Scope and Methodology

We reviewed federal legislation, regulations, and processes regarding  spectrum management and spectrum sharing, including NTIA’s Manual of  Regulations and Procedures for the Federal Radio Frequency  Management; as well as various FCC plans, notices, orders and other  publications related to spectrum management and sharing. We conducted  multiple interviews with FCC, NTIA, and various advisory committees,  such as the Commerce Spectrum Management Advisory Committee  (CSMAC). We selected 7 of the 19 Interdepartment Radio Advisory  Committee (IRAC) agencies—the Departments of Commerce, Defense,  Homeland Security, Interior, Justice, Transportation, and Treasury— based on which agencies were most likely to have experience with  spectrum sharing. We interviewed the spectrum managers for these  departments to better understand their experiences with sharing,  including successes and challenges, and analyzed the extent to which  spectrum sharing was a part of their spectrum management plans.
We also interviewed a variety of stakeholders and experts outside the  federal government with knowledge and experience related to spectrum  sharing issues. These stakeholders and experts fell into four groups:
Nonfederal spectrum users: We interviewed officials from seven  commercial entities such as Verizon, Sprint, and other wireless and  communications companies. We also interviewed local government  officials regarding their spectrum sharing experiences. We selected  these nonfederal users based on their experiences with sharing  spectrum, or based on their vested interest in spectrum policy.
Companies that create spectrum-sharing solutions: We interviewed  two companies that create spectrum sharing technologies. We  selected these companies based on recommendations from spectrum  experts and federal agency officials about which companies were  most active with spectrum sharing technology development.  Industry and academic experts: We interviewed 16 industry and  academic experts. We selected these experts based on their  published and recognized research credentials for their work on  spectrum management, spectrum sharing and the economic impacts  of spectrum related policies, and on other stakeholders’ and experts’  recommendations.  International spectrum management officials: We interviewed  spectrum management officials from Canada, the United Kingdom,  and Australia to compare other countries’ spectrum management and  spectrum-sharing practices to that of the United States. We chose  these three countries based on their level of experience dealing with  spectrum-sharing issues. We also interviewed officials from the  International Telecommunication Union to understand its role in  advising international spectrum management and spectrum sharing  policies.
We also completed a literature search and reviewed recent reports and  articles related to spectrum sharing, including academic and government  reports as well as speeches and articles by the groups of officials and  experts we interviewed as described above.
A complete list of the departments and agencies, experts and companies  that we interviewed can be found in appendix I. The information and  perspectives that we obtained from the interviews may not be generalized  to all experts and industry stakeholders that have an interest in spectrum  policy. Rather, comments and views were reviewed in context with  current literature on spectrum management issues.
We conducted this performance audit from September 2011 to October  2012 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.

