Economists Say Govt. Agencies Must Pay for Spectrum

“The public sector is going to have to pay for spectrum the same way the police dept. pays for its patrol cars,” said Lawrence White, prof. of economics at N.Y.U.: “If [the govt.] wants to build a new police station they have to buy the land or rent the land. This is just another resource that needs to be paid for.” White said while public safety communications may be considered “priceless,” agencies don’t necessarily need to own the spectrum. Inefficient spectrum use costs the U.S. economy billions, he said.

“You may be able to rent spectrum,” White said. “You may be able to have interruptible spectrum that you can call on. The Defense Dept. owns some airplanes and it has a call on passenger airplanes at other times so that it doesn’t need to own all of the resources.”

But Merri Jo Gamble, DoJ spectrum mgr., said many local first responder agencies already hold bake sales and such to buy gear. She asked if they now should have to pay for their use of spectrum, too, and if that would boost state and local taxes. Gamble warned that assessing the value of spectrum to the govt. and economic return versus outlays is tough. “The responsibility to produce results may not necessarily be based on, or follow, sound economic principles and processes as understood and applied in the commercial business world,” she said. “Federal missions are not profit oriented nor typically quantified in monetary value.”

“There’s a place for free parkland” for govt. spectrum users, said Linda Moore, analyst for the Congressional Research Service. But she warned panelists that if they call 911 and an ambulance doesn’t arrive because the govt. had to give up spectrum, “you're going to be sorry this seemed like such a good idea.”

Ellen Goodman, assoc. law prof. law at Rutgers U., said the challenge is for the govt. to allow more use of spectrum -- to the point devices interfere with each other. Goodman compared interference complaints to accidents on crowded roads. “As we reduce that space of separation, we're going to have more accidents,” she said: “The engineers don’t like that, but that’s actually a good thing, to have more interference.”

“A lot of these issues keep circulating,” an industry source said: “It’s a big question mark whether the government is really going to reform the way it uses and owns spectrum. But this is one question the government is going to have to deal with sooner or later.”

David Sampson, deputy secy. of Commerce, noted potential advantages of forcing govt. agencies to set a value on the spectrum they use. He said the govt. must weigh such options as trading or leasing spectrum or making more use of spectrum carriers own. “Federal agencies are not affected by market forces,” Sampson said: “Federal spectrum management is an administrative process in which economic value plays little or no role. An incentives approach recognizes that spectrum has a measurable value and opportunity costs.” The U.S. must make more efficient use of spectrum, he said: “The U.S. is the global leader in radio technology and innovation, but to stay the leader we must stay ahead of the curve.”

Study of govt. spectrum was one recommendation of a June 2004 Spectrum Task Force report sought by President Bush. It said OMB and NTIA should “explore modifying agencies’ existing procedural and analytic guidelines” so govt. users “give more consideration to spectrum use in their capital planning and management processes to determine the most cost-effective approach to obtaining radiocommunication services.” NTIA is expected to report within a year on how the govt. is addressing this issue and is seeking advice from industry, academia and elsewhere.