If Defense Department cost estimates hold true, about half of the revenue Congress expects to obtain through the latest round of auctions of the radio spectrum now used by federal agencies will be lost because DOD will spend the funds to reallocate its systems to other areas of the spectrum. The Co
If Defense Department cost estimates hold true, about half of the revenue Congress expects to obtain through the latest round of auctions of the radio spectrum now used by federal agencies will be lost because DOD will spend the funds to reallocate its systems to other areas of the spectrum.
The Commerce Department's National Telecommunications and Information Administration (NTIA) last week released its "Spectrum Reallocation Report," which states that the three military services estimated the financial impact of the sale would total more than $1 billion.
A spokesman for the Office of Management and Budget said a "rough" estimate of the money the government would raise through the auction was about $2 billion.
This latest spectrum sale was mandated by Congress in the Balanced Budget Act of 1997. The law called on federal agencies to identify 20 MHz of radio frequency in the area of the spectrum that is below 3 GHz. Private spectrum users will bid for use of these frequencies in auctions held within the next four years.
Anthony Valletta, acting assistant secretary of Defense for command, control, communications and intelligence, wrote to Commerce last month warning that reallocation costs would be substantial. "Identifying spectrum for reallocation has been a difficult process as spectrum under 3 GHz has become increasingly congested," Valletta wrote to Larry Irving, assistant secretary of Commerce for communications and information. "If replacement of major systems is required, [reallocation] costs could be significantly higher [than $1 billion]."
The OMB spokesman would not comment on the high reallocation cost estimate provided by DOD. He said OMB has not performed its own cost analysis, nor has it "endorsed" DOD's numbers.
Certainly, DOD's estimate far exceeds those provided by other agencies. The NTIA report said the Air Force, the Army and the Navy estimated their reallocation costs at $520 million, $260 million and $251 million, respectively. By contrast, the Federal Aviation Administration— the agency with the fourth-highest reallocation costs— estimated its costs at only $10 million.
Cindy Raiford, deputy director of communications and the DOD spectrum manager in Valletta's office, said the cost of reallocation will be high because of what she called a domino effect. "If you make a change to one system, you have to look at interference and compatibility with all of the other systems on that platform," Raiford said.
"And not only do we have to be concerned about how we operate domestically, we have to be concerned about how we operate all over the world," she added. "We have to be concerned that we do not interfere with [other countries'] domestic systems as well as interoperability with our allies.
"Some see licensing spectrum as a way to gain new revenue, but you have to fully assess the costs," Raiford said.
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