CITS Policy Statement on Spectrum Auctions


Craig A. Johnson

Curt's ideas are some of the more innovative and realistic to come
down the pike on this very difficult subject.

Note his caution against making 'a devil's deal' in rushing to sell
the airwave spectrum "off for all time in the name of paying off the



Date:          Wed, 31 Jan 96 14:19:35 EST
From:          "W. Curtiss Priest" <•••@••.•••>
Subject:       CITS Policy Statement on Spectrum Auctions

Archive: CITS Policy Statement on Spectrum Auctions

                         W. Curtiss Priest, Ph.D.
                 Center for Information, Technology & Society
                             466 Pleasant Street
                              Melrose, MA  02176
  Internet: •••@••.•••, Voice: 617-662-4044, FAX:

                   This document may be freely redistributed

                               January 31, 1996

                        The Will to Create the Future:

                                Special Topic

        "Spectrum Allocation, Auctions and Intergenerational Equity"

In observing the current debates about spectrum, ownership and
auctions it is imperative that we recognize a consideration that
appears absent from the current discussion.

In public policy microeconomics we recognize the importance of
"intergenerational equity" -- this is the principle that no one
generation has the right to impose costs on other generations.

Currently, we are but a single generation that has developed such a
high federal debt that we search for sources of funds to pay off this
debt.  One source of funds has become the auctioning of "public
spectrum" to private holders.  (We recognize the "allocative
efficiency" of using auctions as a means of allocating the use of
scarce resources, laud this use, but question how the resulting funds
should be used.)

Regardless of the urgency to transfer federal debt to taxes on
communications (which is what private ownership amounts to -- because
the cost of the license is passed back to the communications user), we
do not, from the standpoint of intergenerational equity, have the
right to take these "public goods" -- the limited airwave spectrum and
make a "devil's deal" in selling it off for all time in the name of
paying off the debt (or in attaining any other public good) that
inures to only one, or a limited few, generations. This action is
simply unfair and thus unconscionable.  Are the people of any other
generation less deserving than we?

While it may appear that 5 and 10 year license periods may
augur against an intergenerational concern, we note that these
periods are almost wholely administrative in nature.  Only, say
in the case of PCS, if there is undue interference or a failure
of "build out" might the license be challenged.  Even broadcast
licenses with more strenuous "must carry" requirements are hardly ever
challenged, and if so are rarely successfully challenged. Therefore,
we assume that these auctioned licenses are, indeed, licenses in
perpetuity to the owner.   The $7 billion dollars received in PCS
auction revenues are a one time payment -- to the coffers of this
generation.  Only administrative fees are charged at renewal.

Further, Priest & Komoski have presented the concept of using
lower frequency bands (including the VHF-UHF band slated for
auctioning once broadcasters move to new, HDTV bands) for providing
nationwide digital universal service.  With a $100 PC card and a small
antenna, an entire community of 10 miles radius can be put on a
community local area network operating at about 300 Mbps. [MacArthur
Foundation funded Workshop held at the Council for State School
Officers, July 7th, 1995, attended by many included in this mailing.
At the Workshop the frequency hopping technologies of Metricom and
other wireless providers was discussed as evidence that such a $100
card was not only economically feasible, but technologically

Some people talk about the use of newer unlicensed spectrums in the
1800 Mhz and 5 Ghz bands as the NII wireless Band.  But our research
shows these frequencies, especially 5 Ghz to be useless to achieve
universal service because of the high costs in creating "cells" to
deal with the extremely short distances these bands afford when there
are obstacles such as walls and buildings.  The higher frequencies are
very unfriendly in creating a true Universal NII Band without
deploying expensive cell infrastructure.  With physical obstacles
these frequencies are limited, only, to 10's or 100's of feet.

Therefore we recommend:

    1.  Funds received from auctioning the "public spectrum"
        must be placed in trust for all future generations from
        which to benefit.  This trust will pay interest, and it
        is the interest on the trust funds that may be used
        by any current generation for any use they deem suitable. This
        interest may be used to reduce the federal deficit, to fund
        technology in schools, or whatever "public good" disbursement
        is deemed deserving.

    2.  Either:

        a.)  not auctioning the current VHF-UHF spectrum and
        using this to create a truly affordable form of digital
        universal service (because the character of these
        frequencies are very friendly to a universal digital
        service design that can employ a low-cost wireless
        card.) or,

        b.)  auctioning the spectrum with the interest received
        from the UHF-UHF trust fund to be applied, with means
        testing, to providing universal digital service for our

CITS welcomes comments to this policy statement.  Please address
them to W. Curtiss Priest at •••@••.•••

Thank you.


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