	Background

In the United States, responsibility for managing spectrum—including  allocating, assigning, regulating, and facilitating the sharing of spectrum— is divided between two agencies, NTIA and FCC. NTIA and FCC jointly  determine the amount of spectrum allocated for federal and nonfederal  use, including both exclusive and shared use. After this allocation occurs,  in order to use spectrum, nonfederal users, such as wireless companies  and local governments, must follow rules and be authorized by FCC to  use specific frequencies. When spectrum is repurposed, FCC may also  be authorized to hold an auction to distribute licenses through a bidding  process. Federal users, like the military, must follow rules, and obtain  frequency assignments from NTIA. Both NTIA and FCC have authority to  issue rules and regulations on use of spectrum as necessary to ensure  effective, efficient, and equitable domestic spectrum use.
Federal agencies use spectrum to help meet a variety of missions,  including emergency communications, national defense, land  management, and law enforcement. More than 60 federal agencies and  departments combined have over 240,000 frequency assignments. As of  September 2012, 9 departments and agencies had the vast majority of  the assignments: the Department of Defense, the Federal Aviation  Administration, the Department of Justice, the Department of Homeland  Security, the Department of the Interior, the Department of Agriculture,  the United States Coast Guard, the Department of Energy, and the  Department of Commerce, respectively, hold 94 percent of all federally  assigned spectrum. (See fig. 1.) Nonfederal entities (which include  commercial companies and state and local governments) also use  spectrum to provide a variety of services. For example, state and local  police departments, fire departments, and other emergency services  agencies use spectrum to transmit and receive critical voice and data  communications, while commercial entities use spectrum to provide  wireless services, including mobile voice and data, paging, broadcast  radio and television, and satellite services.
Not all spectrum has equal value. The spectrum most highly valued  generally consists of frequencies between 225 and 3700 MHz, as these  frequencies have properties well suited to many important wireless  technologies, such as mobile devices, and radio and television  broadcasting. According to NTIA’s Office of Spectrum Management,  federal agencies have exclusive use of about 18 percent of this highly  valued spectrum, while nonfederal users have exclusive licenses to  approximately 33 percent. The remainder of this spectrum is allocated to  shared use. The types of and degree of sharing between governmental  and nongovernmental users varies across the bands included within this  shared spectrum. In addition, increasing demands on spectrum mean that  federal and nonfederal users increasingly occupy adjacent bands, which  in practice necessitates intensive coordination on technical rules.  Estimates of the extent of predominant federal use within the spectrum  allocated for shared use vary depending on the particular evaluation  model and analyses employed. Depending on the estimate used, the total  percentage of the most highly valued spectrum exclusively or  predominantly used by the federal government ranges from  approximately 39 percent to 57 percent.
Spectrum sharing can be defined as the cooperative use of common  spectrum that allows disparate missions to be achieved. In this way,  multiple users agree to access the same spectrum at different times or  locations, as well as negotiate other technical parameters, to avoid  adversely interfering with one another. For sharing to occur, users and  regulators must negotiate and resolve where (geographic sharing), when  (sharing in time), and how (technical parameters) spectrum will be used.  (See fig. 2.)
Both FCC and NTIA manage the process that leads to spectrum sharing  between federal and nonfederal users. The steps involved in the process  include the following:
Prior to authorizing a nonfederal user to share spectrum with federal  users, FCC will coordinate with NTIA on the allocation and service  rulemakings required that define the technical and operating  conditions for shared access to spectrum. NTIA will provide draft  findings to IRAC, which provides advice to NTIA regarding federal  spectrum. FCC participates in IRAC as a liaison. IRAC determines  which agencies would be affected by the nonfederal use of spectrum  and acts as the forum where those agencies consider how they may  accommodate the nonfederal user. According to NTIA, any nonfederal  user may approach NTIA and IRAC to discuss a proposal to use  federal or shared bands to determine any obstacles and best ways  forward. In some cases, FCC encourages nonfederal applicants to  work directly with concerned agencies to try to reach agreement on an  arrangement that could then be adapted to FCC rules or licenses.  Similarly, if federal users request frequency assignments in  nonfederal or shared bands, these requests must be coordinated with  FCC through IRAC. According to NTIA, thus far, all requests by  federal entities to change an allocation have gone through NTIA to  FCC and have required an FCC rulemaking.
To have access to federal spectrum, the nonfederal entity must also  obtain an FCC license. FCC will coordinate the allocation change or  license application, including technical and operational conditions, for  sharing federal spectrum through the Frequency Assignment  Subcommittee of IRAC.
Next, before any spectrum sharing takes place in federal or shared  spectrum, NTIA must vet the coordinating parties’ requests, assign  frequencies, and ensure that the systems the parties will be using— such as the land mobile radios used by state and local emergency  responders that share spectrum with federal users—are compatible.
When spectrum sharing occurs solely among federal users within federal  exclusive bands, IRAC’s Frequency Assignment Subcommittee, using  NTIA’s database of federal frequency assignments, reviews the spectrum  requests and identifies any potential interference concerns prior to  commencing the shared use. Federal sharing occurs routinely. For  example, the Departments of Defense, and Transportation, and  Department of Commerce’s National Oceanic and Atmospheric  Administration share spectrum for directing aircraft and monitoring  weather conditions. The Department of Defense also frequently shares  spectrum among its own various programs, internal services and  agencies.
When sharing occurs solely among nonfederal users, FCC seeks to allow  flexibility for license holders to coordinate and negotiate spectrum-sharing  agreements among themselves. FCC provides flexibility in a couple of  ways. One way is through the expanded issuance of flexible use licenses.  As opposed to traditional licenses, where usage is limited to the specific  terms of the license (e.g., TV broadcast stations in specific markets),  flexible use licenses allow for a wider array of uses without having to seek  additional FCC authorization. Licensing expands the pool of potential  entities that would be able to innovate and share the spectrum beyond  those that would use the spectrum in a similar manner. However, with  both traditional and flexible use licenses, if a proposed shared use is not  consistent with the terms of a license, an FCC rulemaking would be  required to allow that use. Another way FCC provides flexibility is with  respect to its secondary market policies and rules that permit licensees to  share their spectrum resource through spectrum lease arrangements.  While FCC tracks these secondary market transactions, users negotiate  their own terms, making it difficult to gauge the extent to which sharing  occurs among these users, if at all.
Spectrum sharing also occurs through unlicensed access by anyone  using wireless equipment certified by FCC for those frequencies.  Equipment such as wireless microphones, baby monitors, and garage  door openers share spectrum with other services on a non-interference  basis typically within a limited geographic range and at low power levels  to avoid interference with higher priority uses. In contrast with most  licensed spectrum use, unlicensed users have no regulatory protection  against interference from other licensed or unlicensed users in the band.  Unlicensed use is regulated to ensure that devices do not cause  interference to other operations in the spectrum. For example, wireless  fidelity (Wi-Fi) devices share some band segments in the 5 gigahertz  (GHz) range with military radar subject to the condition that the Wi-Fi  devices are capable of spectrum sensing via dynamic frequency  selection; if the Wi-Fi device detects a radar signal, the device must  immediately vacate the channel the radar signal is on.
Many technological developments have also increased spectrum  efficiency and further enabled sharing. For example, dynamic spectrum  access technologies under development could allow equipment to sense  and select among available frequencies in an area, efficiently using  whatever frequencies might be available. This allows users to share  frequencies in the same location in very small increments of time. Software-defined radios also use spectrum more efficiently by accessing  different frequencies in one location. In addition, these radios use more  efficient batteries that allow them to perform more sophisticated tasks  while using less spectrum than traditional radios. As another example,  small cell technology allows users to share the same frequencies in close  proximity to each other. Further, emerging fourth generation (4G) Long  Term Evolution (LTE) technologies, as used by some smart phones to  access the Internet, promise improvement in data transfer speeds.  Research continues on these and other fronts to enable more efficient  use of spectrum, including sharing.
Dynamic spectrum access technologies are currently able to sense for available  frequencies before transmission (listen before talk), but not sense during transmission.  (listen while talk) Sensing before transmission involves sensing available frequencies,  then jumping and transmitting, which causes lag time. The technology to enable sensing  during transmission, which would allow a user to seamlessly continue communication  while moving geographically through spectrum bands is still under development.

	Some Users Lack Incentives and Face Barriers to Sharing Spectrum

		Some Users Lack Economic Incentives to Share Spectrum

While federal spectrum users often share spectrum among themselves,  they may have little economic incentive to otherwise use spectrum  efficiently, including sharing it with nonfederal users. From an economic  perspective, when a consumer pays the market price for a good or  service and thus cannot get more of it without this expense, the consumer  has an incentive to get the most value and efficiency out of the good as  possible. If no price is attached to a good—which is essentially the case  with federal agencies’ use of spectrum—the normal market incentive to  use the good efficiently may be muted. In the case of federal spectrum  users, obtaining new spectrum assignments may be difficult, so an  agency may have an incentive to conserve and use the spectrum it  currently has assigned to it or currently shares efficiently, but the extent of  that incentive is likely weaker than if the agency had to pay market price  for all of its spectrum needs. Consequently, federal spectrum users do not  fully face a market incentive to conserve on their use of spectrum or use it  in an efficient manner. The full market value of the spectrum assigned to  federal agencies has not been assessed, but, according to one industry  observer, would most likely be valued in the tens of billions of dollars.  Similarly, many nonfederal users, such as television broadcasters and  public safety entities, did not pay for spectrum when it was assigned to  them and do not pay the full market price for their continuing use of  spectrum, so, like federal agencies, they may not fully have market-based  incentives to use spectrum efficiently.
In contrast, licensed, commercial users that purchase spectrum at auction  generally have market incentives to use their spectrum holdings  efficiently, but these users also have incentives that work against their  sharing spectrum. FCC officials and industry stakeholders and experts  told us that these users may prefer not to share their unused spectrum  because they are concerned about the potential for interference to  degrade service quality to their customers. Also, they may not want to  give potential competitors access to spectrum. Industry stakeholders and  experts also said that companies seeking spectrum may prefer obtaining  exclusive spectrum licenses over sharing spectrum that is licensed to  another company or federal user, given uncertainties about regulatory  approvals, interference, and enforcement if interference occurs.

