Detailed Information on the
Auctions of Licenses for Electromagnetic Spectrum Assessment

While the FCC has a number of performance measures, it will seek to ensure that it uses the most meaningful set of measures to manage the Auctions program. Annual measures that are appropriate for setting performance targets will be explored. Long-term measures will be developed based on annual measures. Also, optimal efficiency measures will be examined.

The FCC will seek to present a more detailed cost justification for the Auctions program in its budget request. This information should be presented in the context of the resources required to meet the program's goals, and should also explain how the resource requirements relate to anticipated auction activity in the fiscal year.

Measure: Number of Commercial Mobile Radio Service (CMRS) subscribers to wireless services (millions) (calendar year)

Explanation:The number of CMRS subscribers (e.g. mobile telephony and data) accessing services carried on spectrum, most of which was awarded through the auctions program, demonstrates the development and deployment of services to the public. This information is publicly available in the FCC's annual CMRS Competition Reports: located at (http://wireless.fcc.gov/cmrsreports.html#annual). The 2005 number can be found at (http://files.ctia.org/img/survey/2005_endyear/slides/EndYear_1.jpg).

Measure: Minutes of wireless use per month (calendar year)

Explanation:The FCC generates and tracks the average number of wireless minutes per month each subscriber consumes. Through this measure, the FCC gains insights into the service benefits being successfully delivered to the public. The data underlying these measures are available approximately six months after the conclusion of the calendar year. This information is publicly available in the FCC's annual CMRS Competition Reports: located at (http://wireless.fcc.gov/cmrsreports.html#annual). The 2005 number is forthcoming (June 2006) from the Cellular Telecommunications & Internet Association (CTIA) at (http://www.ctia.org).

Measure: Average price of wireless service per minute (calendar year)

Explanation:The FCC monitors the average price of wireless service per minute for subscribers. A trend of decreasing prices indicates that the market is both competitive and driving market participants towards efficient and intensive spectrum use. The data underlying these measures are available approximately six months after the conclusion of the calendar year. This information is publicly available in the FCC's annual CMRS Competition Reports: located at (http://wireless.fcc.gov/cmrsreports.html#annual). The 2005 number is an FCC estimate and will be published in the 2006 CMRS Competition Report to be released later this year.

Measure: Spectrum Auction receipts deposited in the Treasury (millions) (fiscal year)

Explanation:One of the principal goals of the auctions program is to compensate the public for use of the public airwaves. Although the FCC is prohibited from using total cash receipts as a basis for regulatory decisions involving auctions, it maintains a record of cash collections generated through the program. These amounts reflect the net fiscal year collections. Collection timing is unique to each auction and receipts may not be recognized until several months after the close of an auction. The cash collections for spectrum auctions may be found at (http://www.fcc.gov/oig/FCCFY01AuditedFS.pdf), page 48 (200 and 2001), (http://www.fcc.gov/oig/FY2002FinancialStatementAuditReport.pdf), page 62 (2002), (http://www.fcc.gov/Reports/ar2004.pdf), page 85 (2003, and (http://www.fcc.gov/Reports/ar2005.pdf), page 84 (2004 and 2005).

Measure: Percentage of the total U.S. population that lives in counties with access to three or more different operators offering mobile telephone service. (calendar year)

Explanation:One of the principal goals of the auctions program is to increase competition. Annually, the FCC analyzes many services to determine if competition is demonstrated through the presence of three or more operators per county. This information is publicly available in the FCC's annual CMRS Competition Reports: located at (http://wireless.fcc.gov/cmrsreports.html#annual). The 2005 number is an FCC estimate and will be published in the 2006 CMRS Competition Report to be released later this year.

Measure: Mobile telephone digital coverage (calendar year)

Explanation:This measure is the percent of total U.S. population that live in counties where operators offer digital mobile telephone service. In order to measure the rapid deployment of new technology, the FCC analyzes the roll-out of selected major advances. Digital service is a relatively recent cellular technology that serves as a strong benchmark for industry's ability to deploy new technologies. The FCC is considering whether or not to continue tracking this measure given near total market penetration. The data underlying these measures are available approximately six months after the conclusion of the calendar year. This information is publicly available in the FCC's annual CMRS Competition Reports: located at (http://wireless.fcc.gov/cmrsreports.html#annual). The 2005 number is an FCC estimate and will be published in the 2006 CMRS Competition Report to be released later this year.

Measure: Wireless broadband deployment (number of wireless channels with over 200 kbps in at least one direction) (calendar year)

Explanation:Baseline as of June 2005. One of the principal goals of the auctions program is to promote the development and rapid deployment of new technologies, products and services for the benefit of the public. Semi-annually, the FCC collects and analyzes data on broadband deployment throughout the U.S. to determine whether this goal is being met. In 2005, the FCC refined its data collection to more specifically track what broadband services are directly attributed to auctionable spectrum. The FCC established this baseline in 2005, and will continue to track progress using this measure. This number may be found at High-Speed Services for Internet Access: Status as of June 30, 2005, Industry Analysis and Technology Division, Wireline Competition Bureau, April 2006 (http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-264744A1.pdf).

Measure: Percentage of licenses won by entities self identified as rural, minority-owned, or women-owned. (fiscal year)

Explanation:In order to measure the program's effectiveness in disseminating licenses to rural telephone companies and minority- and women-owned businesses, the FCC requests that auction applicants indicate whether they fall within one or more of these categories. The reporting is voluntary and aids the FCC in gauging whether its efforts to provide opportunities to these types of entities are successful. No target is appropriate given the unique characteristics of each spectrum band and constitutional restrictions on race- and gender-based government programs. This data can be aggregated through an analysis of publicly available auction applications.

