A look at the CBO incentive auction estimate


Leaders of the Senate Commerce Committee have been pushing for an incentive auction bill that gives spectrum to the public safety community. Other versions would have that same spectrum auctioned off and made available to responders when necessary. Commerce Chairman Jay Rockefeller (D-WV) and Ranking Member Kay Bailey Hutchison (R-TX) cited a Congressional Budget Office estimate saying their plan would knock $6.5B off of the federal deficit.

In a joint statement, they said, “The Congressional Budget Office’s estimate reconfirms that our bill builds a robust public safety network, pays for itself, and still generates real deficit reduction.  This is just another step along the path to final passage.  S.911 has strong bipartisan support, and we look forward to getting it through the Senate.”

According to the report, the going rate for frequency in the bands suitable at all for mobile broadband ranges anywhere from 55 cents to over a dollar per person per MHz, depending on specific frequency characteristics. They arrived at a weighted average cost of 80 cents, and believe it would be optimistic to pull in that much at this time. They expect 70 cents to be more like it.

The top-line result of an incentive auction as called for in S.911 is expected to be $24.5B. Of that, $18B would be considered a new expense, leaving $6.5B to put toward deficit reduction.

Wells Fargo’s Marci Ryvicker commented, “The Congressional Budget Office is estimating that incentive auctions of broadcast spectrum would bring in $6.5B toward reducing the national deficit out of a total $24.5B that would be made after compensating licensees for vacating the spectrum. The CBO doesn’t spell out exactly how much broadcasters would get but did indicate that $1B would likely cover the payments to those who don’t sell for moving out of the spectrum and to cable operators for any modifications they would have to institute to receive signals.

The CBO cost estimate can be read here.