HIGH WIRELESS ACT
MAY 7, 1996
The Federal Communications Commission has just completed auctioning off the rights to use Personal Communication Service (PCS) airwaves. Economics Correspondent Paul Solman explains the auction and its potential impact on American consumers and the global communications industry.
PAUL SOLMAN: For most of us, a big-time auction is basically a spectator sport--not much chance we're buying this Claude Monet painting, for instance, or, for that matter, selling it. But in Washington on December 5th, they began auctioning off something of ours, something you might not have known we had, something with enormous value, as it happens.
VICE PRESIDENT AL GORE: Is everybody ready?
PAUL SOLMAN: The right to use our airwaves.
VICE PRESIDENT AL GORE: Let the auctions begin.
PAUL SOLMAN: Now the government used to give these rights away on an exclusive basis to the radio and TV frequencies in different areas of the country, for example. And even as much lower frequencies began to be used, the so-called cellular telephone, the government was still giving away our airwaves by lottery. MIT economist Jerry Hausman thought that was sort of foolish.
JERRY HAUSMAN, Economist: They did the cellular lottery for Cape Cod, a dentist won sold it a week later for $40 million. Now, I've never really thought the dentists are the truly needy in this country, and so it's much better for taxpayers to get the money than the truly needy dentist who won the Cape Cod cellular franchise.
PAUL SOLMAN: This is actually going to make a difference to the two of us as taxpayers?
JERRY HAUSMAN: Yes. In fact, it's going to lower the deficit. The government's going to get the money, and let's say it's $20 to $40 billion dollars, that's real money even in Washington nowadays.
PAUL SOLMAN: And, remember, it's your real money and mine. Even Hausman's low estimate, $20 billion, would work out to about $200 per American household for the PCS licenses. Okay. Time out for a brief moment of science here on the NewsHour. This some of you may recall from physics class is the electromagnetic spectrum, cosmic rays up here at the highest frequencies and shortest wave lengths down through X-rays, visible light, that's those colors you see, radar, TV, that's about there, radio, and down here at the lowest frequencies and longest wave lengths, cellular telephone right about there maybe, and now personal communications services, or PCS, down even lower. Now, let's cut through the actual science part of this because the business person simply needs to know that way down in the PCS band you need to put up more transmitters to give the phones a reasonable range. And that costs money. But the payoff could be tremendous, according to Reed Hundt, chairman of the Federal Communications Commission, which is running the PCS auction.
REED HUNDT, Chairman, FCC: We will see about 1 percent added to the Gross National Product of this country through the development of a mobile communications industry, about 300,000 new jobs in mobile communications alone, and another 700,000 jobs that are jump-started into being because of the global communications business.
PAUL SOLMAN: In short, this could be a boom industry, and at a pre-auction press conference featuring, by the way, not one but two FCC officials who bore a startling resemblance to the Vice President, we were given a sampling of the world beyond cellular, so-called personal communications.