		Several Barriers Can Deter Users from Sharing Spectrum

Federal agencies will not risk mission failure, particularly when there are  security and public safety implications. According to the agency officials  we contacted, federal agencies will typically not agree to share spectrum  if it puts achievement of their mission at risk. The officials stressed that  when missions have security and safety implications, sharing spectrum  may pose unacceptable risks. For example, the military tests aircraft and  trains pilots using test ranges that can stretch hundreds of miles,  maintaining constant wireless contact. While there may be times and  locations where the frequencies are not in use because aircraft are not in  the area, communication frequencies in the test ranges cannot be shared,  according to officials in the Department of Defense, because even  accidental interference in communications with an aircraft could result in  catastrophic mission failure. Further, sharing information about such  flights could expose pilots and aircraft, or the military’s larger mission, to  increased risk. Federal law enforcement agencies are also concerned  about how sharing spectrum could put missions at risk. For example,  officials at the Departments of Treasury and Justice explained that  interference with communications among agents could put the agents in  danger and cause them to miss mission critical information. According to  officials from the Department of Justice, the department tested sharing  spectrum with a major commercial carrier in a metropolitan area in 2008  and concluded that the department and the carrier t could not co-exist on  the same spectrum. NTIA also reported that although sharing should be  accommodated when appropriate, it is necessary to establish clear  regulatory mechanisms for sharing to ensure that federal users are not  required to assume responsibility for mitigating interference.
According to FCC officials, concerns about risk of mission failure can  drive conservative technical standards for federal agencies’ missions that  can make sharing spectrum impractical. In general, the technical  analyses and resulting standards federal agencies develop are based on  worst-case scenarios and not on assessments of the most likely scenario  or a range of scenarios. Moreover, in contrast to FCC’s open rulemaking  process, there is little opportunity for public input to the federal agencies’  standards-setting process. Stakeholders may meet or have discussions  with NTIA and the relevant federal agencies, but this occurs without any  formal public process. Nor do stakeholders have any effective means to  appeal other than by asking FCC to reject NTIA’s analysis or standards.
Spectrum sharing can be costly. FCC and NTIA officials, as well as other  agency officials and an industry stakeholder, told us that sharing federal  spectrum can be costly for both the nonfederal and federal users seeking  to share for the following reasons:
Users may find that mitigation of potential interference can be costly in  terms of equipment design and operation. For example, according to  officials from one agency, sharing spectrum outside a law  enforcement environment would require cognitive radios, which could  be costly.
Users applying to share federal frequencies may find that those  frequencies are being used by more than one federal agency or  program. As a result of needing to mitigate interference for multiple  users, costs to share spectrum in that band could increase.
Federal users often use and rely on proven older technology that was  designed to use spectrum to meet a specific mission and may be less  efficient than more modern systems. Limited budgets may also  prevent users from being able to invest in newer technology that can  facilitate easier sharing. For example, officials at one agency said they  maintain and use systems until the end of the system’s life cycle to  assure continuity of operations and security.
Spectrum-sharing approval and enforcement processes can be lengthy  and unpredictable. FCC and NTIA processes can cause two main  problems when nonfederal users seek to share federal spectrum,  according to stakeholders:
The spectrum-sharing approval process between FCC and NTIA can  be lengthy and unpredictable, and the risk associated with it can be  costly for new entrants. FCC officials told us that its internal processes  can potentially last years if a rulemaking is required to allow shared  use of spectrum. In addition to that time, NTIA officials said that  IRAC’s investigation of potential harmful interference could also take  months. In one example, federal users currently share the spectrum  band of 413-457 MHz with a nonprofit medical devices provider. The  spectrum is used for transmissions related to implant products for  veterans. It took FCC, NTIA and the spectrum users approximately 2  years (from 2009 to 2011) to facilitate this arrangement because an  FCC rulemaking was required and all parties agreed to a lengthy  evaluation of potential interference. The nonprofit in this case was  funded by an endowment and was not dependent on income from the  device to sustain itself during this process, but such delays, and the  potential for a denial because of findings of harmful interference risks,  could discourage for-profit companies from developing and investing  in business plans that rely on sharing federal spectrum. However,  officials at one agency commented that they have seen the timing of  NTIA approval of federal participation drastically reduced over the  past several years, from many months to less than a month as a  result of additional coordination and negotiation of sharing done prior  to the submission of frequency requests.
Stakeholders we interviewed told us that when federal and nonfederal  users share spectrum, both parties worry that harmful interference  may affect their missions or operations if the other party overreaches  or does not follow the agreement. They also fear that any  enforcement actions taken by FCC will happen too slowly to protect  their interests and that enforcement outcomes may be unfavorable.  According to officials at one agency, there are not many examples of  large scale sharing of federal and nonfederal systems and limited  governance and enforcement mechanisms exist to support such  efforts.
Similar problems can arise when nonfederal users share spectrum with  each other. Distrust of each other and of FCC’s decision-making and  enforcement processes could discourage sharing. For example, if a  proposed shared use does not fall within the terms of the incumbent’s  license, FCC may need to engage in rulemaking proceedings, which can  be long and unpredictable and can make spectrum-sharing arrangements  unattractive to companies that otherwise might consider sharing.