Measure: Percentage of licenses won by entities identified as small, very small or entrepreneurial. (fiscal year)

Explanation:The program is able to gauge its effectiveness in disseminating licenses to small businesses by tracking the number of auction applicants that indicate on their auction applications that they are small, very small or entrepreneurial businesses as those terms are defined for specific services. If an applicant is seeking a bidding credit based on its size, it must supply supporting information in the application. Applicants may, however, self-report small business, very small business, and entrepreneur status only for services in which size-based bidding credits are available. In the past the application form also allowed for voluntary self-reporting of small business status by entities that did not seek bidding credits. No target is appropriate given the unique characteristics of each spectrum band brought to market and the types of business entities seeking particular spectrum. This data can be aggregated through an analysis of publicly available auction applications.

Measure: License auto-processing percentage (fiscal year)

Explanation:This measure reflects the percentage of licenses processed using a fully automated procedure. By designing its rules and applying technology in a strategic manner, the FCC is seeking to expedite post-auction license processing through automation. Due to the unique nature of many auction licensing transactions, the FCC does not identify a specific target; however, it seeks to increase automated processing whenever feasible. This information is maintained for internal processing and is generally not available to the public.

Measure: Average time for processing auction licensing transactions (fiscal year)

Explanation:The FCC seeks to process all transactions involving auctioned licenses within 90 business days. Timely processing of these transactions promotes the rapid deployment of services to the general public. This information is maintained for internal processing and is generally not available to the public.

Measure: Auction-related transactions filed electronically (fiscal year)

Explanation:The FCC makes available and encourages electronic filing of all auction-related transactions. Through this approach, the FCC seeks to expedite processing and reduce errors arising from manual data entry. This information is maintained for internal processing and is generally not available to the public.

Is the program purpose clear?

Explanation: The FCC's Auctions program awards licenses to use the electromagnetic spectrum for communications services through competitive bidding. The program's purposes are identified in its authorizing statute, Section 309(j) of the Communications Act, as amended in 1993. These purposes are: to promote the development and rapid deployment of new technologies, products, and services for the benefit of the public; to foster economic opportunity and competition through the dissemination of licenses among a wide variety of applicants, including small businesses, rural telephone companies, and minority- and women-owned businesses; to promote efficient and intensive spectrum use; and to compensate the public for use of the public airwaves. Since Supreme Court rulings holding that a strict scrutiny standard of judicial review applies to all government-imposed racial classifications and applying an intermediate scrutiny standard of review to gender classifications, the dissemination of licenses to minority- and women-owned businesses has remained one of the program's statutory purposes. However, in the wake of these rulings the FCC has promoted the participation of minority- and women-owned businesses through race- and gender-neutral means, finding that, because many minority- and women-owned businesses are also small, they benefit from small business benefits.

Evidence: The program's statutory purposes are set forth at 47 U.S.C. § 309(j)(3) (https://wireless2.fcc.gov/omb/part/index.htm?doc=47USC309.pdf#page=5). They are also discussed in the legislative history of the Omnibus Budget Reconciliation Act of 1993 (https://wireless2.fcc.gov/omb/part/index.htm?doc=0_279d.pdf#page=68), which added Section 309(j) to the Communications Act. See H.R. Rep. 103-111, 246-49, 253-55; H.R. Conf. Rep. 103-213, 482. The Supreme Court held that all government-imposed racial classifications are subject to a strict scrutiny standard of judicial review in Adarand Constructors, Inc. v. Pena, 515 U.S. 200 (1995) (https://wireless2.fcc.gov/omb/part/index.htm?doc=adarand_v_pena.pdf), and applied an intermediate scrutiny standard of review to a State gender classification in United States v. Virginia, 518 U.S. 515 (1996) (https://wireless2.fcc.gov/omb/part/index.htm?doc=US_v_Virginia.pdf).

Does the program address a specific and existing problem, interest, or need?

Explanation: The Auctions program addresses the need for a fair and efficient method of assigning spectrum licenses to the parties that are best able to provide rapid, innovative, and reliable service to the public. Spectrum-based technologies and services have become critically important to U.S. consumers and the economy in recent decades, and the resulting demand for spectrum is significant. Licensing methods used prior to establishment of the Auctions program, such as comparative hearings and lotteries, often delayed delivery of services to the public. Lotteries could also result in unjust enrichment of speculators. Auctions result in licenses going to the highest valued use, minimize the need for secondary market transactions, and have a transparent methodology. In addition, auctions are quicker and less costly than either lotteries or competitive hearings. In most instances, licenses for a particular service are awarded by auction as a result of the FCC deciding that it is in the public interest to establish a licensing scheme that meets the requirements of Section 309(j), which include the filing of mutually exclusive applications (i.e., that only one entity may hold a particular license). The timing of auctions is usually determined based on the FCC's assessment of industry's need for spectrum in certain bands. In a few cases, Congress has directed the FCC to conduct auctions for particular spectrum licenses by particular dates. The majority of auctions have been for mobile telecommunications services licenses, although auctions are also used to award licenses for fixed telecommunications services, and broadcast services. In furtherance of its statutory goal of disseminating licenses among a wide variety of applicants, the program offers preferences, generally in the form of "bidding credits" (i.e., discounts off of winning bids), to qualified small businesses in many auctions. Bidding credits are designed to address the problem of small firms having more limited access to capital than larger firms. The specific level of discounts provided varies by auction; the FCC's rules provide for 15%, 25%, and 35%. The FCC's unjust enrichment rules are designed to prevent such benefits from being used for the realization of windfall profits. These rules require entities that acquire licenses with the help of small business benefits (such as bidding credits) to make unjust enrichment payments when they lose their eligibility for the benefits received, or when they transfer licenses to other entities that are not eligible for the same benefits (see 1.4 and 3.2). Bidding credits are also made available to wireless telecommunications carriers that provide service to Tribal Lands to provide incentives for the deployment of service in those areas.

