More Spectrum, Please

The electromagnetic spectrum holds a unique place in the history of innovation. From the early days of radio to today’s artificial intelligence (AI) revolution, harnessing its power has provided immense technological and economic benefits for consumers and businesses alike. Yet, spectrum serves as both a catalyst for and a constraint on future progress. As a medium that fosters connectivity and communication, spectrum is the lifeblood of the information economy. However, partitioning and allocating various bands of spectrum has proven contentious and politically challenging.

Currently, the United States is in a pivotal position. While the authority of the Federal Communications Commission (FCC) to allocate spectrum through auctions expired in 2023, demand continues to increase. Mobile networks, internet connectivity, AI adoption, low-Earth orbit satellite constellations, and the government all vie for scarce bands of spectrum. Little consensus exists on how spectrum should be allocated to meet these competing demands, leading to uncertainty among commercial users and government agencies. This could lead to significant delays in deploying new 5G infrastructure as well as future technologies.

Without a clear, forward-looking strategy, the United States’ global leadership in wireless technologies is at risk, leaving China and other countries to establish international standards for new technologies. Not only does this slow the pace of innovation, it also has significant implications for equipment manufacturers who build at scale to the accepted global standards, putting U.S. producers at risk.

Allocating Spectrum: From Beauty Contests…

Managing access to the electromagnetic spectrum has been a regulatory struggle for the last century, from Pittsburgh radio station KDKA’s first radio broadcast in 1920 to the first spectrum auction for commercial non-broadcast use in 1994. Yet much of today’s muddled spectrum allocation landscape can be traced directly to the historical origins of the government’s role in controlling spectrum.

The emergence of radio demonstrated the economic value of the airwaves as well as potential problems from interference and conflicts over spectrum use. Early government interventions claimed to avoid anarchy on the airwaves and allocate frequencies to minimize interference through separation and rules on signal strength. The system established by Congress (and ultimately developed by the FCC) was a creature of its time, inherently a command-and-control system that allocated spectrum by government fiat. As defined in the Radio Act of 1927, spectrum was a public good to be managed by the government, which would allocate licenses based on “public interest, convenience, and necessity.” Politics, not markets, dominated spectrum allocation decisions, with government users like the U.S. Navy directly competing with commercial radio to access various spectrum bands.

As far back as the 1950s, Nobel prize-winning economist Ronald Coase questioned the efficiency of government spectrum policies and suggested establishing property rights in the different bands of radio spectrum that could then be auctioned off to the highest bidder. This would provide commercial radio operators with incentives to allocate spectrum to its most highly valued use, driven by market forces and prices. Scarcity, Coase asserted, did not necessitate federal ownership and control. Price signals and competitive bidding would ensure rapid allocation of spectrum to its most highly valued use.

Almost until the turn of the last century, decisions on spectrum use were made by bureaucratic discretion, with the FCC as the arbiter of which products or services gained access to the airwaves. Licenses were granted through “beauty contests,” wherein potential licensees pitched their proposals at comparative hearings before the FCC. Not only did the agency assign various bands of spectrum, it also authorized the specific purpose for which it could be used. This lack of flexibility limited innovation and, in some cases, locked in inferior technologies—such as the delay of cellular technologies in favor of less-valuable mobile radio services.

A former chief economist for the FCC argued in 2017’s The Political Spectrum that government command-and-control spectrum policies harmed consumers and significantly delayed technological innovation. Government failure—not market failure—plagued the effective use of spectrum in the United States for much of the 20th century. In fact, he suggests that government control of the early airwaves was not an attempt to create order out of chaos; rather, government policies were enacted at the behest of early commercial radio stations seeking to limit competition in the burgeoning market. Ignoring market-based spectrum use in favor of a government rationing of the airwaves made spectrum allocation decisions inherently political. As such, spectrum policy became a “devil’s playground” leading to inefficient economic outcomes that hampered innovation and the introduction of critical new technologies.

Radio provides a prime example of poor government allocation decisions. Despite the clear technical advantages of frequency modulation (FM) over amplitude modulation (AM), the political interests of AM broadcasters thwarted the launch of FM radio in the 1940s by encouraging the FCC to reallocate the initial spectrum used by FM broadcasters, making previously sold radios useless. Only in the 1960s did FM radio gain footing in the market at its new bandwidth. Similarly, although cellular technology was available as early as the 1940s, the FCC saw little future benefit, delaying its widespread adoption by 40 years.