		Users May Be Unable to Easily Identify Spectrum Available for Sharing

Besides lacking incentives and overcoming other barriers, users may also  have difficulty identifying spectrum available for sharing because data on  available spectrum is incomplete or inaccurate, and information on some  federal spectrum usage is not publicly available. According to NTIA  officials, coordinating spectrum sharing requires accurate data on users,  frequencies, locations, times, power levels, and equipment, among other  things. We recently reported that both FCC’s and NTIA’s spectrum  databases may contain incomplete and inaccurate data. We reported  that a substantial number of surveyed users of FCC’s largest and most  accessed license database, the Universal Licensing System, said that  inaccurate and missing data hindered their use of the system to a great or  moderate extent. NTIA collects basic, descriptive information on federal  spectrum use, such as agency name, frequency, and location, in its  Government Master File, and relies on agencies to evaluate and report  their own current and future spectrum needs, even though agencies have  not always provided accurate information on their spectrum use, which  could be useful in coordinating sharing arrangements.agency spectrum managers told us that agencies have not been asked to   Further, federal  regularly update their spectrum plans, in which they were required to  include an accounting of spectrum use. Federal agencies were directed to  submit spectrum plans to NTIA and provide updates every 2 years.  Since 2008, NTIA has ceased requesting those updates and has put its  strategic planning initiatives on hold because of limited resources.
NTIA is developing a new data system that officials believe will provide  more robust data that will enable more accurate analysis of spectrum  usage and potential interference. The new system may in turn identify  more sharing opportunities. NTIA officials plan for the new Federal  Spectrum Management System (FSMS) to house more detailed data  about agencies’ spectrum usage than the current Government Master  File, including times of use, power levels, and equipment, among other  information not currently collected. FSMS is scheduled to be operational  in fiscal year 2014. However, the data will only be available to IRAC  members and will not be publicly available.
Legislation has been introduced to try to address the lack of publicly  available data on spectrum usage broadly. The legislation would require  in part that FCC, in consultation with NTIA and the White House Office of  Science and Technology, prepare a report for Congress that includes an  inventory of each radio spectrum band they manage. The inventory is  also to include data on the number of transmitters and receiver terminals  in use, if available.  Other technical parameters that allow for more  specific evaluation of how spectrum can be shared will also be  inventoried, including coverage area, receiver performance, location of  transmitters, percentage and time of use, and a list and described use of  unlicensed devices authorized to operate in the band. However, experts  and federal officials we contacted told us that there may be some  limitations to creating such an inventory. For instance, measuring  spectrum usage can be difficult because it can only be accomplished on a  small scale and technologies to measure or map widespread spectrum  usage are not yet available. Additionally, FCC and NTIA officials told us  that information on some federal spectrum bands may never be made  publicly available because of the sensitive or classified nature of some  federal spectrum use.

	Incentives and Opportunities to Share Spectrum Could Be Expanded

Federal advisors and experts we spoke with identified several options that  could provide incentives and opportunities for more efficient spectrum use  and sharing, by federal and nonfederal users, which include, among  others: (1) assessing spectrum fees; (2) expanding the availability of  unlicensed spectrum; (3) identifying federal spectrum that can be shared  and promoting sharing; (4) requiring agencies to give more consideration  to sharing and efficiency; (5) improving and expediting the spectrum-  sharing process; and (6) increasing the federal focus on research,  development and testing of technologies that can enable sharing, and  improve spectral efficiency. We have previously reported that to improve  spectrum efficiency among federal agencies, Congress may wish to  consider evaluating what mechanisms could be adopted to provide better  incentives and opportunities for agencies to move toward more efficient  use of spectrum, which could free up some spectrum allocated for federal  use to be made available for sharing or other purposes.

		Assessing Spectrum Fees

Several advisory groups and industry experts, including those we  interviewed, have recommended that fees be assessed based on  spectrum usage. As previously mentioned, with the exception of fees for  frequency assignments, federal users incur no costs for using spectrum  and have few requirements for efficient use. As s result, federal users  may have little incentive to share spectrum assigned to them with  nonfederal users or identify opportunities to use it more efficiently— except to the extent that sharing or more efficient use helps them achieve  their mission requirements. In 2011, the CSMAC Incentives  Subcommittee recommended that NTIA and FCC study the  implementation of spectrum fees and solicit input from both federal and  nonfederal users that might be subject to fees.Plan has also recommended that Congress consider granting FCC and  NTIA authority to impose fees on unauctioned spectrum license holders—  The National Broadband  such as TV broadcasters and public safety entities—as well as  government users. Fees could help to free spectrum for new uses, since  licensees that use spectrum inefficiently may reduce their holdings or  pursue sharing opportunities once they bear the opportunity cost of letting  their spectrum remain fallow or underused. FCC officials told us that they  have proposed spectrum usage fees at various times including in FCC’s  most recent congressional budget submission and have requested, but  have yet to receive, legislative authority to implement such a program.
While noting the benefits of spectrum fees, the CSMAC Incentives  Subcommittee report also notes specific concerns about the impact of  spectrum fees on government users. For instance, some CSMAC  members expressed concern that fees do not fit into the federal annual  appropriations process and that new appropriations to cover fees are  neither realistic nor warranted in the current budget environment. Other  members suggested that fees will have no effect because agencies will  be assured additional funds for their spectrum needs. Similarly, the  National Broadband Plan notes that a different approach to setting fees  may be appropriate for different spectrum users, and that a fee system  must avoid disrupting public safety, national defense, and other essential  government services that protect human life, safety, and property.
To address some of the concerns regarding agency budgets, the recent  PCAST report recommended the use of a “spectrum currency” process to  promote spectrum efficiency. Rather than using funds to pay for  spectrum, federal agencies would each be given an allocation of synthetic  currency that they could use to “buy” their spectrum usage rights. Usage  fees would be set based on valuations of comparable private sector uses  for which the market has already set a price. Agencies would then have  an incentive to use their assignments more efficiently or share spectrum.  In the PCAST proposal, agencies would also not bear the costs of making  spectrum available to others for sharing, because they could be  reimbursed for their investments that made sharing possible from a  proposed Spectrum Efficiency Fund.
Internationally, some regulatory agencies have moved forward with  charging market based rates for spectrum. Officials in two of the countries  we spoke with said that the regulatory agency in their country collects  user fees for government-agency spectrum use that reflect the  opportunity cost of spectrum and serve as a means to encourage greater  efficiency. For instance, the Australian Communications and Media  Authority assesses two types of license fees for devices: (1)  administrative charges to recover the direct costs of spectrum  management and (2) annual license taxes to recover the indirect  government costs of spectrum management. Officials suggested that  license fees provide incentives for efficient use. Similarly, the Office of  Communications in the United Kingdom uses a concept known as  Administered Incentive Pricing (AIP) to set charges for spectrum holdings  to reflect the value of the spectrum and to promote efficient use. Officials  in these countries told us that the fee structure also encourages agencies  to seek more opportunities to share spectrum. For example, in response  to the United Kingdom’s AIP system, one ministry conducted a study of  which spectrum bands could be shared or, if not in full use, released for  use by others. The ministry identified at least five bands to share and  released additional bands because the cost associated with retaining  those rights was not economically feasible for intermittent use. As a  result, the ministry relinquished its rights to those underused bands.