Evidence: The GAO has found that "demand for spectrum has exploded over the past several decades" and that the FCC's auctions have "mitigated a number of problems associated with comparative hearings and lotteries." These findings are documented in Strong Support for Extending FCC's Auction Authority Exists, but Little Agreement on Other Options to Improve Efficient Use of Spectrum, Report to Congressional Committees, GAO-06-236, at pages 1, 4, 17, 20-21 (December 2005) (https://wireless2.fcc.gov/omb/part/index.htm?doc=d06236.pdf). This report also concludes that of the three viable options for improving spectrum management extending the FCC's auction authority is overwhelmingly supported. One industry expression of the need for spectrum may be found in Statement of Thomas J. Sugrue, Vice President, Government Affairs, T-Mobile USA, Inc., Before the Senate Committee on Commerce, Science & Transportation (March 14, 2006) (https://wireless2.fcc.gov/omb/part/index.htm?doc=sugrue-031406.pdf), at pages 2, 3-5: "[I]t is essential that more spectrum be introduced into the marketplace at the earliest possible date in order for existing and new providers to deploy the advanced and increasingly innovative wireless services that consumers demand." With respect to the efficiency of auctions, Treasury Department economist Adele Morris has stated, "Spectrum license auctions are widely recognized by economists as more efficient than lotteries or administrative approaches to allocate exclusive rights to spectrum." Spectrum auctions: Distortionary input tax or efficient revenue instrument? (October 2004), page 2 (hard copy available upon request). For a discussion of the benefits of auctions over comparative hearings and lotteries, see Evan Kwerel and Walt Strack, U.S. Federal Communications Commission, Auctioning Spectrum Rights, (February 20, 2001) (https://wireless2.fcc.gov/omb/part/index.htm?doc=aucspec.pdf). T he requirements that must be met for a service to be auctionable are set forth at 47 U.S.C. § 309(j) (1) and (2) (https://wireless2.fcc.gov/omb/part/index.htm?doc=47USC309.pdf#page=5). Statutory guidance for facilitating the participation of small businesses is found in 47 USC 309(j)(3). For an example of Congress directing the FCC to conduct an auction for particular spectrum licenses by a particular date, see the Digital Television Transition and Public Safety Act of 2005, Pub. L. No. 109-171, Title III, 120 Stat. 4, 22 (2006) (https://wireless2.fcc.gov/omb/part/index.htm?doc=S1932_title3.pdf), which requires the FCC to begin an auction of licenses for recovered analog television spectrum by January 28, 2008. Statutory provisions relevant to small business bidding credits are found at 47 U.S.C. 309(j)(3)(B) (https://wireless2.fcc.gov/omb/part/index.htm?doc=47USC309) and 47 U.S.C. 309(j)(4)(A) (https://wireless2.fcc.gov/omb/part/index.htm?doc=47USC309). FCC rules governing bidding credits are found at 47 C.F.R. 1.2110(f) (http://a257.g.akamaitech.net/7/257/2422/09nov20051500/edocket.access.gpo.gov/cfr_2005/octqtr/pdf/47cfr1.2110.pdf). FCC unjust enrichment rules are found at 47 C.F.R. 1.2111 (http://a257.g.akamaitech.net/7/257/2422/09nov20051500/edocket.access.gpo.gov/cfr_2005/octqtr/pdf/47cfr1.2111.pdf). A description of Tribal Lands auction preferences is available at:(http://wireless.fcc.gov/auctions/default.htm?job=tribal_billing&page=1).

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: The FCC's Auctions program is unique in that it is the only competitive bidding program in the U.S. through which unassigned spectrum licenses are awarded to private entities. The FCC is responsible for non-Federal spectrum management and the assignment of non-Federal spectrum licenses. The US Department of Commerce manages the Federal spectrum; however, Federal spectrum licenses are not subject to auction and are not available to private entities. No similar program exists at the State or local level, because the management of the radio spectrum is the sole prerogative of the Federal government. Though the FCC's auctions program is the primary means of assigning initial spectrum licenses, private entities may also acquire spectrum licenses in the secondary market, with such transactions subject to FCC approval. While the FCC auctions program fufills a unique role, the small business preferences therein may be said to duplicate support available to such firms from other sources. To the extent that discounts in spectrum auctions are provided to small business in order to address the more limited access to capital of these firms, such capital may also be obtained through several loan programs of the US Small Business Administration.

Evidence: The FCC's general competitive bidding rules are codified at 47 C.F.R. §§ 1.2101-1.2113 (https://wireless2.fcc.gov/omb/part/index.htm?doc=Combinedpdf.pdf). Federal authority over the radio spectrum is codified at 47 USC 301. US Small Business Administration programs are described at: (www.sba.gov).

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: The FCC has monitored the Auctions program carefully since its inception and has modified it over the years to ensure that the program is both effective and efficient. For each auction, the FCC selects a format (the "simultaneous multiple round" format being the most common) that it judges best suited to the characteristics fo the licenses offered and their respective markets. The program's structure is designed to ensure the most efficient division of labor among the various program activities (e.g., review of auction applications, conduct of auctions, and award and management of licenses), and adjustments have been made when it has been found that the division of labor could be improved. The FCC has also issued a number of orders to improve and streamline its auction rules. In 1997, for example, the FCC adopted general competitive bidding rules for all auctionable services, finding that separate auction rules for different spectrum-based services were largely unnecessary. These general rules provide the program with considerable flexibility to adapt its procedures as needed to accommodate the characteristics of individual services and auctions. Other amendments to specific rules and procedures have been made over the years to ensure that they address statutory changes and marketplace developments, and to apply lessons learned. While most of the 62 auctions conducted through May 2006 have been conducted without major flaws, a few have had problems, and steps have been taken to ensure that these problems have not recurred. For example, bidders are no longer allowed to place bids in specific dollar amounts, a procedure which made it possible for them to use "bid signaling" to collude; and the program no longer offers installment payment plans, which in certain cases led bidders to bid beyond their means and resulted in bankruptcies and delays in service to the public. On occasion, legal challenges have caused delays or uncertainty in the issuance of licenses. In 2005, for example, the US Court of Appeals found that the auction of licenses for Direct Broadcast Satellite service (DBS, or satellite television) was prohibited, contrary to Executive Branch interpretation of the relevant statute. The Administration has proposed through legislation to restore the FCC's authority to auction licenses for DBS, to ensure that the effectiveness and efficiency of the auctions process is applied to this class of spectrum licenses. In addition to legal challenges, small business preferences are another potential area of uncertainty in the FCC's Auctions program. Large firms and wealthy individuals may attempt to take advantage of small business preferences (e.g., by forming partnerships with small firms for the sole purpose of obtaining bidding credits). The FCC continues to allow large firms to invest in small businesses, and has decided that it would not be in the public interest to adopt a net worth limit on individual controlling interests of small businesses. However, the FCC did recently adopt measures to prevent those entities from receiving such bidding preferences (credits) from receiving a windfall benefit. While legal uncertainty related to DBS licenses, as well as the implementation of small business preferences, pose challenges to the Auctions program, broad consensus exists in support of auctions as a means of assigning spectrum licenses.