…to Spectrum Auctions

Acknowledging the impediments to spectrum use, Congress began to evaluate new mechanisms for allocating different frequencies. Spectrum lotteries were introduced in 1981. However, problems emerged relatively quickly, with rampant speculation by many participants who saw lucrative opportunities to resell spectrum rights for a windfall rather than deploy new services.

In 1993, Congress granted the FCC authority to auction spectrum resources to the highest bidder, with the first auction held the following year. More than 100 countries followed the United States’ lead, and today, auctions are a vital tool to ensure that spectrum facilitates innovation and the deployment of new technologies. Through 100 of these auctions, spectrum has generated over $233 billion in revenue for the federal government while providing consumers with the benefits of 3G, 4G, 5G, and beyond. Relying on market forces rather than government rationing has facilitated the rapid deployment of the latest technologies.

Appropriate auction structure is essential to ensure optimal outcomes. America was the global pioneer in the move toward auctioning spectrum, and the FCC has become a world leader in auction design, working closely with economists, game theorists, and others to improve auction efficiency. In fact, two economists earned the 2020 Nobel Memorial Prize in Economic Sciences for championing the use of auctions to benefit “sellers, buyers and taxpayers around the world.” Through careful design and appropriate structure, auctions have proved effective at allocating spectrum to its most highly valued uses.  

Political inertia intervened once again in March 2023 when, despite the success of spectrum auctions, Congress allowed the FCC’s auction authority to lapse, leaving the United States at a distinct disadvantage in global competition. The current debate to renew auction authority reflects long-standing tensions over spectrum management, pitting competing interests against each other in a political quagmire that once again stymies innovation, much like regulatory impediments of yesteryear.

How Is Spectrum Used?

Spectrum management has moved well beyond audio and television broadcasting, with increased demand and competing uses complicating spectrum allocation. The FCC manages all non-federal spectrum allocations, including state and local governments, commercial, private, and public safety communications. This entails partitioning and allocating bands for competing services, such as mobile broadband, radio broadcasting, public safety, and satellites. Allocation can happen via auction, direct assignment, or designation for unlicensed use. Additionally, the FCC is authorized to enforce rules that prevent harmful interference. Many federal agencies also utilize spectrum for both military and civilian uses. The federal government holds 61 percent of the valuable lower mid-band spectrum (compared to 10 percent for commercial use). The National Telecommunications and Information Administration (NTIA) manages all federal uses and works closely with the FCC to allocate shared spectrum and address potential conflicts between government and commercial users.

In the United States, spectrum is currently managed using various allocation mechanisms. A significant amount of spectrum is reserved for the federal government for various uses, including military, public safety, air traffic control, and other critical national functions. Identifying and evaluating the use of spectrum currently controlled by the Department of Defense (DOD) and other federal agencies is an essential element of any reforms to improve spectrum allocation. Federal agencies resist any reallocation of mid-band spectrum, which they claim is necessary for radar, satellite, and military uses. Yet globally, following China’s lead, mid-band spectrum is being allocated to commercial use, putting the United States at odds with global standards. Not only does this impede U.S. leadership on spectrum issues, it also puts U.S. hardware companies at risk by limiting their market.

Licensed spectrum is allocated to specific commercial users, such as wireless carriers, through auctions or regulatory mandates. Licensed use provides exclusive rights to operate in the designated frequency bands.  

On the other hand, the unlicensed spectrum allows access to anyone who agrees to adhere to the technical rules and is essential because it supports technologies that carry much of the internet’s traffic. Unlicensed spectrum uses have grown considerably in the past decade, most notably Wi-Fi networks, Bluetooth communications, and smart devices that comprise the Internet of Things. One study found that unlicensed spectrum contributed $1.6 trillion to the U.S. economy in 2024, generating $392 billion in consumer surplus and $441 billion in producer surplus. While these uses represent a significant component of the information economy, their lower power levels and smaller ranges distinguish them from larger mobile wireless networks.

