New Report Says Federal Users Should Pay Fee for Spectrum (2/6/14)
Thursday, February 06, 2014 | Comments

The Brattle Group released a report analyzing the impact of different spectrum sharing schemes and proposed implementing a spectrum-based fee that would incentivize federal users to adjust their use to more efficiently allocate this scarce resource and reduce costs.

Verizon funded the report, which said imposing a spectrum-based fee would incentivize federal users to use spectrum more efficiently.

As demand for more complex wireless technologies increases, so does the demand from both commercial and government users for spectrum suitable for wireless broadband services. Sharing between federal and commercial users will be a key component of the strategy to meet increasing demands for spectrum.

The authors identified several different types of spectrum sharing proposed or in use, including geographic sharing, predictable and random temporal sharing, coordinated sharing and rule-based sharing.

The report said policymakers and market participants must have a clear understanding of how the value of spectrum to individual users is affected by spectrum sharing. To illustrate the impact of sharing on spectrum value, the authors used a series of examples, both hypothetical and grounded in Commerce Spectrum Management Advisory Committee (CSMAC) recommendations. CSMAC advises the National Telecommunications and Information Administration (NTIA).

For instance, the report said that for the 1.695 GHz – 1.71 GHz band, excluding 12 percent of the population in the currently proposed exclusion zones could reduce the value of the band by 16 percent, but relocating some of the exclusion zones from urban to rural areas would reduce the value of the band by only 7 percent.

According to the report, federal users have little incentive to use spectrum efficiently, because they don’t internalize the costs associated with their spectrum use. The authors proposed that the appropriate federal fee should be based on the commercial value of spectrum. By tying the fee to spectrum's commercial value, federal users would incur the foregone economic value or opportunity cost of the spectrum in deploying these federal services.

"The spectrum fee we have proposed will create incentives for efficient spectrum use, in part by shining a light on the costs of spectrum use by federal users," said Coleman Bazelon, a Brattle principal and co-author of the report. "Additionally, the fee-setting process that we have proposed should generate good, accurate information about the value of federal spectrum use — information policymakers can use in more direct spectrum management decisions."

Bazelon and Associate Giulia McHenry authored the report, with contributions from Brattle research analysts Maura Coughlin and Katie Lee. The report, "Spectrum Sharing: Taxonomy and Economics," is available for download at

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