net return of each varies between $5 billion and $21 billion. As proposed, the auctions would collectively introduce 470 MHz (444 MHz of AWS-1 equivalent spectrum) and generate approximately $100 billion, with a deduction of $6 billion for expected exclusion zones for reallocated federal spectrum and expected clearing costs of about $30 billion, thereby resulting in net revenue of $64 billion. “In the past, the FCC has been successful in designing auctions which garner close to the full value of the spectrum,” Dr. Bazelon said. “Given that the draft legislation addresses many issues that influence spectrum value, resolving them in favor of higher valuations, it is likely that future well designed FCC spectrum auctions will generate receipts similar to the full value of spectrum.”
Dr. Bazelon’s report, “Expected Receipts From Proposed Spectrum Auctions,” was sponsored by the Wireless Broadband Coalition and is available for download below.
