GAO: Spectrum relocation costs often exceed projections

The costs to civilian agencies for relocating their spectrum assets out of a band that was auctioned off for commercial use are far exceeding government projections, according to a study by the Government Accountability Office which could feature prominently in the ongoing debate on how best to get federal spectrum into commercial hands.

This is not just a history lesson -- the numbers are interesting because they provide some guidance on the costs of clearing federal spectrum down the road, under President Obama's plan to make 500MHz of spectrum available for commercial use. The mobile carrier industry is eager to get its hand on more spectrum, particularly in prime locations. However, the law requires that the proceeds from spectrum auctions exceed by 110 percent the associated costs of relocating federal users.

Originally pegged at $1 billion, the costs of relocating the designated spectrum holdings of the civilian agencies are expected to clock in at about $1.5 billion, according to estimates from the Office of Management and Budget and the National Telecommunications and Infrastructure Agency, the Commerce department division that manages federal spectrum. The 2006 auction of the 1710-1755 megahertz band raised about $6.9 billion for the U.S. Treasury, so the government is still coming out ahead despite a 47 percent increase in actual costs over projections.

The Defense Department provided a much more accurate projection of clearing and relocating its assets from the 1710-1755MHz band, the GAO found. Defense agencies expect to complete the work for $275 million – about $80 million under its projection of $355 million.

The DOD estimated in 2011 that clearing the 1755-1810 MHz band -- the next chunk of spectrum likely to be put on the block -- would take 10 years and cost about $13 billion, including moving the Air Combat Training System. The GAO report validates those cost estimates, saying the "preliminary cost estimate for relocating systems from the 1755-1850 MHz band substantially or partially met GAO's best practices." 

The costs of relocating specialized government spectrum uses vary widely. In some cases, equipment can be simply retuned to new frequencies. In other more extreme cases, like communications with satellites and space-based systems, the spectrum allocation must remain fixed, because no one is going to rocket into space to adjust frequency settings.

Industry is looking hard at a 25 MHz swath of spectrum between 1755 and 1780 MHz, because it pairs well with the 2155-2180 MHz band, due to auction soon. Air Force Gen. Robert Wheeler told a recent hearing of the Senate Armed Services Committee that the Defense Department has "significant reservations" about making that spectrum available for commercial auction. At the same hearing, a leading industry representative cautioned against government entities spending too much time evaluating the feasibility of reallocations and overestimating the cost of moving government users. If the GAO is correct, and government estimates of spectrum relocation costs are coming in low, it could take the wind out of these arguments.