Evidence: Program organizational changes made in 2003 as part of larger changes to the Wireless Telecommunications Bureau, which has primary responsibility for conducting auctions, are described in Reorganization of the Wireless Telecommunications Bureau, Order, 18 FCC Rcd 25414 (2003) (https://wireless2.fcc.gov/omb/part/index.htm?doc=FCC-03-291A1.pdf), and News Release, Wireless Telecommunications Bureau Announces Primary Responsibilities and Appointments for Reorganized Bureau (January 15, 2004) (https://wireless2.fcc.gov/omb/part/index.htm?doc=DOC-242947A1.pdf). The FCC adopted general competitive bidding rules applicable to all auctionable services in Amendment of Part 1 of the Commission's Rules - Competitive Bidding Procedures, Third Report and Order and Second Further Notice of Proposed Rule Making, 13 FCC Rcd 374 (1997) (https://wireless2.fcc.gov/omb/part/index.htm?doc=fc970413.pdf). Other examples of rule changes that have been adopted based on statutory developments or to enhance competitive bidding may be found in Implementation of Sections 309(j) and 337 of the Communications Act of 1934 as Amended, Report and Order and Further Notice of Proposed Rule Making, 15 FCC Rcd 22709 (2000) (https://wireless2.fcc.gov/omb/part/index.htm?doc=FCC-00-403A1.pdf); and Commercial Spectrum Enhancement Act and Modernization of the Commission's Competitive Bidding Rules and Procedures, Report and Order, FCC 06-4 (January 24, 2006) (https://wireless2.fcc.gov/omb/part/index.htm?doc=FCC-06-4A1.pdf). For a description of improvements to specific auction procedures that have been made to correct problems, see Peter Cramton, "Simultaneous Ascending Auctions," in Peter Cramton, Yoav Shoham, and Richard Steinberg (eds.), Combinatorial Auctions, Chapter 4, MIT Press (2006) at pages 13-15 (https://wireless2.fcc.gov/omb/part/index.htm?doc=cramton-simultaneous.pdf#page=13). For a discussion of small business preferences and recent actions taken to address flaws therein, see: Implementation of the Commercial Spectrum Enhancement Act and Moderization of the Commission's Competitive Bidding Rules and Procedures, Second Report and Order and Second Further Notice of proposed Rule Making (April 25, 2006) (http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-06-52A1.pdf). For an example of the opportunities for exploitation of small business preferences by wealthy individuals, see the Wall Street Journal, "In FCC Auctions, Gabelli Was Behind the Scenes", December 27, 2005, by John R. Wilke. Related to domestic satellite service auctions, see: In Northpoint Technology, Ltd. v. FCC, No. 04-1052 (D.C. Cir. June 21, 2005) (https://wireless2.fcc.gov/omb/part/index.htm?doc=04-1053a.pdf), the U.S. Court of Appeals for the D.C. Circuit concluded that, although it is reasonable to construe Section 647 of the ORBIT Act, 47 U.S.C. § 765f, as not prohibiting auctions of licenses for domestic satellite services, it is unreasonable to consider the Direct Broadcast Satellite ("DBS") service as a domestic satellite service not subject to Section 647's prohibition against auctions of international or global satellite services licenses.

Is the program design effectively targeted so that resources will address the program's purpose directly and will reach intended beneficiaries?

Explanation: Auctions have proven to be an effective means of assigning spectrum licenses and bringing wireless services to consumers. The program helps to maximize the benefits to consumers in the wireless services market by awarding licenses to the firms that value them most highly. As FCC economist Evan Kwerel noted in a 2001 paper, "These parties are generally best able to provide consumers with the services they most want, while using the spectrum most efficiently." Since 2001, the number of mobile telephony subscribers has increased from 128 million to 208 million as of 2005. Auctions also provide the FCC and others with information about the value of spectrum, which can be an indicator of industry demand and scarcity of suitable spectrum, factors that can help to inform future allocations of spectrum among different services. In addition, this information can serve to promote efficient use of the Federal spectrum by providing an indication of the opportunity cost of government use. Resale and leasing arrangements help to improve the efficiency of spectrum distribution in the marketplace, though such secondary market transactions can entail costs of their own, and can also be more protracted than auctions. In addition, auctions are generally said to have little effect on the price of spectrum-based telecommunications services, since the amounts that firms expend in auctions are considered "sunk" and are not the primary consideration in pricing decisions. Pricing decisions are primarily based on the amount consumers are willing to pay for a service and the level of competition in the marketplace. The majority of the approximately $15 billion in revenue generated from FCC auctions has been deposited in the US Treasury, though the FCC is authorized under 47 U.S.C. § 309(j)(8) to retain from auction revenues those funds necessary to develop, implement, and maintain the Auctions program; which in recent years has been $85 million per year. The retained revenues are explicitly applied to program-related activities through internal controls that ensure that any and all expenditures of funds are reviewed and authorized in accordance with the program's goals. Funds are targeted to only those activities necessary to ensure the fair and efficient assignment of licenses to those parties best able to use the spectrum to provide rapid, innovative, and reliable service to the public.