Finally, shared spectrum is another option that allows multiple users to access the same band under dynamic or coordinated rules, thereby enabling more efficient use of limited frequencies. The Citizens Broadband Radio Service (CBRS) is one model attempting to do this through sharing between the government (priority user) and commercial operators (secondary users).

Striking the appropriate balance among competing demands for spectrum has been a persistent challenge for the FCC that has historically yielded suboptimal allocations of important spectrum bands. To maintain global leadership, the United States can no longer rely on outdated rules and mandates for spectrum allocation. Different strategies are required to balance access by all of these users to maximize the spectrum’s benefits. As a study from the Information Technology & Innovation Foundation noted, “The question for spectrum policy is not whether uses in a particular band are good, but rather how to determine which arrangements of rights produce the most productive outcome among mutually exclusive goods.”

Getting Spectrum Policy Right

Spectrum policy reform is essential to promote innovation and maintain global leadership in deploying new technologies. According to the NTIA, “The United States needs a comprehensive strategy to modernize spectrum policy and make the most efficient use possible of this vital national resource.” The following reforms may facilitate more robust spectrum management that facilitates innovation and economic growth:

1. Permanent Reauthorization of FCC Auction Authority with a Pipeline
   Given the demonstrable efficiencies associated with auctions, Congress should pass a long-term reauthorization of the FCC’s auction powers to provide regulatory certainty for investors and innovators alike.
2. Reallocate Underused Federal Spectrum
   The federal government controls over 60 percent of mid-band spectrum. Agencies must be incentivized to relinquish underutilized bands for higher-value commercial or shared uses. Federal agencies, particularly the DOD, continue to control valuable spectrum bands. Providing greater access for commercial use is critical for the deployment of 5G and next-generation Wi-Fi technologies.
3. Maintain a Healthy Mix of Licensed and Unlicensed Bands
   Exclusive licenses (via auction) and open access (via unlicensed sharing) both create significant economic value. Policy should prioritize long-run efficiency rather than short-term budgetary or political objectives. Unlicensed spectrum should work in tandem with market-based licensing for wireless carriers to achieve optimal use.
4. Expand Spectrum-sharing Initiatives and Invest in Spectrum Management Technologies
   CBRS and similar models should be expanded where feasible—particularly in bands where federal users cannot be entirely displaced (although the spectrum is idle much of the time). New technologies will facilitate the efficient and dynamic sharing of resources.

Legislation has been introduced in the current Congress to encourage more efficient spectrum use. First, Sen. Mike Lee (R-Utah) introduced the Government Spectrum Valuation Act (S.792), which would require the NTIA to estimate the market value of all electromagnetic spectrum allocated to federal agencies between 3 kilohertz and 95 gigahertz (GHz). This would increase transparency and economic accountability for spectrum held by federal entities while guiding future decisions about reallocating spectrum to its most highly valued use. Given the revenue generated by spectrum auctions, there is also an effort to include spectrum auctions in the current reconciliation bill.

Additionally, Rep. Rick Allen (R-Ga.) introduced the Spectrum Pipeline Act of 2025 (H.R. 651), which would improve spectrum utilization by reauthorizing the FCC’s auction authority while increasing opportunities for both licensed and shared spectrum use. The bill requires at least 2,500 megahertz (MHz) of spectrum within the 1.3 GHz to 13.2 GHz band to be identified for reallocation from federal or shared use to broader commercial access. Of this, at least 1,250 MHz must be designated for high-power, full-area licensed wireless services, while the remaining spectrum may support a mix of licensed, unlicensed, and shared-use arrangements. The bill includes a timeline for identifying, reallocating, and auctioning critical spectrum bands, including at least 125 MHz for unlicensed uses. It also dedicates some of the auction revenue toward the costs of federal spectrum relocation to facilitate the transition.

Conclusion

Fundamentally, federal spectrum policy aims to allocate this invaluable but scarce resource to its most highly valued use. Technological innovation, increasing demand, and evolving regulatory frameworks will shape the future of spectrum policy in the United States. Reauthorizing the FCC’s auction authority is vital to ensure efficient use of existing spectrum, as is the need to acknowledge the expanding role of shared spectrum. Rebalancing federal and commercial use, mitigating interference in shared bands, and keeping pace with growing demand are challenges the FCC must address, especially if the United States seeks to maintain global leadership in wireless technologies.