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Sharing Federal Spectrum - New Report

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Last week The Brattle Group released a Verizon-funded report entitled “Spectrum Sharing -- Taxonomy and Economics”. The authors were Coleman Bazelon and Giulia McHenry.

Of particular interest to your blogger was Section VII. Facilitating Sharing: Incentivizing Federal Users. Federal users currently pay a small fee that supports the costs of the NTIA spectrum office. But the fee structure is not well known and is about $150/NTIA assignment. An assignment might be a 25 kHz channel in one city, a communications satellite, or a nationwide system. The fee is the same as NTIA has never been able to work out with the IRAC a better system.

Here is the description of Section VII from the executive summary of the report:

It is widely accepted that until Federal users internalize the costs associated with their spectrum use, they have little incentive to use spectrum more efficiently or support proposals to share their spectrum. If federal users paid for spectrums use, they would internalize the cost associated with holding spectrum assignments that prevent other productive uses of the frequencies.

Recognizing the costs of spectrum through a federal fee would incentivize federal users to adjust their usage to reduce costs. While there are limitations to a fee-based approach, it would require government users to incur some cost for spectrumusage. By imposing a spectrum based fee, the cost of spectrum based services for federal users will reflect the use of this scarce resource. The question is: what should the fee be tied to?

Consistent with the principle that government spectrum users should consider the forgone economic value of spectrum deployed for their services, we suggest that a federal user fee should be based on the commercial value of spectrum. By tying the fee for federal spectrum to spectrum’s commercial price, federal users would be incurring the foregone economic value or opportunity cost of the spectrum in deploying these federal services. A fee based on the commercial value of spectrum would require that federal users at least acknowledge this opportunity cost of the spectrum use and publicly argue that the value of their use of the spectrum exceeds this opportunity cost.

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