The largest, most promising source of U.S. mid-band spectrum suitable for repurposing to mobile wireless use is the C-Band, a 500 MHz swath of mid-band spectrum (3.7-4.2 GHz band) presently allocated for the provision of satellite communications, say T. Randolph Beard, George S. Ford and Michael Stern of the Phoenix Center for Advanced Legal and Economic Public Policy Studies.
Satellite service providers, operating through the C-Band Alliance (“CBA”) consortium, have indicated that a large portion of this band could be quickly repurposed through a private sale, a proposal now being evaluated by the Federal Communications Commission.
Perhaps the most compelling argument for a private transaction is the CBA’s proposed timeline, the researchers argue. Assuming the FCC adopts, largely, the CBA proposal by year-end 2019, the Alliance claims it can conduct a private sale in the first-half of 2020 and clear at least 60 MHz for terrestrial operations in as little as eighteen months.
Is such a private sale in the public interest? The researchers say it is. “It makes sense for the government to allow the consortium to serve as an agent in conducting the sale, thereby ensuring the rapid and efficacious repurposing of the band,” they argue. “For many reasons, a public auction is a less desirable approach” than a public auction.
“While the government may increase its revenue through a public auction, it does so only at the cost of an outsized reduction in total economic welfare,” they say.
The satellite operators possess a significant information advantage over federal regulators with respect to how much spectrum can be repurposed, how much investment is required to accommodate the change, how to avoid interference problems, among other important considerations.
This private information and the rapid pace of redeployment are both valuable and warrant compensation. Payment for information and efficiency is not “unjust.”
Compensation to the agent (owners of the spectrum licenses) for its private information is efficient and not “unjust enrichment,” they argue.
Third, considering the possibility that the principal may demand compensation from the agent, any such compensation (i.e., a regulatory payment) should take the form of a fixed payment rather than a share of auction proceeds.
Fourth, while a public auction may be used to increase the government’s proceeds from repurposing the band, such enrichment is more than matched by a reduction in total economic welfare, they argue.
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