DOGE should live up to its name and propose lasting reforms that improve government efficiency. Freeing up federal spectrum for commercial uses presents such an opportunity. For that to happen, however, the agencies that control much of the nation’s spectrum need a better incentive to give some of it up.
Spectrum is the foundation for the ubiquitous wireless technologies that have become essential for businesses and consumers. Federal agencies also are major users of spectrum: it is an important input for mission-critical activities performed by the Department of Defense, the Federal Aviation Administration, the National Oceanic and Atmospheric Administration, and many other agencies. In fact, the government controls about 60% of the most desirable mid-band spectrum. But since there is no market test, we don’t know whether the agencies that control this spectrum are using it efficiently (or even, due to lack of transparency, whether they use it at all) or whether the allocation of spectrum between the public and private sectors is efficient.
We do know that companies would be willing to pay a lot for some of the government’s spectrum. For example, a recent estimate placed the value of the private-sector company Dish’s similar spectrum holdings at between $57 and $90 billion, depending on when it was sold.
Spectrum is similar in many respects to physical real estate like office buildings. Government agencies pay rent for their office space like anyone else, but they don’t pay anything for their spectrum. Consequently, they rarely consider the opportunity cost of their spectrum holdings.
An obvious solution, all else equal, to this problem is to charge government agencies a “user fee” based on estimates of the market value of the spectrum they use. An agency that used less spectrum could use the savings on something else – upgrading military equipment, for example.
The problem is that all else is not equal. The agencies can’t count on the appropriations process allowing them to keep any dividends from using less spectrum. Their congressional appropriators may simply see that the agencies have spent less and reduce their appropriation accordingly.
Agencies have no incentive to relinquish spectrum because they don't experience opportunity costs for its use, see no benefits from surrendering it, and would lose the option value of future use if they gave up control.
These difficulties should not stop us from making incremental steps towards better spectrum use. The executive branch could take a major step by adopting an internal spectrum “market” as part of its budgetary process. For example, the Office of Management and Budget could, in concert with the Defense Department, develop a process that allows DoD to substitute capital investments that the DoD wants in return for giving up some spectrum based on the market value of that spectrum. Congress would know that the Defense Department is willing to make this tradeoff. The appropriators would still have the final say so the DoD could still lose the savings, but the risk is probably less with this sort of process.
While money is fungible, the process could be more palatable to Congress if the new funds to the agency came from the spectrum itself. This could mean auction revenues from selling high-power, flexible use exclusive licenses or from sharing regimes such as the Citizens Broadband Radio Service (CBRS). Sharing would reduce the market value of spectrum at auction, but the government user would retain more rights to use the spectrum, which also has value. Better information on the value implications of alternative sharing arrangements should yield better government decisions. Most importantly, any new arrangements should be for the long term so that government and private entities that share spectrum can make efficient investment decisions.
The Federal Communications Commission introduced spectrum auctions thirty years ago. They have been instrumental in directing this valuable resource to its highest and best uses. These auctions replaced inefficient lotteries and administrative “beauty contests,” fueling the wireless broadband revolution while generating tens of billions in revenue for the federal treasury.
While Congress considers reauthorizing the FCC's auction authority (which lapsed in 2023), such legislation alone will be insufficient without addressing the core issue: government agencies controlling 60% of desirable spectrum need meaningful incentives—like the internal market approach outlined above—to participate in reallocating this critical resource. Only by aligning agency incentives with economic reality can we unlock the full potential of our nation's spectrum.
