Wireless Spectrum and the American Debt Crisis

by Matt Klassen on July 28, 2011

Can wireless spectrum keep the American government from hitting the debt ceiling? While the notion initially sounds ludicrous, with the country dangerously close to defaulting on its debts, an event that would be nothing short of a global economic catastrophe, both Democratic and Republican representatives are scrambling to prepare their own escape plans, desperate to find ways to lower spending or find additional sources of revenue.

It is in regards to the latter where we find the wireless spectrum debate enter the fray, one of many key factors in the $2.7 trillion budget proposal from Senate Majority Leader Harry Reid.

In fact, while wireless spectrum isn’t going to solve any sort of debt crisis on its own, an auction of the newly acquired “white space” could generate as much as $15 billion dollars that could be applied directly to debt reduction. But as the doomsday clock draws ever closer to zero hour sometime on Tuesday, will time run out on this wireless spectrum plan?

As part of a multi-pronged plan towards cutting expenses and generating additional revenues, there’s little question that the wireless spectrum auction will be a key example of where the government can generate extra money to be applied towards debt reduction.

Having received the extra “white space” spectrum for free from television broadcasters who no longer wanted to pay for licenses for the parts of the spectrum they didn’t use, the government will, in turn, be able to generate billions from reselling this spectrum back to wireless carriers for use in improving existing network infrastructure or creating new wireless networks.

The problem, of course, is that auctions don’t happen quickly. One has only to look at the ongoing Nortel selloff to realize that such auctions can take years to complete, taking into consideration anti-trust and monopolization concerns. So, while it’s certainly a welcome source of additional revenue, it’s not going to solve any debt crisis…at least not by Tuesday.

That said, not everyone is happy about the wireless spectrum auction being used as a component to any debt reduction package. The National Association of Broadcasters (NAB) has expressed concerns that should the auctions be part of solving this debt crisis, the focus of the auctions would be more about a quick cash grab, foregoing fairness and competition concerns in favour of getting it done quickly.

In a statement regarding Reid’s proposal the NAB said it was “deeply concerned” that his plan “would threaten the future of a great American institution.”

In the end, while including the ongoing wireless spectrum debate into a debt reduction plan may offer the government an extra source of revenue, the spectrum debate itself is not going to solve the debt crisis, and if the auction itself is done incorrectly, it could upset the balance of the telecommunications world for years to come, adding yet one more problem onto the government’s already overflowing plate.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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