A Grab for Riches in the Sky

In the land grabs of the 19th century, businessmen bought seemingly worthless land, then, deeds in hand, disclosed the hidden riches of gold, oil or water. Today, broadcasters and telecommunications companies are attempting a similar grab in Washington, lobbying the Federal Communications Commission and the Congress for exclusive control of the remaining unused portions of the nation’s increasingly crowded and scarce airwaves. Federal deeds that grant the right to transmit a signal through a defined slice of the spectrum have become the most valuable “real estate” of the new century.

As anyone who has tried to use a cell phone in a crowded airport or sports arena knows, the airwaves are jammed with voice calls, and the density is expected to increase exponentially with the roll-out of what is known as “3G,” or third-generation, wireless. This advance will bring high-speed wireless Internet access to laptop and palmtop computers.

3G technologies, including palmtop computers that can be used also as videophones, are already coming out in Europe and Japan. They are considered the one high-tech area in which the United States is in danger of falling, as AT&T; puts it, into “some sort of Third World status in terms of technology.”

The heart of the problem is that the United States is using only half as much of the spectrum for 3G technologies as Europe and Japan. To resolve the problem, the FCC had planned to auction off most of the remaining spectrum by Sept. 1. Now, however, the FCC is considering delaying the auctions until November to resolve proprietary claims that could ratchet down auction proceeds. The FCC’s necessary delay should ensure that the public fully profit from the auction of the spectrum. Industry analysts say that if the auctions are open and free of prior claims, they could bring $25 billion into the Treasury, as opposed to only $3 billion if the claims are not sorted out.

The most politically powerful claimants are the broadcast networks, which were given leases on part of the spectrum in 1997 to roll out digital TV--basically a beefed-up, high-definition version of current television. Broadcasters now say they don’t need all of that spectrum for digital TV--which is far behind schedule anyhow--and thus would be willing to sublease unused portions to the wireless companies that win the auction rights to transmit signals in various geographical regions.

The FCC says it does not have the authority to compel broadcasters to return unused spectrum, but in fact the Radio Act of 1927 gives the agency the authority to restructure any licensing agreements that fail to serve the public interest. The FCC should use its authority to ensure that broadcasters not be allowed to gain hundreds of millions of dollars in profits from selling airwaves they don’t own.

Between now and November, the FCC should do everything in its power to see that the spectrum auctions are not rigged to generate undue profits for networks or to allow a single wireless company to dominate the new spectrum. All entrepreneurs with good ideas should have a fair chance to stake a claim to the new riches in the skies.