		Expanding Unlicensed Use

According to stakeholders, unlicensed use is a valuable complement to  licensed use and more spectrum could be made available for unlicensed  use. Spectrum for unlicensed use can be used efficiently and for high  value applications, like Wi-Fi, for example. While FCC has generally  relied on auctions to license spectrum, which over the years have  generated billions in dollars of revenue for the United States Treasury,  FCC is attempting to make more unlicensed spectrum available in the  hope of fueling innovation and economic growth. Increasing the amount  of spectrum available for unlicensed use allows more users to share  spectrum without going through lengthy negotiations and interference  mitigations, and also promotes more experimentation and innovation. To  access exclusively licensed spectrum, users must enter into sharing  agreements with the license holder sand negotiate access each time they  wish to use that spectrum. By contrast, when spectrum is available for  unlicensed purposes, such negotiation is generally not needed and,  according to some experts, may lead to more widespread  experimentation and the development of innovative technologies.
More recently, FCC has provided unlicensed access to additional  spectrum, known as TV “white spaces,” to help address spectrum  demands. The white spaces refer to the buffer zones that FCC provided  between the television broadcasters to mitigate unwanted interference  between adjacent stations. In the TV white space rules, the buffer zones  are no longer needed, and FCC approved the previously unused  spectrum for unlicensed use. To identify available white space spectrum,  devices must access a database that responds with a list of the  frequencies that are available for use at the device’s location. As an  example, one local official explained that the City of Wilmington, North  Carolina, uses TV white space spectrum to provide a network of public  Wi-Fi access and public-safety surveillance functions. However, some  experts have noted that the use of white space for rural areas holds more  promise than large, dense urban areas because the sheer number of TV  stations and higher usage in those areas makes use of the white spaces  more challenging.

		Identifying Federal Spectrum That Can Be Shared and Promoting Sharing

FCC and NTIA have noted the importance of sharing federal spectrum as  a means to address spectrum demand. FCC’s Chairman recently said  that it has become increasingly harder to find free and clear blocks of  spectrum. The Chairman further said that it would be counterproductive  to be limited to the choices of reallocation or nothing and that it may be  the case that in some bands, sharing could allow access to spectrum that  might otherwise take years and be costly to make available to other  users. As we previously mentioned, in 2010, the President directed  federal agencies to clear 500 MHz of spectrum for nonfederal uses by  2020. In response to this directive, NTIA identified bands to evaluate for  repurposing. For example, an interagency group was formed to determine  the viability of accommodating commercial wireless broadband in the  1755-1850 MHz band. However, the evaluation found that clearing this  95 MHz band may take 10 years, cost $18 billion, and cause significant  disruption. Furthermore, some federal systems could remain in the band  indefinitely. To support NTIA’s effort regarding this band, FCC recently  granted special temporary authority for T-Mobile to conduct tests to  explore sharing between commercial wireless services and federal  systems operating in the 1755-1780 MHz band. NTIA has also noted  that the federal government must ensure effective spectrum use and push  for sharing and other innovative uses wherever possible. Further, it is  critical that agencies participate in identifying strategies for more efficient  use of spectrum, including sharing it, while maintaining essential federal  missions. For example, NTIA asked CSMAC to advise on what kinds of  sharing are workable in the long term. Consequently, CSMAC is  reviewing options to analyze the impact federal systems remaining in the  band might have on future commercial uses, and the sharing conditions  that might be required to protect incumbent systems.
Recent PCAST recommendations could also create opportunities for  nonfederal users to share 1,000 MHz of spectrum previously occupied  only by federal users. Out of concern that additional clearing of federal  users from spectrum is not sustainable, PCAST recently recommended  that the President issue a new policy memorandum calling for the federal  government to immediately identify 1,000 MHz of federal spectrum for  sharing with nonfederal users. To facilitate sharing this spectrum,  PCAST also recommended that FCC and NTIA implement a federal  spectrum access system that includes data on when and where federal  users could allow access to fallow spectrum. Such a system could help  streamline the regulatory processes involved in sharing that we discussed  earlier. However, PCAST acknowledged that implementing the structure  they recommended will not be easy and could take a long time. Moreover,  some experts and industry stakeholders suggest that sharing 1,000 MHz  of federal spectrum may be no easier or less costly than previous efforts  to vacate half that amount, given the barriers to sharing that exist.

		Requiring Agencies to Give More Consideration to Spectrum Sharing and Efficiency

In 2011, the Office of Management and Budget (OMB) updated its  guidance to federal agencies on preparing the fiscal year 2013 budget by  asking agencies to consider the economic value of spectrum when  developing their economic justifications for procuring new equipment.The guidance noted that spectrum should generally not be considered a  free resource, but rather should be considered to have value. Therefore,  budget requests for systems that require spectrum should include the  evaluation of alternative systems or methods that reduce spectrum  needs, such as spectrum sharing. In January 2011, CSMAC reported that  the focus of this process had been on capital planning. The Committee  stated that it believed it would be more useful to focus on ensuring that  agencies give more consideration to trade-offs in spectrum use in their  management processes. They also said that doing so will likely yield  greater improvements in overall spectrum management and use. Toward  that end, with respect to the budget for major spectrum-dependent  communications systems, the Committee rewrote the circular,  recommending that agencies specify in their spectrum proposals (a)  whether the system will share with other existing systems, (b) the extent  to which replacement systems will be more spectrally efficient compared  to the prior system, and (c) that there was consideration of non-spectrum  dependent or commercial alternatives. The Middle Class Tax Relief and  Job Creation Act required that OMB implement these recommendations.  We have also reported that federal agencies generally invest in more  spectrally efficient technologies when mission needs demand it, not  according to any underlying, systematic consideration of spectrum  efficiency. As a result, we recommended that FCC and NTIA jointly  develop accepted models and methodologies to assess the impact of new  technologies on overall spectrum use and that NTIA determine how to  provide incentives to agencies to use spectrum more efficiently.