Evidence: For an examination of the benefits of auctions as a means of assigning spectrum licenses, see: Evan Kwerel and Walt Strack, "Auctioning Spectrum Rights", FCC, February 20, 2001 (http://wireless.fcc.gov/auctions/data/papersAndStudies/aucspec.pdf). For a review of the wireless market, see the Tenth Annual CMRS Competition Report, FCC (http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-05-173A1.pdf). For the FCC's authority to collect and retain auction revenue, see 47 U.S.C. § 309(j)(8) (https://wireless2.fcc.gov/omb/part/index.htm?doc=47USC309.pdf#page=9). The program is provided the following authority: "[T]he salaries and expenses account of the Commission shall retain as an offsetting collection such sums as may be necessary from such proceeds for the costs of developing and implementing the program required by this subsection." The FCC's control process, which ensures that the program's structure and application of funds are appropriately targeted, can be found in Auctions Cost Recovery Guidelines and Procedures, revised 1999 (https://wireless2.fcc.gov/omb/part/index.htm?doc=Auctions_Funding_PP.pdf). [NON-PUBLIC]

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: The program has three general goals that mirror certain goals identified in the agency's Strategic Plan, and are also consistent with the statutory purposes of the program: (1) encouraging the highest and best use of spectrum, (2) ensuring a competitive framework for communications services, and (3) promoting competition, innovation, and investment in broadband services. The FCC has identified a number of annual measures focused on marketplace outcomes that it uses to assess its progress toward these goals. To determine long-term progress, the FCC is seeking to arrive at a limited number of measures that provide a succinct and accurate indication of the program's outcomes.

Evidence: The general goals the program has pursued are included in the agency's Strategic Plan 2003-2008 (https://wireless2.fcc.gov/omb/part/index.htm?doc=strategicplan2003-2008.pdf). This plan and its most recent revision, the Strategic Plan 2006-2011 (https://wireless2.fcc.gov/omb/part/index.htm?doc=DOC-261434A1.pdf), are located on the Strategic Plan Webpage (http://www.fcc.gov/omd/strategicplan/).

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: The FCC is in the process of developing long-term measures of the Auctions program that reflect its performance and impact on the wireless market. In doing so, the agency should ensure that its targets for such measures are both reasonably achievable and ambitious.

Evidence: The general goals the program has pursued are included in the agency's Strategic Plan 2003-2008 (https://wireless2.fcc.gov/omb/part/index.htm?doc=strategicplan2003-2008.pdf). This plan and its most recent revision, the Strategic Plan 2006-2011 (https://wireless2.fcc.gov/omb/part/index.htm?doc=DOC-261434A1.pdf), are located on the Strategic Plan Webpage (http://www.fcc.gov/omd/strategicplan/). The annual review of the wireless market can be found in the 9th Annual CMRS Competition Report: (http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-04-216A1.pdf)

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: The program has three general goals that mirror certain goals identified in the agency's Strategic Plan, and are also consistent with the statutory purposes of the program: (1) encouraging the highest and best use of spectrum, (2) ensuring a competitive framework for communications services, and (3) promoting competition, innovation, and investment in broadband services. The FCC has identified a number of annual performance measures focused on marketplace outcomes that it uses to assess its progress toward these goals. In the Performance Measures section below, data are presented for these performance measures. Measures relevant to encouraging the highest and best use of spectrum are: 1) number of Commercial Mobile Radio Services ("CMRS") wireless subscribers, 2) minutes of wireless use per month, 3) average price of wireless service per minute, and 4) percentage of U.S. population that lives in counties with access to three or more different operators offering mobile telephone service. Measures relevant to ensuring a competitive framework for communications services are: 1) percentage of licenses won by entities self-identified as rural, minority-owned, or women-owned, 2) percentage of licenses won by entities identified as small, very small or entrepreneurial, and 3) percentage of U.S. population that lives in counties with access to three or more different operators offering mobile telephone service. Measures relevant to promoting competition, innovation, and investment in broadband services are: 1) mobile telephone digital coverage, and 2) wireless broadband deployment. The amount of spectrum auction receipts deposited into the Treasury is also tracked because one of the statutory purposes of the auctions program is to recover a portion of the value of spectrum for the public (47 U.S.C. § 309(j)(3)(C)). However, because 47 U.S.C. § 309(j)(7) prohibits the FCC from basing public interest findings solely or predominantly on the expectation of auction revenues, revenues are not used to assess the program's performance. In order to track its efficiency, the FCC measures several operational aspects of the auctions program, including the level of automated and electronic processing of transactions as well as the average time for processing licensing transactions.

Evidence: The FCC's annual CMRS Competition Reports are located at (http://wireless.fcc.gov/cmrsreports.html#annual). Information regarding broadband deployment is located at Availability of Advanced Telecommunications Capability in the United States, Fourth Report to Congress, FCC 04-208 (September 9, 2004), (https://wireless2.fcc.gov/omb/part/index.htm?doc=FCC-04-208A1.pdf), and High-Speed Services for Internet Access: Status as of June 30, 2005, Industry Analysis and Technology Division, Wireline Competition Bureau, (April 2006) (https://wireless2.fcc.gov/omb/part/index.htm?doc=DOC-264744A1.pdf).

Does the program have baselines and ambitious targets for its annual measures?

Explanation: Since the FCC measures indicators of the state of the wireless market as a means for assessing the performance of the Auctions program, it does not set specific targets for such measures because it does not believe it in the public interest to do so. For example, it is not the FCC's role to set a target for number of wireless subscribers, because doing so may provide an incentive for the agency to favor one technology over another. In some cases, a general goal of improvement on some measures is stated. The FCC is exploring the development of annual measures that are more conducive to setting targets and judging continuous improvement. Each January, during the Open Commission Meeting, senior officials give presentations regarding implementation of the agency's Strategic Plan. As part of this process, highlights of the program's objectives for the year, including specific planned auctions and auction-related activities, are presented. Accomplishments of the previous year are also reviewed.

