UI deal relies on selling government intangible assets

Part of the economic package that Congress will soon vote on (a $150 billion measure) includes not only an extension of the payroll tax cut but also an extension of unemployment insurance (UI) benefits. (For more info, see the Conference Report for entire package.) The UI portion of that deal will be paid for using revenues from sale of a government intangible asset, specifically the auctioning of broadcast spectrum. According to the write up by the Democratic staff of the House Energy and Commerce Committee:

The legislation gives the Federal Communications Commission (FCC) the authority to pay TV broadcasters for underutilized broadcast spectrum and resell it at higher prices to wireless companies to meet the growing spectrum demands of smartphones and tablets. This provision is expected to make a large band of prime spectrum available for auction, raising over $25 billion. The bill provides $7 billion in auction proceeds and spectrum worth $2.75 billion (called the “D Block”) to a new “First Responder Network Authority” to build a broadband network for police, firefighters, emergency medical service professionals, and other public safety officials. A key provision in the legislation authorizes the FCC to create guard bands in the broadcast spectrum auctioned to wireless carriers that can be used for innovative unlicensed uses like Super WiFi.

What to do about this underutilized spectrum has been a controversial issue for some time. Broadcasters wanted to make sure they didn’t have to give up spectrum they were using (and were adequately compensated). Wireless companies want to be able to buy most of that freed-up spectrum. Tech companies want to make sure it would be available as unlicensed spectrum for Wi-Fi usage. Public safety officials wanted to make sure they had access to spectrum for emergency communications systems. (For a quick over view, see the stories in The Hill, the New York Times, the Wall Street Journal, and GigaOM; for more in-depth, see the ongoing coverage in the Benton Foundations newsletter.).
The fight over selling over all of the spectrum and preserving some of it as unlicensed “white space” for Wi-Fi type applications is of special interest. It highlighted the conflicting roles of government assets: maximize revenues to the government or utilize those assets as essentially a subsidy to promote innovation. It also raised a question about how we think about and manage government intangible assets. Technically, this part of the broadband spectrum is not a government asset, as it was already allocated to the TV broadcast companies. The government will have to buy back the spectrum first in order to re-allocate it. Had the issue been approached as a issue of the long term management of an important intangible asset, the original allocation process might have been structure differently.
As I’ve argued before, we need to do a better job of understand our government intangible assets. With the deal now cut, maybe an after-action analysis is in order. Such an analysis might help us learn from of this experience as to how to better manage these assets.


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