		Improving and Expediting the Spectrum-Sharing Process

FCC and NTIA have taken some actions to potentially reduce the amount  of time and even the need for some potential rulemakings associated with  spectrum sharing, but stakeholders and experts we interviewed  suggested that more could be done to expedite the process. NTIA also  encourages communication between federal and nonfederal users  regarding sharing plans to deal with potential interference and other  technical issues early in the process. These communications are  important to provide certainty to nonfederal users about the availability of  shared spectrum while also ensuring that critical federal operations are  protected.
Stakeholders suggested that NTIA and FCC could do more to streamline  or automate their processes, and that more complete databases of  spectrum use, as discussed earlier, could help potential sharing entities  identify opportunities. Some experts argued for FCC to shift from a  “command and control” approach for spectrum management to a  regulatory approach that was more flexible and adaptable to new  technologies. Others argue that the process is further slowed down and  complicated because two regulatory agencies are involved as opposed to  a single agency, as is the case in other countries, and other industries.
CSMAC also reported that FCC and NTIA could do more to streamline  the sharing approval process. For example, a common frustration is that a  nonfederal entity seeking to share federal spectrum is unable to precisely  follow the status of its spectrum sharing application once it is filed with the  FCC. Further, it is not transparent in the experimental licensing process  on the FCC website when FCC transmits applications to NTIA, when  NTIA responds to FCC, and whether that response contains questions to  which the applicant must respond to progress the application. On the  NTIA side, IRAC’s Frequency Assignment Subcommittee established a  review period of approximately nine days to respond with concurrence or  concerns regarding an application. NTIA’s website provides some  information regarding the status of an application in the IRAC process;  however, the information is very generic and the nonfederal applicant has  no means to obtain information as to why its request was tabled or to  engage directly with the concerned parties. For applicants to more  proactively engage FCC regarding concerns or other actions, CSMAC  recommended that there be a public tracking capability that allows an  FCC applicant to readily identify when FCC sent the application to NTIA,  when NTIA responded, and whether NTIA had specific questions  regarding the merits or technical components of the application.  Regardless, any such changes to how spectrum is currently managed  and regulated would need to be carefully studied with respect to potential  benefits and costs.

		Increasing the Federal Focus on Research, Development and Testing

Several technological advances promise to make sharing easier, but are  still at early stages of development and testing. For example, various  spectrum users and experts we contacted mentioned the potential of  dynamic spectrum access technology. If made fully operational, dynamic  spectrum access technology will be able to sense available frequencies in  an area and jump among frequencies to seamlessly continue  communication as the user moves geographically through spectrum  bands. According to experts and researchers we spoke with, progress  has been made but there is no indication of how long it will be before this  technology is fully deployable. Similarly, current fourth generation (4G)  Long Term Evolution (LTE) technologies promise the ability to facilitate  channel sharing as well as much faster data transfer rates over time,  which could also potentially free frequencies more quickly for use by  others. However, experts we talked to could not predict how long it will be  before data networks reach international 4G transmission standards and  thus, maximize spectral efficiency. Such new technologies can obviate or  lessen the need for extensive regulatory procedures to enable sharing  and can open up new market opportunities for wireless service providers.  If a secondary user or sharing entity employs these technologies, the  incumbent user or primary user would theoretically not experience  interference, and agreements and rulemakings that are currently needed  may not be necessary to enable sharing.
Although industry participants indicated that extensive testing under  realistic conditions is critical to conducting basic research on spectrum  efficient technologies, we found that only a few companies are involved in  such research and may experience challenges in the testing process.  Companies tend to focus technology development on current business  objectives as opposed to conducting basic research that may not show an  immediate business return. For example, NTIA officials told us that one  company that indicated it would participate in NTIA’s dynamic spectrum  access-testing project removed its technologist from the testing effort to a  project more closely related to its internal business objectives.  Furthermore, some products are too early in the development stage to  even be fully tested. For example, NTIA officials said six companies  responded to NTIA’s invitation to participate in the previously mentioned  dynamic spectrum access-testing project. However, three handsets were  received for the testing, and one of those did not work as intended. Other  companies that responded told NTIA that they only had a concept and  were not ready to test an actual prototype.
We have previously reported that the federal government has a key role  in performing or otherwise encouraging research that the private industry  would not do on its own. With respect to research and development on  spectrum sharing and spectrum efficiency, we found that FCC and NTIA  are involved in creating test beds and other opportunities for research and  development. For example, when FCC proposed a rulemaking to  improve its experimental license program in November 2010, it invited  comments on a number of ideas including the need to identify locations  for test beds, where new technologies could be tested before being  introduced to the market and frequency bands where FCC might provide  increased flexibility to conduct experiments. Further, FCC is seeking to  establish provisions that encourage the exploration of new technologies,  including technologies that would facilitate spectrum sharing. To expand  testing opportunities, PCAST recommended that real-world test services  be provided to test federal and public-safety frequency bands. Similarly,  the Wireless Spectrum Research and Development’s Senior Steering  Group is conducting workshops regarding the development of a national  wireless test environment. However, spectrum users told us that even  though they understand the benefits of testing and development, they are  reluctant to allow testing in their spectrum because of the potential for  harmful interference. As previously mentioned, NTIA also has a pilot test  bed program to evaluate dynamic spectrum access and technology for  spectrum sharing in land mobile radio bands, but the program is in the  early stages and requires additional access to spectrum for testing to be  fully implemented.
The Department of Defense—the federal agency with the largest number  of spectrum assignments—is also involved in researching and developing  new spectrum technologies, although they are still in the early stages.  The Department’s Defense Advanced Research Projects Agency  (DARPA) has several such efforts under way. For example, unlike  existing databases that only provide limited, descriptive frequency  assignment information, DARPA’s Advanced Radio Frequency Mapping  program seeks to provide real-time awareness of spectrum use across  frequency, geography, and time. With this information, spectrum  managers and automatic spectrum allocation and management systems  could operate more efficiently through improved interference mitigation.  However, agency officials told us that this technology is at the basic  research level and years away from market readiness. Also, in the  beginning phases, the Communications Under Extreme Radio Frequency  Spectrum Conditions program plans to address spectrum use and  interference mitigation in a congested communications environment.  According to DARPA officials, the program will work to develop  interference mitigation technologies (especially for jamming),interference tolerance, and higher spectrum utilization.
Recent federal advisory committee recommendations and international  examples also emphasize the importance of funding and providing  incentives for research and development endeavors. For example, to  promote research in efficient technologies, PCAST recommended that (1)   release funds  the Research and Development Wireless Innovation Fund for this purpose and (2) the current Spectrum Relocation Fund be  redefined as the Spectrum Efficiency Fund. This adjustment would allow  federal agencies to be reimbursed for general investments in improving  spectrum sharing. PCAST also recently suggested that a partnership  between the federal government and the private sector is the best  mechanism to ensure optimal use of federal spectrum and related  spectrum research and testing. Similarly, CSMAC recommended the  creation of a Spectrum Innovation Fund. Unlike the Spectrum Relocation  Fund, which is strictly limited to the actual costs incurred in relocating  federal systems from auctioned spectrum bands, the Spectrum Innovation  Fund could also be used for spectrum sharing and other opportunities to  enhance spectrum efficiency.Canadian government instituted tax credits for research and development  efforts by Canadian wireless companies, and required wireless  companies to commit 2 percent of all revenues toward research and  development activities related to spectrum.

