NTIA Says Cost of Clearing AWS Spectrum Will Be Below $1 Billion

Traditional telecom carriers, and possibly new market entrants -- from cable operators to Internet companies like Google are likely to use the spectrum for wireless broadband as well as for traditional wireless phone service. The spectrum is located at 1710-1755 MHz and 2110-2155 MHz.

The next step must be taken by the FCC, which has yet to schedule an auction. Sources said Wed. that the FCC would need to act quickly for a June AWS auction, since while the Commission largely has auction rules in place, public notice process and other auction preparations usually take at least 4 months.

The Dept. of Defense, as expected, has the highest estimated relocation costs at $289 million; the Navy has the largest share. The Dept. of Justice estimated its costs at $264 million, with the FBI reporting the highest relocation costs. Dept. of Energy costs were reported at $174 million. Dept. of Homeland Security cost estimates were $91 million and FAA $58 million. The Forestry Service has the most frequency assignments to be relocated, at 578, but its estimated costs were only $17 million. DOE reported 596 frequency assignments that have to be moved -- the most for any department -- more than involving the Western Area Power Administration.

NTIA Dir. Michael Gallagher told us Wed. there probably are several reasons for the lower estimate, including “more numerous, lower cost” technologies now available to the agencies, as well as a common purchasing approach. Actual costs could be higher; the published numbers reflect costs that are legally reimbursable, he said. The relatively low costs eliminate any danger that the pending auction wouldn’t cover relocation costs, Gallagher said; a probably substantial surplus would go to reduce the deficit.

An industry source said relocations costs were determined by matters such as the amount of equipment that must be retooled and the location of the spectrum the agencies will now use. For example, relocation to higher frequencies like 8 or 9 GHz tends to be more expensive. “Relatively speaking, based on how much the auction is expected to raise, [the estimated cost] does seem low,” the source said. “It looks like it will be lower than what they're expecting to raise. [However,] if you compare it to other relocation costs, it does sound high.”

Gallagher said the AWS auction will be timely, coming as national wireless carriers begin to roll out 3G offerings. “In a period where unlicensed spectrum is the news of the day, the opportunities for growth and innovation in the licensed space have never been greater,” he said. “Cingular is first in the world -- not 16th, first -- in its deployment of HSDPA, which is the very highest speed GSM technology in the world.” CDMA operators like Verizon are reporting even faster throughput speeds through EVDO Rev. A, he said.

“It’s great news for the Treasury because the costs of moving the government [users] are lower and the net that is left over is available for deficit reduction,” Gallagher said. “It’s great news for consumers because new mobile services are going to be available.”

“The costs and timelines submitted to the FCC pave the way for an FCC auction of some of the nation’s most valuable airwaves,” TIA said. “TIA identified this issue as a priority with Congress last year and has continued to work with policy-makers and Dept. of Defense spectrum users to emphasize the critical importance of making this spectrum available.” T-Mobile said the release of the report should guarantee that “the govt. stays on track to deploy additional spectrum for broadband services.” - Howard Buskirk