Phoenix Center Says Economics Prescribe Allocation of D Block to Public Safety Rather Than Using Spectrum for Commercial Purposes

In a new study, the Phoenix Center finds that assigning the 10 MHz of contiguous 700 MHz spectrum, the D Block, to public safety could provide at least $3.4 billion more in social benefits than the auction of this spectrum for commercial use as favored by FCC Chairman Julius Genachowski. As the Phoenix Center explains, much of this difference is attributable to the unique opportunity to create a contiguous 20 MHz block of prime spectrum for use by public safety, and to the fact that this opportunity exists only for the public safety community.

The study argues that with the Obama Administration’s promise of freeing up an additional 500 MHz of spectrum for commercial use over the next five years, there would be only a relatively small impact of a temporary, incremental increase of 10 MHz of spectrum on market outcomes. The study also suggests that the loss of auction revenues today is more than offset by higher auction revenues and lower public safety network deployment costs tomorrow. Thus, the auction adds, rather than relieves, stress to the public budget.

In the study, the Phoenix Center also estimates that if policymakers chose not to give public safety the D Block and instead opt to require future allocations of 700 MHz spectrum to support the encroachment of public safety users during episodes of resource scarcity, then such encumbrances could materially diminish the auction value of such spectrum by as much as 86%.