Evidence: For recent presentations at the annual Open Commission meeting by the Wireless Telecommunications Bureau, see: 2004 (https://wireless2.fcc.gov/omb/part/index.htm?doc=2004_wtb.pdf), 2005 (https://wireless2.fcc.gov/omb/part/index.htm?doc=2005_wtb.pdf), 2006 (https://wireless2.fcc.gov/omb/part/index.htm?doc=2006_wtb.pdf).

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: In administering the Auctions program, the FCC works with Federal partners, private-sector stakeholders, and the academic community, pursuant to its goals. For instance, the National Telecommunications and Information Administration ("NTIA") of the US Department of Commerce works closely with the FCC to effectuate transfers of Federal spectrum to non-Federal use. This reallocation of spectrum, by helping to meet the demand for spectrum in the wireless market, contributes to the goals of (1) encouraging the highest and best use of spectrum, (2) ensuring a competitive framework for communications services, and (3) promoting competition, innovation, and investment in broadband services. Recently, NTIA has been working with the FCC toward the auction of licenses for the 1710-1755 MHz band, which is being transferred from Federal to non-Federal use. The program considers the views of stakeholders through rulemaking proceedings, in which potential auction participants provide their views on auction-related matters and relevant substantive information and data. This process helps to inform the FCC regarding the demand for spectrum as well as optimal auction rules. The program also maintains an active dialogue with members of the academic community, who contribute ideas and findings regarding auction designs and procedures. As the FCC sought to develop and evaluate feasible combinatorial auction mechanisms, for example, it held three 3-day conferences (in 2000, 2001, and 2003) that brought together U.S. and international auction experts from the fields of economics, computer science, operations research, and business. These conferences provided the FCC with a broad range of academic, government, and industry perspectives. The FCC also recently sought comment from the academic community and others on proposed research to compare two alternative auction designs.

Evidence: For collaboration between NTIA and the FCC, see the most recent Memorandum of Understanding, signed in 2003 at: (http://www.ntia.doc.gov/ntiahome/fccfilings/2003/fccntiamou_01312003.pdf). Also see the Omnibus Budget Reconciliation Act of 1993 (Pub. L. No. 103-66, Title VI, § 6001(a), 107 Stat. 312, 380), which required the heads of the two agencies to meet at least biannually to conduct joint spectrum planning, including spectrum auctions, and required the NTIA to identify a certain amount of spectrum for transfer from Federal to non-Federal use. (https://wireless2.fcc.gov/omb/part/index.htm?c=omnibus_reconciliation_act.pdf) The recently enacted Commercial Spectrum Enhancement Act (Pub. L. No. 108-494, Title II, § 202(4), 118 Stat. 3986) guides the process for reallocation of the 1710 - 1755 MHz band of spectrum, as well as several other bands, from Federal to commercial use.(https://wireless2.fcc.gov/omb/part/index.htm?doc=108_494_Title2.pdf) See also NTIA Manual, Procedures and Principles for the Assignment and Coordination of Frequencies for a description of how the NTIA and the FCC coordinate activities related to the auctions program.(https://wireless2.fcc.gov/omb/part/index.htm?doc=NTIA_manual_1.pdf) Evidence of the academic community's contributions to the program's combinatorial bidding conferences may be found at the past conferences webpage (http://wireless.fcc.gov/auctions/default.htm?job=past_conferences). The recent request for comment on proposed research to compare two alternative auction designs is contained in Comment Sought on Experimental Design for Examining Performance Properties of Simultaneous Multiple Round Spectrum License Auctions With and Without Combinatorial Bidding, Public Notice (May 2, 2005) (https://wireless2.fcc.gov/omb/part/index.htm?doc=DA-05-1267A1.pdf). Public participation in the rulemaking process involving auction rules is reflected in rulemaking documents, which can be found under specific docket numbers in the FCC's Electronic Comment Filing System (http://gullfoss2.fcc.gov/prod/ecfs/comsrch_v2.cgi). Documents seeking public comment on and establishing procedures for specific auctions can be viewed at: (http://wireless.fcc.gov/auctions/default.htm?job=auctions_home).

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: Evaluations of the Auctions program have been conducted by organizations and individuals that are entirely independent of the agency, such as the Government Accountability Office (GAO). In December 2005, the GAO issued the results of a wide-ranging study of spectrum management, including an assessment of the Auctions program. This assessment concluded that auctions do not increase consumer prices, inhibit infrastructure deployment or competition, and have no mesurable impact on the market entry and participation of small businesses. The report was based on the GAO's review of economic, legal, and policy-oriented literature; the input of two diverse expert panels representing academia, government, and industry; GAO interviews with representatives of academia, government, and industry; and the GAO's analysis of FCC databases. GAO's main conclusion was that auctions have mitigated problems associated with previous mechanisms for assigning spectrum licenses (comparative hearings and lotteries), and are quicker, less costly, and more transparent to administer. Academic assessments of the auctions program have also been published, and the input of the academic community has been sought in FCC-sponsored conferences. In addition, the FCC compiles annual reports that review mobile telecommunications market conditions based on standard indicators commonly used for the assessment of effective competition (see 2.3 and 2.4). Although these reports are written by the FCC, they are based largely on data that are collected independently of the FCC. These reports are broad in scope and draw on numerous publicly available sources of data (e.g., company filings with the Securities and Exchange Commission, data compiled by trade associations and other government agencies, and reports by research companies and consultants) that are also independent of each other. Positive assessment of the Auctions program has contributed to a broad consensus of support for spectrum license auctions, and has led to calls for the extension of the FCC's auction authority. The Administration has proposed that the FCC's authority to auction spectum licenses be made permanent.