	Conclusions

As the demand for and use of spectrum continues to increase, federal  and nonfederal users will need to be more cognizant of how efficiently  spectrum is used. Sharing spectrum is one way to use spectrum more  efficiently and make more spectrum available. While a number of barriers  exist to sharing spectrum—such as incompatible uses, potentially  prohibitive costs, and cumbersome regulatory processes—it is clear that  first and foremost, users currently lack incentives to share the spectrum  that is assigned or licensed to them. To address the incentive problem,  spectrum experts, federal advisory groups, and others have made  recommendations but have also identified implementation problems  associated with different options. First, we agree with experts that  spectrum usage fees should be given further consideration. We  previously reported that incentive-based fees are designed to promote the  efficient use of spectrum by compelling users to recognize the value to  society of the spectrum that they use. Yet, designing a fee system is  fraught with numerous obstacles and challenges, such as how such fees  should be incorporated into agency budgets and the appropriations  process in order to create the right incentives. A full evaluation of the  potential benefits and impacts of implementing a fee structure would be a  potential step in identifying the most prudent and effective approach.  Second, because new technologies that could better facilitate sharing are  in some cases years from market readiness, spectrum users could be  encouraged to dedicate more resources to research and development.  Additionally, users need spectrum access for testing new technologies. If  there are continued limitations to accessing spectrum for testing, it may  be impossible to validate technologies under realistic conditions, further  delaying the availability of these technologies to users and the opening of  new market opportunities and economic growth. Third, users have  expressed concern about the timeliness of FCC and NTIA spectrum- sharing processes. If these processes continue to be lengthy and  unpredictable, federal and nonfederal users may continue to be reluctant  to share spectrum. As the debate about these options continues, it is  clear that more information is needed to further the understanding and  discussion about which incentives and opportunities will be the most  feasible and effective toward promoting sharing as a viable solution to  address increasing spectrum demand.

	Recommendations for Executive Action

To better identify the most feasible incentives to promote spectrum  efficiency and sharing, we recommend that the NTIA Administrator and  the FCC Chairman jointly take the following three actions:
Report their agencies’ views and conclusions regarding spectrum  usage fees to the relevant congressional committees, specifically with  respect to the merits, potential effects, and implementation challenges  of such a fee structure, and what authority, if any, Congress would  need to grant for such a structure to be implemented.
Based on the findings of current research and development efforts  under way, determine how the federal government can best promote  federal and nonfederal investment in the research and development of  spectrally efficient technologies, and whether additional spectrum is  needed for testing new spectrum efficient technologies.
Evaluate regulatory changes, if any, that can help improve and  expedite the spectrum sharing process.

