How are radio frequencies purchased in the USA? Can I purchase a specific frequency that's already in use?

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How are radio frequencies purchased in the USA? Can I purchase a specific frequency that's already in use?

In the United States, auctions are the primary mechanism by which radio spectrum frequencies for non-federal use are purchased. So far, the Federal Communications Commission (FCC), which regulates the assignment of such frequencies, had conducted no less than 100 spectrum auctions in the previous 23 years. Since transactions such as transfer of control, assignment of authorization, and spectrum leasing can take place in secondary markets, it is possible for another individual or entity to buy out a radio spectrum frequency that is currently in use. These secondary market transactions are subject to FCC approval, however.

HOW RADIO FREQUENCIES ARE PURCHASED

The allocation of frequencies on the radio spectrum, which covers electromagnetic spectrum frequencies ranging from 3 kHz to 300 GHz, is regulated by either the Federal Communications Commission (FCC) for non-federal use or the National Telecommunications and Information Administration (NTIA) for federal use. Given the details of your request, I assumed that you are interested in the purchase of radio spectrum frequencies for non-federal use.

Assignment of frequencies for non-federal use is mainly done through auctions conducted by the FCC. It has been this way since 1994 after the FCC was given the authority to utilize competitive bidding by Congress in 1993. Prior 1994, the FCC had used lotteries and comparative hearings to decide which one among mutually exclusive applicants will be awarded a license. Compared to lotteries and comparative hearings, auctions were found more effective in allocating licenses.

Administered online, these auctions are available to individuals and companies deemed qualified by the FCC and that have submitted an application and an upfront payment for the right to bid. Licenses issued through these auctions by the FCC commonly have a 10-year term. They indicate the frequency band, the geographic area, and the signal power that can be used.

Regarding your question about whether a frequency that is already in use can be bought, it appears such scenario is possible considering that the FCC has requirements pertaining to transfers of control of a broadcast company or station. For example, an individual or entity that has purchased an existing broadcast station is required to submit within 30 days the relevant filing fee and its accomplished FCC Form 314. FCC's approval of this application means it is consenting to the assignment of the broadcast construction license or permit. Also, within 90 days, the form relating to ownership of broadcast station (either FCC Form 323 or 323-E) must then be submitted. For involuntary transfers of control, there is a separate form, FCC Form 316.

Also, according to an article recently published by the American Enterprise Institute, "with regulatory permission, licensees can sell their licenses in what are called secondary markets." Indeed, the FCC has a Secondary Markets Application Search facility that contains applications for assignment of authorization, transfer of control, and spectrum leasing.

FREQUENCY OF SPECTRUM AUCTIONS

From the FCC's Auctions Summary page, it appears the commission had already completed at least 100 auctions since 1994. That is at least 100 auctions in 23 years. Though it may seem from this rate that the FCC conducts auctions fairly often, it is not clear how many of these auctions were specifically for radio spectrum frequencies. Moreover, the commission warns that "in many areas of the country, no frequencies may be available on which a new station could begin operating without causing interference to existing stations."

Though it is said that an auction may be as short as one day or as long as several weeks, FCC's latest spectrum auction ran for a year. It started on March 29, 2016 and concluded on March 30, 2017. The length may have something to do with the fact that this specific auction is the commission's first-ever broadcast incentive auction, which was designed in line with the commission's National Broadband Plan to free up 500 MHz of wireless or radio frequency spectrum by 2020 for broadband use. The auction design, the number of licenses on offer, and the number of bidders all influence the length of the actual auction. There are several pre-auction activities as well to orient potential participants and qualified bidders on the auction procedures.

Two auctions make up the incentive auction — the reverse auction and the forward auction. The reverse auction establishes the lowest price at which broadcasters are willing to forgo their spectrum usage rights, while the forward auction establishes the highest price companies or individuals are willing to pay for the rights. Connecting these two auctions is the "repacking" process, which is the reorganization of channels such that blocks of spectrum are cleared up.

The FCC's first-ever incentive auction resulted in the repurposing of 84 MHz of spectrum, 70 MHz of which was for licensed use while 14 MHz of which was for unlicensed use and wireless microphones. It also generated a total of $19.8 billion in revenue, $10.05 billion of which was for winners of the reverse auction while over $7 billion of which was for the U.S. Treasury. The auction preceding this incentive auction was conducted in 2015; it generated $41 billion in revenue for 65 MHz.

CONCLUSION

The Federal Communications Commission (FCC) conducts auctions to establish which individuals or entities will be granted spectrum usage rights. In the past 23 years, it had already completed at least 100 spectrum auctions. With secondary market transactions such as transfer of control, assignment of authorization, and spectrum leasing, the purchase of a licensee's spectrum usage rights is a possibility. These transactions are for approval by the FCC.
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