Evidence: See GAO, Strong Support for Extending FCC's Auction Authority Exists, but Little Agreement on Other Options to Improve Efficient Use of Spectrum, Report to Congressional Committees, GAO-06-236 (December 2005) (https://wireless2.fcc.gov/omb/part/index.htm?doc=d06236.pdf). See, e.g., the GAO's finding that the FCC's auctions are "quicker, less costly, and more transparent" than previous methods of assigning licenses in "Highlights" (https://wireless2.fcc.gov/omb/part/index.htm?doc=d06236.pdf#page=2), its conclusion that the FCC's auctions have had "little to no negative impact on end-user prices, infrastructure deployment, and competition; evidence on how auctions impact the entry and participation of small businesses is less clear." Examples of academic assessments of the program are Lessons Learned From the United States Spectrum Auctions, Prepared Testimony of Peter Cramton, Professor of Economics, University of Maryland, President, Market Design Inc., Before the United States Senate Budget Committee (February 10, 2000) (https://wireless2.fcc.gov/omb/part/index.htm?doc=PeterCramton_testimony.pdf); and John McMillan, "Market Design: The Policy Uses of Theory," The American Economic Review, Vol. 93, No. 2, Papers and Proceedings of the One Hundred Fifteenth Annual Meeting of the American Economic Association, Washington, DC, January 3-5, 2003 (May 2003) pages 139-144 (https://wireless2.fcc.gov/omb/part/index.htm?doc=Market_Design-McMillan.pdf). Academic assessments of the auction design used most frequently by the program may be found in Paul Klemperer, Auctions: Theory and Practice, Princeton University Press, 2004; Paul Milgrom, Putting Auction Theory to Work, Cambridge University Press, 2004; and Peter Cramton, "Simultaneous Ascending Auctions," in Peter Cramton, Yoav Shoham, and Richard Steinberg (eds.), Combinatorial Auctions, Chapter 4, MIT Press (2006) (https://wireless2.fcc.gov/omb/part/index.htm?doc=cramton-simultaneous.pdf). The annual CMRS Competition Reports and Notices of Inquiry seeking data for these reports are located at (http://wireless.fcc.gov/cmrsreports.html).

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: FCC budget requests have generally not fully detailed the resource requirements of administering the Auctions program. Past budget submissions have presented the Auctions program as a single objective within the context of the FCC's total budget submission. More detailed information should be provided to the Congress, particularly since such information is collected and retained by the FCC. This information should be presented in the context of the resources required to meet the program's annual and long-term goals, and should also explain how the resource requirements relate to anticipated auction activity in the fiscal year. The FCC has been working to integrate its financial systems. Upon completion of these integration efforts, all financial reporting will be consistent across the FCC's components. As a result of this undertaking, the Auctions program budget will be presented in the same manner as the salaries and expenses account.

Evidence: The auctions program accounting process is discussed in Report on the Audit of the Federal Communication's Commission's Auction-Related Accounting, Audit Report No. 01-AUD-09-34 (January 4, 2005) pages 4 - 5 (https://wireless2.fcc.gov/omb/part/index.htm?doc=Final_Auctions_1-4-05.pdf#page=4). This report discusses the ongoing reconciliation of the budgeting processes between the Auctions program and the FCC's Salaries and Expense account. FCC budget requests can be found at: (www.fcc.gov/omd/strategicplan/). The FCC's FY 2005 Performance and Accountability Report, page 135 (https://wireless2.fcc.gov/omb/part/index.htm?doc=ar2005.pdf#page=135), discusses the areas the FCC is targeting for improvement.

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: The FCC is presently working toward determining how the general long-term goals of the program can be expressed in measurable quantities. Since it has not yet done so, the program cannot adequately determine potential strategic planning deficiencies. The FCC should finalize long-term measures for the program, and should also further seek to ensure the integrity of its small business preferences (discounts) to prevent exploitation. In addition, the enactment of the Administration's legislative proposal to restore the FCC's authority to auction licenses for Direct Broadcast Services (DBS, or satellite television) would help to ensure that the effectiveness and efficiency of the Auctions program is applied to this class of licenses. Although the FCC does not presently have long-term measures in place, it does evaluate the effectiveness of the Auctions program on an ongoing basis and applies lessons learned to future auctions by adjusting auction rules. Recently, the FCC has sought to ensure the integrity of spectrum auctions by adopting a modified "blind bidding" process, which may help to reduce bidding on the basis of external clues (rather than the business plan of the bidder). Also, the FCC has sought to limit the exploitative opportunities in its preference programs that provide discounts to qualified small businesses. FCC management has also sought to addresses accounting deficiencies found through audits of the FCC's Inspector General. To this end, the FCC now reviews all costs prior to allocating them to the Auctions budget. This process enables the agency to better track expenditures and future resource requirements. This improvement should be leveraged by presenting more detail on the Auctions program in the FCC's annual budget request.

Evidence: For the adoption of the modified "blind bidding" process, see: (http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-06-47A1.pdf) For steps taken to limit exploitation of small business preferences, see: (http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-06-52A1.pdf) See FCC Office of the Inspector General, Report on the Audit of the Federal Communications Commission's Auction-Related Accounting, Appendix VI, Audit Report No. 01-AUD-09-34 (January 4, 2005) (https://wireless2.fcc.gov/omb/part/index.htm?doc=Final_Auctions_1-4-05.pdf#page=4).

Are all regulations issued by the program/agency necessary to meet the stated goals of the program, and do all regulations clearly indicate how the rules contribute to achievement of the goals?

