What does it mean for the FCC to auction spectrum?

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I understand that it is necessary for broadcasters, wireless companies, etc for transmission. But there can only be a finite amount of spectrum. Has it all been used up? If there is some remaining then does the FCC hold it back? Do companies get more efficient in using it? If it is such a finite and valuable resource then wouldn’t companies pay a lot for their licenses?

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Yes they do pay a lot for it. The FCC often couples a spectrum with a location. Radio stations for example have to prove that their transmitters don’t broadcast further outside of an area, or a frequency than they are allowed. The FCC will sometimes also audit these stations.

Also sometimes these frequencies don’t need to be very wide. If you’re sending compressed digital data over the frequency you can get away with a narrower broadcast frequency.

And that’s about all I know, from having been raised by a broadcast engineer and occasional inspector-for-hire.

Not an expert but I think they are limited because at some point that spectrum becomes visible (aka light) and on the other side it starts using too much energy. The more high energy spectrum is you are sending at the more energy gets lost every meter it travels so your broadcast will reach fewer people with the same energy. At some point this just becomes too inefficient.
So it’s a limited spectrum. Now when the FCC auctions spectrums it just assigns the right to use a certain spectrum to someone. This spectrum might have previously belonged to someone else or it might be completely new, a “reserve” spectrum if you so will.

Spectrum is scarce and valuable because the tiny antenna in an iPhone can only access a narrow range of frequencies. All the cellphone companies would like to access all of them, as this would eliminate competitors. So, the FCC has a complex system for renting out vccess to them which seeks to preserve competition.

Not all radio spectrum is under the authority of the FCC. Some is managed by NTIA for government uses.

A colorful chart showing what frequencies are used for what has a link at https://www.ntia.doc.gov/page/2011/united-states-frequency-allocation-chart

Once upon a time, frequencies were free. It’s only in about the last 25 years that they’ve been auctioned off, bring in a lot of money to the US treasury from companies that profit off the use of the frequencies

Three factors on spectrum allocation:

First is you don’t want to have two groups using the same frequency if possible. The Coast Guard needs to talk to one another and if their frequency was also used by cellular phones they might not be able to talk to each other of someone is on the phone. So the spectrum is broke into chunks for each group.

Here is the map as of 2011: https://www.eitdigital.eu/uploads/pics/page1-6300px-United_States_Frequency_Allocations_Chart_2011_-_The_Radio_Spectrum.pdf.jpg

Second is that different frequencies are good for different situations. Higher frequencies can go short distances, line of sight to the radio tower, while lower frequencies can easily cover the country or even the planet but are not good for short distances. Depending on the use case you want to pick a frequency that fits your needs.

Third is the amount of bandwidth needed for your service. Morse code and low data rate digital radios need a very small amount of frequency to transmit information. High quality wide band FM uses about 75 kHz while Morse code can be down around 50Hz. The more data the wider spectrum each user needs. So finding space where a lot of users can coexist may be a need.

The auctions occur when some services stop needing spectrum and other services need more. No more analog TV in the US so that spectrum got repurposed. Cell companies want more coverages for more users with more data so they need to buy more.

As for paying, yes they pay a lot of money. But then there are cases like Amateur Radio where we get the spectrum for free as long as you’re licensed (taking a test).