Senate bill would allow FCC to test radio frequency auction awards

Electronic News, June 8, 1992

WASHINGTON--Sen. Daniel Inouye (D., Hawaii), chairman of the Senate Commerce Communications subcommittee, proposed allowing the Federal Communications Commission (FCC) for the first time to test auctioning off some radio frequency allocations to the highest bidders.

He said he intends to introduce a bill to allow the FCC to run a three-year test beginning in Fiscal 1993 to conduct competitive bids for frequency licenses encompassing up to 30 megahertz of spectrum. Based on this test the FCC would then be authorized, but not required, to use competitive bidding after Oct. 1, 1996, for most licenses.

Some industry watchers believe the auction process might speed FCC awarding of licenses for emerging new markets in wireless personal communications systems and services, wireless data networks, and integrated voice-data mobile networks. Those observers fear new technologies could be hung up in lengthy FCC licensing reviews if the present bureaucratic and legal processes were used.

While the FCC tests would primarily involve service providers and users, a faster ramp up in new technology systems would benefit equipment manufacturers and their suppliers. A bevy of computer and telecommunication gear producers are actively involved in the FCC study to assign new frequencies for new advanced technology systems. Sources believe if a new law allowed the FCC to auction off licenses, some of the projected experimental advanced technology frequencies could be assigned by competitive bidding. To offset worries such licenses would only be awarded to well-financed entities, however, the FCC also has a program called "Pioneer's Preference," ostensibly to award licenses to technological innovators.

The proposed bipartisan legilation drafted with Sen. Ted Stevens (R., Alaska) does not specify what frequencies or telecommunication services the FCC would earmark for the projected three-year auction test. The proposed bill does spell out that "not less than 50 percent of frequencies (in the test) shall be located below 3 gigahertz."

The Bush Administration, which has pressed for such frequency allocation auctions, immediately welcomed the proposed legislation. Thomas Sugrue, acting assistant Secretary of Commerce, said "Competitive bidding (for allocations) should be used for the entire spectrum assignment process, but we recognize that the experimental process set out is a better way to assign this valuable resource, other than lotteries or comparative hearings.