The Art of Spectrum Lobbying
America's $480 Billion Spectrum Giveaway, How it Happened, and How to Prevent it from Recurring
By J.H. Snider, New America Foundation
August 2007
Introduction
In the late 1980s, the Federal Communications Commission (FCC) conducted a series of lotteries to allocate electromagnetic spectrum (popularly known as the “public airwaves”) for mobile telephone service. More than 320,000 lottery tickets were acquired by spectrum speculators, including dentists, lawyers, accountants, and anyone else willing to devote the time and hire the legal talent necessary to fill out the complicated form to acquire a lottery ticket. Many of the lottery tickets were purchased as part of partnerships, whose members would collectively enter lottery tickets for hundreds of different licenses. For example, in December 1989, the FCC selected the winning ticket for a lottery for one such license on Cape Cod, Massachusetts. The winning ticket holder then sold the ticket ten months later for $41.5 million. Former Governor Mark Warner, a U.S. Senate staffer before the lottery, was among the politically savvy who made millions by acquiring and flipping the licenses granted in the lottery.
The result was widespread outrage because the public could readily perceive that billions of dollars of public assets had been given away to private interests—well-connected, wealthy Americans—without public compensation. As the chairman of the FCC at the time characterized the lottery winners, “They receive a windfall and the public gets no payment.” This outrage led to legislation in 1993 to auction future FCC licenses. Congressional leaders publicly promised that, except for a few services—notably public safety and terrestrial broadcasting—the government would henceforth grant exclusive rights to use spectrum only in return for monetary compensation.
This has not come to pass. According to calculations presented in this paper, since 1993, the government has given to private interests as much as $480 billion in spectrum usage rights without public compensation. That comes to more than 90 percent of the value of spectrum usage rights it has assigned from 1993 through the present.
(Continued here.)
By J.H. Snider, New America Foundation
August 2007
Introduction
In the late 1980s, the Federal Communications Commission (FCC) conducted a series of lotteries to allocate electromagnetic spectrum (popularly known as the “public airwaves”) for mobile telephone service. More than 320,000 lottery tickets were acquired by spectrum speculators, including dentists, lawyers, accountants, and anyone else willing to devote the time and hire the legal talent necessary to fill out the complicated form to acquire a lottery ticket. Many of the lottery tickets were purchased as part of partnerships, whose members would collectively enter lottery tickets for hundreds of different licenses. For example, in December 1989, the FCC selected the winning ticket for a lottery for one such license on Cape Cod, Massachusetts. The winning ticket holder then sold the ticket ten months later for $41.5 million. Former Governor Mark Warner, a U.S. Senate staffer before the lottery, was among the politically savvy who made millions by acquiring and flipping the licenses granted in the lottery.
The result was widespread outrage because the public could readily perceive that billions of dollars of public assets had been given away to private interests—well-connected, wealthy Americans—without public compensation. As the chairman of the FCC at the time characterized the lottery winners, “They receive a windfall and the public gets no payment.” This outrage led to legislation in 1993 to auction future FCC licenses. Congressional leaders publicly promised that, except for a few services—notably public safety and terrestrial broadcasting—the government would henceforth grant exclusive rights to use spectrum only in return for monetary compensation.
This has not come to pass. According to calculations presented in this paper, since 1993, the government has given to private interests as much as $480 billion in spectrum usage rights without public compensation. That comes to more than 90 percent of the value of spectrum usage rights it has assigned from 1993 through the present.
(Continued here.)
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