GAO-13-78R, Spectrum Management: FCC's Licensing Approach in the 11, 18, and 23 Gigahertz Bands Currently Supports Spectrum Availability and Efficiency, November 20, 2012

FCC has generally ensured the availability of licenses and encouraged the efficient use of spectrum through its various regulations. Specifically, stakeholders noted that the Commission's rules on frequency coordination, buildout requirements, and operating requirements each ensure availability of licenses and encourage efficient use of spectrum. First, FCC's requirement to coordinate new links with existing links protects incumbent licensees from interference. Under this requirement, applicants must resolve potential conflicts raised by incumbent licensees by, for example, designing links that avoid interfering with the signals of incumbent licensees. These procedures ensure availability of licenses by allowing the applicant to acquire new links and promote efficiency by increasing overall use of the spectrum. Second, FCC's buildout rule requires licensees to construct and activate links within 18 months; a licensee that fails to meet this requirement can lose its license. This promotes spectrum availability by helping to ensure that unused spectrum is again made available to other applicants. This also promotes spectrum efficiency by pushing licensees to build out their systems and begin using the spectrum in a timely manner. Third, FCC's operating rules require a licensee to cancel a license if it is not used for any 12-month period after construction, a rule that promotes availability by again helping to ensure that unused spectrum is available to other applicants and promotes efficiency by requiring use of the spectrum. Most industry stakeholders we interviewed told us that as a result of these steps, spectrum is generally available in the 11, 18, and 23 GHz bands. Similarly, FCC officials stated that based on feedback from industry stakeholders, they believe spectrum is generally available in these bands, noting that the Commission almost never rejects applications for licenses in these bands. Further, most industry stakeholders stated that FCC's approach generally encourages efficient spectrum use, although some stakeholders asserted that this licensing approach leads to the inefficient use of spectrum. However, FCC officials stated that the FCC's process encourages firms to cancel unused or underutilized licenses.

Radio-frequency spectrum is a natural resource that is used to provide an array of wireless communications services critical to the U.S. economy and a variety of government functions, such as scientific research, national defense, homeland security, and other vital public safety activities. As new spectrum-dependent technologies and services are brought to market and government users develop new mission needs, the demand for spectrum continues to increase and additional capacity will be needed to accommodate future growth that cannot be addressed through more efficient use of wireless technologies. A primary driver of the increased demand for spectrum has been the significant growth in commercial wireless broadband services, including third and fourth generation technologies that are increasingly used with smart phones and tablet computers. To accommodate this growth, common carriers, such as cellular phone companies and other telecommunications firms providing communication services to the public, often rely on wireless methods, such as fixed point-to-point microwave service, to transmit data.

The Federal Communications Commission (FCC)—an independent agency that regulates spectrum use for commercial and other nonfederal users—manages spectrum through allocation and assignment. Allocation involves designating bands of spectrum for specific types of services or classes of users, such as for commercial or government use. Assignment provides a license to a specific entity, such as a wireless company, to use a specific portion of spectrum. To facilitate the use of point-to-point communications, FCC has allocated spectrum for microwave connections in the 11, 18, and 23 gigahertz (GHz) (common carrier) bands, as well as in a number of other microwave spectrum bands. In recent years, use of microwave links has increased significantly, particularly as a cost-effective alternative to traditional wireline technologies, such as fiber optics. Given the increasing demand for and importance of these types of links, a few industry stakeholders have expressed concern about the availability of additional spectrum and whether FCC’s policies reflect the value of this spectrum.

In the Middle Class Tax Relief and Job Creation Act of 2012, Congress directed us to examine FCC’s licensing approach in the 11, 18, and 23 GHz bands. Consequently, we examined (1) the steps FCC has taken to ensure availability of common carrier licenses in the 11, 18, and 23 GHz bands and the extent to which these steps provide incentives for efficient use of this spectrum, and (2) how alternative approaches to assigning licenses in these bands might affect both revenue generated by the government and spectrum efficiency.

For more information, contact Mark L. Goldstein, (202) 512-2834 or goldsteinm@gao.gov .

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