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CHIPS Articles: Spectrum Auctions Raise Money and Incentivize Innovation

Spectrum Auctions Raise Money and Incentivize Innovation
By Guenever Aldrich, PE and Wilfredo Lopez-Morales - April-June 2016
We often hear how natural resources drive economies, such as clean water, fossil fuels, minerals and metals.

What we don’t usually hear is that the electromagnetic spectrum is also a valuable and finite resource. Many products that we take for granted and use every day, such as cell phones, tablets, and even modern hearing aids, use radio-frequency (RF) spectrum. RF spectrum is a requirement for today’s civilian, commercial and industrial enterprises that rely on broadband connectivity.

A massive increase in RF spectrum demand over the last 25 years is making this resource, once taken for granted, now scarcer and even more valuable than before. The wireless broadband industry has experienced such increased demand that it has been seeking additional bandwidth to accommodate the needs of its current, and potential, client base.

One method of acquiring additional spectrum has been through a government auction. A spectrum auction is the process whereby a government uses an auction system to sell licenses to transmit signals over specific bands of the electromagnetic spectrum. Like auctions of any product, it offers for sale resources to those who value them the most (i.e., the highest bidder). In such instances, the government generates needed revenue from the process.

In 2012, Congress authorized the Federal Communications Commission (FCC) to conduct the Advanced Wireless Services Three (AWS-3) auction, putting 65 megahertz up for bid. AWS-3 concluded in early 2015. It was forecasted to bring in between $10-15 billion; instead, it raised over $40 billion, further demonstrating an enormous escalation in value.

The U.S. Government has conducted other spectrum auctions in the past, but AWS-3 far surpassed previous results. In fact, this auction’s success ensured the likelihood that others would follow; and, in 2015, Congress instructed federal agencies to identify additional spectrum for auction. The Navy and Marine Corps are now examining the feasibility of vacating or sharing other spectrum bands, which is the first step in an auction process. Current law in the United States protects federal systems impacted in auctioned bands by guaranteeing reimbursement of costs required to transition to comparable spectrum, so no existing operational capability is lost.

Military systems are increasingly spectrum dependent, and the changing spectrum landscape is creating significant operational challenges. These challenges will force the Defense Department to innovate and develop better ways to utilize spectrum. The Department of the Navy is investing in new technologies and developing updated policies that will facilitate maximized spectrum efficiency, including improving the ability to coexist with other systems in the same band, and increasing radio frequency agility.

Spectrum auctions have become a reality for the U.S., as they have in countries around the world, including Canada, India, Slovakia, and Sweden. A successful auction provides much needed revenue to the government and fosters growth for the wireless industry, which in turn helps move the economy forward. As the proverb goes — “Necessity is the mother of invention” — and a new wave of wireless innovation is well underway.

Guenever Aldrich is the DON Spectrum Relocation Lead for the Department of the Navy Chief Information Officer. Wilfredo Lopez-Morales is the Deputy Branch Head for Electromagnetic Environment Effects (E3) /Spectrum Policy and Programs in the office of the Deputy Chief of Naval Operations for Information Warfare (OPNAV N2N6F15)

NOAA maintains two primary constellations of environmental satellites: polar-orbiting (POES) and (GOES) geostationary satellites (GOES). They are impacted by the Advanced Wireless Services Three (AWS-3) auction. NOAA image.
Lance Cpl. Travis DeShazo, a rifleman assigned to Company E, 2nd Battalion, 4th Marine Regiment, 1st Marine Division, assembles a RQ-11B Raven unmanned aircraft system (UAS) to establish the location of notional enemy units aboard Marine Corps Air Ground Combat Center, Calif., Dec. 10, 2015. The Marines employed the Raven UAS as part of Steel Knight to gain a better understanding of it and develop a higher proficiency of what it takes to operate as a more effective ground combat element of the I Marine Expeditionary Force. U.S. Marine Corps photo
A member of the Marine Corps Special Operations Command (MARSOC) launches a RQ-20A Puma unmanned aircraft Aug. 12, 2015 during an exercise near Marine Corps Base Camp Lejeune, N.C. The U.S. Coast Guard and MARSOC joined forces to demonstrate the ability to launch and recover the Puma, RQ-12A Wasp IV, and InstantEye vertical takeoff and landing UAS from the Coast Guard’s smallest boats. These battery-powered, hand-launched systems provide real-time, day and night reconnaissance, surveillance and target acquisition. U.S. Navy photo
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