Wireless Windfall

Who says congress never gets anything done? Spurred by the need to generate new revenue, lawmakers agreed to let the U.S. government raise as much as $25 billion by auctioning off valuable wireless spectrum, promising better mobile service for tens of millions of consumers and opening up new frequencies for next-generation wi-fi networks. Mobile giants like AT&T and Verizon Wireless have been sounding increasingly ominous warnings about a coming “spectrum crunch,” thanks to the rapid proliferation of data-hungry iPhones, iPads and Android-based smart phones. The new spectrum will mean faster, more reliable service for movies, video games and other bandwidth-intensive services.

Under the plan, the Federal Communications Commission (FCC) will sell unused wireless frequencies currently owned by TV broadcasters, which will divide up to $1.75 billion for voluntarily giving up their spectrum. It’s a win-win for the U.S. government: $15 billion raised by the auction will be used to extend unemployment benefits for 4.5 million people through the end of 2012. Another $7 billion will fund a nationwide emergency-services communications network that police, firefighters and other first responders have been asking for since 9/11. The plan also calls for access to chunks of unlicensed spectrum–known as white spaces–which can connect mobile devices to new, long-range super wi-fi networks.

Improving broadband service for consumers and creating a public-safety network seem like no-brainers, but congressional negotiators squabbled for months over the details. Republicans succeeded in preventing the FCC from excluding major carriers from the auction (though it can curb their share of individual markets). Democrats prevailed in their insistence that the plan preserve access to unlicensed spectrum for super wi-fi. In the end, the urgent need to pass extensions of the payroll-tax cut and unemployment benefits–and find revenue to pay for them–forced both sides to compromise.