FCC Commissioner Michael O'Rielly

When Opportunity Costs Knock

O’Rielly is recommending a spectrum-for-cash swap to encourage government agencies to give up spectrum for broadband

FCC Commissioner Michael O’Rielly is recommending a spectrum-for-cash swap to encourage government agencies to give up spectrum for broadband and better understand the “opportunity costs” of that bandwidth — meaning, what they might do with the cash tied up in that spectrum that they can’t do now because it is not monetized.

Getting more spectrum from the government could mean less pressure on commercial users, such as broadcasters, if the wireless industry finds their avowed spectrum crunch has not been alleviated by the recent broadcast incentive auction.

Both Republican and Democratic administrations, and broadband providers eager to bid on it or use it for WiFi hotspots, have been looking for more spectrum from the Department of Defense and others to meet the growing demand for wireless broadband.

O’Rielly suggested in a blog post that agencies be able to use giving up spectrum as a way to offset budget caps. He indicated the value could be determined as an average of Congressional Budget Office and Office of Management and Budget estimates, with surrendered spectrum then being used to offset proposed cuts or even expand spending.

Government agencies are reluctant to give up their spectrum turf, so that incentive could help sweeten the pot.

O’Rielly says this could also force spectrum to be part of the equation when balancing budget priorities.

The commissioner said that the “enormous need” for more commercial spectrum means agencies are going to have to be more efficient with theirs, and that incentivizing them with cash could help encourage that efficiency.