	Agency Comments and Our Evaluation

We provided a draft of this report to the Department of Commerce and  FCC for review and comment. In response to our draft report, Commerce  and FCC provided written comments, which are reprinted in appendix II  and III, respectively. The agencies also provided technical corrections to  the draft report, which we incorporated as appropriate. In summary,  Commerce concurred with our findings, but believes that activities  completed or under way by NTIA and FCC satisfy the recommendations  contained in our draft report. In its written comments, FCC noted that the  agency was pursuing the goals outlined in the National Broadband Plan,  and highlighted several actions it is taking to promote more shared  access to spectrum.
In our draft report, we included four recommendations. The first  recommendation was that NTIA and FCC jointly examine the merits and  challenges associated with implementing spectrum usage fees.  Commerce noted that the issue was examined by the CSMAC in 2010  and 2011 and that consensus could not be reached regarding the  imposition of such fees. Moreover, the agency states that further study is  unlikely to resolve the issues. We agree that implementation of spectrum  usage fees or a similar structure that can provide users with greater  incentive to efficiently use or share spectrum raises several difficult  questions, such as authority to implement a new fee structure and  ensuring that federal operations are not disrupted. We also agree that  further study may not resolve these issues. Nevertheless, our findings  suggest that additional incentives are still needed for users to seek out  more efficient ways of using spectrum, such as sharing, and that  Congress could benefit from more information to fully understand the  implications of a fee structure. Therefore, we altered our recommendation  to state that NTIA and FCC, rather than initiate additional study on the  issue, should provide Congress with the agencies’ views and conclusions  regarding the merits, potential effects, and implementation challenges of  such a fee structure, and authorities that Congress would need to grant  that such a structure be implemented. We believe such actions would  help provide members of Congress with information they could use to  evaluate any proposed fee structure or other proposed incentive  schemes.
Our second recommendation was that FCC and NTIA jointly study  whether spectrum should be repurposed and made available for  unlicensed use. However, in written comments the agencies identified  NTIA’s and FCC’s recent efforts to identify spectrum for repurposing,  which have focused on allowing unlicensed users to share the spectrum.  Consequently, we removed that recommendation from our final report.
Our draft report also recommended that the agencies jointly study (1)  actions that could help spur research and development and (2) regulatory  changes that might improve the spectrum-sharing process. Commerce  stated that NTIA and FCC already have efforts under way in these areas  that fulfill the goals of these recommendations and that additional study is  unnecessary. We acknowledge throughout the report that NTIA and FCC  have activities under way in these areas, some of which were initiated  during the course of our review. The intent of our recommendations was  not to displace these activities with additional study, but rather to support  these actions, and to encourage the agencies to take further steps to  enable real world testing of spectrum-sharing technologies and to  streamline and improve the regulatory processes that enable spectrum  sharing. We revised our draft recommendations to clarify that we are  encouraging NTIA and FCC to take further actions in these areas, as  opposed to further study, and we will continue to monitor the agencies’  efforts in these areas.
In addition to Commerce and FCC, we also provided the Departments of  Defense, Homeland Security, Interior, Justice, Transportation, and  Treasury the opportunity to comment on segments of the report that  pertain to the data and information they provided. Except for the  Department of Transportation, which did not provide any comment, the  agencies verified the key facts we obtained from them and provided  technical corrections to the draft report, which we incorporated as  appropriate.
We are sending copies of this report to the Secretary of Commerce, the  Chairman of the Federal Communications Commission, and appropriate  congressional committees. In addition, the report will be available at no  charge on GAO’s website at http://www.gao.gov. If you or members of  your staff have any questions about this report, please contact me at  (202) 512-2834 or goldsteinm@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. Major contributors to this report are listed in appendix IV.

Appendix I: Federal Agencies, Nonfederal Spectrum Users and Experts Interviewed Regarding Spectrum Sharing

	Selected Interdepartment Radio Advisory Committee Member Agencies

	Nonfederal Spectrum Users

Appendix II: Comments from the Department of Commerce

Appendix III: Comments from the Federal Communications Commission

Appendix IV: GAO Contact and Staff Acknowledgments

	GAO Contact

	Staff Acknowledgments

In addition to the contact person named above, Andrew Von Ah  (Assistant Director), Eli Albagli, Amy Abramowitz, Michael Clements,  Andy Clinton, David Goldstein, Brian Hartman, Bert Japikse, Elke  Kolodinski, Jean McSween, Erica Miles, Sally Moino, Joshua Ormond,  Amy Rosewarne, Hai Tran, and Jarrod West made key contributions to  this report.

Summary:
Why GAO Did This Study

The increasing popularity of wireless devices that use spectrum, combined with federal spectrum needs for national defense and other public safety activities, have created concerns that a "spectrum crunch" is looming. However, there is also evidence that at any given time or place, spectrum lies fallow or is only intermittently used. In an effort to use spectrum as efficiently as possible, advisory groups and others have proposed solutions to share spectrum.
This requested report examines (1) what factors prevent users from sharing spectrum more frequently and (2) what actions the Federal Communications Commission (FCC), the National Communications Information Administration (NTIA), and others can take to encourage more sharing and efficient spectrum use. GAO reviewed plans and documents from FCC and NTIA regarding their management of nonfederal and federal spectrum-sharing activities, respectively. GAO also interviewed federal and commercial spectrum users, industry and academic experts, and other stakeholders.

What GAO Found

Some spectrum users may lack incentive to share spectrum or otherwise use it efficiently, and federal agencies and private users currently cannot easily identify spectrum available for sharing. Typically, paying the market price for a good or service helps to inform users of the value of the good and provides an incentive for efficient use. Federal agencies, however, pay only a small fee to the NTIA for spectrum assignments and therefore have little incentive to share spectrum. Federal agencies also face concerns that sharing could risk the success of security or safety missions, or could be costly in terms of upgrades to more spectrally efficient equipment. Nonfederal users, such as private companies, are also reluctant to share spectrum. For instance, license holders may be reluctant to encourage additional competition, and companies may be hesitant to enter into sharing agreements that require potentially lengthy and unpredictable regulatory processes. Sharing can be costly for them, too. For example, nonfederal users may be required to cover all interference mitigation costs to use a federal spectrum band, which might include multiple federal users. Sharing can also be hindered because information on federal spectrum use is lacking and information regarding some federal spectrum use may never be publicly available, a situation that makes it difficult for users to identify potential spectrum for sharing.
Federal advisors, agency officials, and experts have identified several options that could provide greater incentives and opportunities for more efficient spectrum use and sharing by federal and nonfederal users. These options include, among other things: considering spectrum usage fees to provide economic incentive for more efficient use and sharing; identifying more spectrum that could be made available for unlicensed use, since unlicensed use is inherently shared; encouraging research and development of technologies that can better enable sharing; and improving and expediting regulatory processes related to sharing. However, these options involve implementation challenges. For example, setting spectrum usage fees for federal users may not result in creating the proper incentives, because agency budgets might simply be increased to accommodate their current use. While new technologies that overcome some of the inherent challenges with sharing spectrum are being developed, proving those technologies under real-world conditions can be difficult, and few incentives exist at the federal level to encourage such technology development. Finally, FCC and NTIA have taken some actions to potentially reduce the amount of time and even the need for potential rulemakings sometimes associated with spectrum sharing, but stakeholders and experts suggested that more could be done to expedite the approval process, such as automating some steps and developing better capabilities to track the status of spectrum-sharing applications. However, any changes to federal regulatory processes related to spectrum management and sharing would need to be carefully studied with respect to potential benefits and costs.

What GAO Recommends

FCC and NTIA should jointly (1) report to Congress on the potential merits and effects of a spectrum fee, (2) determine how to best promote spectrum research and development, and (3) evaluate what regulatory changes might improve the spectrum sharing process. The agencies generally agreed with GAO's findings but identified ongoing efforts that address the recommendations. GAO has modified the recommendations as described further in the report.