As Steve said in the interviews, it's great to have the President of the United States, ITU (an arm of the United Nations), FCC, NTIA and policymakers support our industry's efforts to get more spectrum. That's why we thought this paper would be helpful. It offers a fact-based analysis of what it would take to free up 120 MHz of spectrum, which would produce more than $33 billion in net proceeds. While the benefit for the U.S. Treasury is obvious, the 120 MHz of spectrum would help:
- Fulfill the FCC's National Broadband Plan.
- Allow our member companies to spend billions of dollars to purchase the right to use this spectrum.
- Enable wireless providers to continue to develop innovative new services and products for U.S. consumers and businesses.
As we explain the paper, we conservatively estimate that the voluntary broadcast incentive auction would gross $36 billion. CTIA/CEA found that incentive auctions – when you look at the entire continental U.S. – would only need broadcasters to participate in the top 30 markets. In those markets, broadcasters would be paid to exit. Outside those top markets, no other stations would need to give up their spectrum.
So here's how we came to the $33 billion net for the U.S. Treasury:
- Analyzing the 13 past auctions, the paper concludes that auction of the spectrum could be valued at about a dollar per MHz-POP. This means that the auction revenues, and we’re being conservative, would be about $36 billion.
- Calculating the value of the broadcast stations that would need to be paid to exit, the value of those business enterprises are worth between $1.2 to $2.3 billion.
- Repacking some of the other broadcasters, to create a new core for broadcast television, give us 120 MHz of contiguous spectrum. That would cost about $565 million.
When you subtract #2 and #3 from #1, the net proceeds are around $33-34 billion.
Now these aren’t definitive numbers, the incentive auction for the broadcasters will set the actual clearing price, and the auction of the spectrum will set the amount of revenue for the federal government. But we thought this would be helpful for people to recognize just how much this incentive-auction process could provide for the U.S. government.
Remember that spectrum is what fuels our industry's "virtuous cycle" of innovation and competition. After our members purchase it, then our industry’s ecosystem upgrades their offerings through faster networks, new devices and new apps and content.
We believe this study will arm Congress with the facts it needs to assess, and ultimately pass, incentive auction legislation. We are committed to working with Congress to enact that legislation, and to working with the FCC to ensure we free up this valuable spectrum as soon as possible.