Most of the time, “there’s no such thing as a free lunch.” However, if a free lunch is offered, always accept! Such an opportunity exists for Congress right now, and next year, to auction access to the invisible airwaves managed by the federal government — airwaves that facilitate communication between phones, radios, and Wi-Fi devices, to name a few. These auctions offer a rare free lunch in public policy, serving as a powerful tool to spur innovation, generate substantial government revenue, and bolster the United States’s global dominance — all at no cost to the taxpayer.
Spectrum, the backbone of modern communication, is the range of electromagnetic frequencies used for transmitting data. As the demand for wireless services, be it mobile phones, Wi-Fi, or satellite communications, increases, the need for efficiently allocated spectrum does so, too.
The Federal Communications Commission has been auctioning spectrum since 1994. These auctions are a market-driven process in which companies bid for the rights to use specific frequency bands. The result? Tens of billions of dollars flow into the U.S. Treasury, and the most innovative companies in telecommunications are incentivized to maximize the potential of this finite resource.
In the digital age, spectrum efficiency is central to America’s technological and economic success. By allowing companies to bid for the spectrum they need, we ensure that those with the most innovative plans secure the resources necessary to bring cutting-edge technologies to market. The evolution of mobile networks from 3G to 4G and now 5G has been made possible by this very process. Each new generation of mobile technology requires more spectrum to deliver faster data speeds, lower latency, and support a growing number of connected devices.
The competitive nature of spectrum auctions drives companies to innovate, not just to meet but to exceed consumer expectations. The deployment of 5G, which is revolutionizing industries from healthcare to transportation, is a direct result of the nation’s spectrum management. Without access to the necessary frequency bands, the transformative potential of the next wave of technology will remain unrealized, and America will lose out as technical advancements are made in China.
Beyond innovation, spectrum auctions are a boon to the U.S. economy. The wireless industry is a cornerstone of economic growth, supporting millions of jobs and contributing trillions to gross domestic product. Spectrum auctions provide the foundational infrastructure upon which this sector thrives, enabling everything from smartphone connectivity to the Internet of Things. The ripple effects of spectrum are felt across the economy, driving growth in sectors far beyond telecommunications.
What also makes spectrum auctions important today is the revenue they generate for the federal government — revenue that comes without increasing taxes or the national debt. For example, the last time the FCC auctioned spectrum, it brought in over $81 billion. Next year, when the 2017 tax cuts expire, Congress will extend them. To go along with those extensions, Congress will be looking for some added revenue. A spectrum auction perfectly fits this need by providing revenue and adding economic growth.
Spectrum auctions are also a strategic asset in America’s competition with China. As China seeks to expand its influence through state-controlled technology giants such as Huawei, the U.S. must ensure that its companies remain at the forefront of global innovation. Spectrum is the battlefield on which this competition is fought.
China’s centralized allocation of spectrum contrasts sharply with the U.S. model. While China directs its spectrum resources to state-backed firms, the American system rewards those who can make the most efficient and innovative use of this finite resource. This difference ensures that spectrum is allocated to those who can use it most effectively, enabling the U.S. to maintain its edge in the development and deployment of new technologies, from 5G and beyond.
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Spectrum auctions are a rare policy triumph — one that drives innovation, fuels economic growth, strengthens America’s global standing, and raises significant government revenue, all without the need for additional taxpayer burden. It is a wonder that the Biden-Harris administration ignored this opportunity. But it is tailor-made for former President Donald Trump to pick.
As we look to the future, the continued success of spectrum auctions will be critical in maintaining America’s leadership in technology and ensuring that the U.S. remains a beacon of innovation and economic prosperity. Auctioning additional spectrum is essential to the continued strength and security of the nation.
Paul Winfree, Ph.D., who was the director of budget policy and deputy director of the White House Domestic Policy Council during the Trump administration, is president and CEO of the Economic Policy Innovation Center.