Explanation: The FCC modifies its auction rules on an ongoing basis to ensure that they are as effective as possible, to incorporate lessons learned from previous auctions, and in response to enacted legislation. The FCC's initial competitive bidding rules, which were adopted in 1994, were needed to establish the auctions program as authorized by Section 309(j) of the Communications Act. In the early years of the Auctions program, the FCC adopted auction rules specific to individual services. Experience showed, however, that service-specific auction rules were largely unnecessary. Therefore, in 1997 the FCC significantly streamlined its rules by modifying its general competitive bidding rules, codified in 47 C.F.R. Part 1, to make them applicable to all auctionable services. Since that time, the agency's practice has been to adopt only those service-specific rules that are absolutely necessary to achieve the program's goals.

Evidence: The principal statutory provision that governs the FCC's auction authority is 47 U.S.C. § 309(j)(3) (https://wireless2.fcc.gov/omb/part/index.htm?doc=47USC309.pdf#page=5). The FCC established a uniform set of rules to govern all auctions in Amendment of Part 1 of the Commission's Rules - Competitive Bidding Procedures, Third Report and Order and Second Further Notice of Proposed Rule Making, 13 FCC Rcd 374 (1997) (https://wireless2.fcc.gov/omb/part/index.htm?doc=fc970413.pdf). This document explains: "These changes to our general competitive bidding rules are intended to streamline our regulations and eliminate unnecessary rules wherever possible, increase the efficiency of the competitive bidding process, and provide more specific guidance to auction participants. The changes also advance our auction program by reducing the burden on the Commission and the public of conducting service-by-service auction rule makings." 13 FCC Rcd at 376 1 (https://wireless2.fcc.gov/omb/part/index.htm?doc=fc970413.pdf). In modifying its competitive bidding rules pursuant to the Commercial Spectrum Enhancement Act, the FCC explained: "Some of the changes we make today are required by the Commercial Spectrum Enhancement Act...; others are intended to enhance the effectiveness of our auctions program." Implementation of the Commercial Spectrum Enhancement Act and Modernization of the Commission's Competitive Bidding Rules and Procedures, Report and Order, FCC 06-4 (January 24, 2006) (https://wireless2.fcc.gov/omb/part/index.htm?doc=FCC-06-4A1.pdf).

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: The FCC regularly collectes data on the wireless services market, which serve as annual outcome measures for the Auctions program. This information relates to the performance of the regulated bodies of the program, namely the wireless service providers. Although the program does not set specific targets for these marketplace outcomes, they do serve generally to inform the FCC on the performance of the program and allow for any needed adjustments. In addition, the FCC requires licensees to meet certain construction and service requirements to ensure that spectrum licenses won at auction are put to use in a timely manner, and licensees must certify that they have met these requirements. Compliance with these requirements is tracked in the Universal Licensing System ("ULS"), a fully automated, interactive licensing database. Also, the FCC works with the NTIA to ensure that both agencies meet their statutory obligations regarding matters related to spectrum transferred from Federal to non-Federal use. Although the FCC does not formally collect performance data from the NTIA, the two agencies have executed a Memorandum of Understanding ("MOU") to formalize reciprocal obligations, including the exchange of information that may affect communications operations.

Evidence: For the most recent example of the FCC's request for information and data on mobile telecommunications market performance metrics, see Wireless Telecommunications Bureau Seeks Comment on CMRS Market Competition, Public Notice, DA 06-62, (January 18, 2006) (https://wireless2.fcc.gov/omb/part/index.htm?doc=DA-06-62A1.pdf). The Memorandum of Understanding Between the Federal Communications Commission and The National Telecommunications and Information Administration, executed on January 31, 2003, may be found at: (https://wireless2.fcc.gov/omb/part/index.htm?doc=fccntiamou_01312003.pdf). Licensees' construction and service requirements are included in the rules for each service. See, e.g., 47 C.F.R. § 24.203 (https://wireless2.fcc.gov/omb/part/index.htm?doc=47CFR24.203.pdf), which defines construction requirements for broadband Personal Communications Services.

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: Managers of the Auctions program have clearly defined responsibilities for achieving primary program results. They oversee legal and policy aspects of the program as well as the preparation and implementation of spectrum auctions in a timely and efficient manner in accordance with applicable statutes and FCC regulations. Managers are held accountable for results through the inclusion of criteria for meeting performance goals and objectives in their annual performance plans. Also, the FCC and the NTIA executed an MOU in 2003 to increase coordination on spectrum matters between the two agencies (see 3.1). This agreement identifies specific actions for which both parties are responsible, including joint planning with respect to spectrum licenses which may be issued through the Auctions program. Winning bidders in spectrum auctions are held accountable for meeting construction and service requirements through rules that impose license forfeiture or nonrenewal in the event of noncompliance. Entities that receive preferential treatment, such as small business bidding credits, are also held accountable through unjust enrichment rules, which require such entities to repay the value of the benefit received if they lose their eligibility or transfer licenses to an ineligible entity.

Evidence: The FCC's senior employee pay-for-performance system has received a provisional rating (https://wireless2.fcc.gov/omb/part/index.htm?doc=certification-archive-05.pdf) from OPM. This certification demonstrates that the FCC has a program ensuring measurable and specific levels of performance and accountability for its senior managers. See also Memorandum of Understanding Between the Federal Communications Commission and The National Telecommunications and Information Administration, (January 31, 2003) (https://wireless2.fcc.gov/omb/part/index.htm?doc=fccntiamou_01312003.pdf), and NTIA Manual, Procedures and Principles for the Assignment and Coordination of Frequencies: (https://wireless2.fcc.gov/omb/part/index.htm?doc=NTIA_manual_1.pdf) See, e.g., 47 CFR § 24.203 (https://wireless2.fcc.gov/omb/part/index.htm?doc=47CFR24.203.pdf) regarding the consequences of licensee failure to meet construction requirements. For an example of the enforcement of construction requirements, see Minnesota PCS Limited Partnership, Notification of Compliance and Request for Extension of Broadband PCS Construction Requirements for Call Sign KNLF389 in the Brainerd, Minnesota BTA, Order, 17 FCC Rcd 17234 (2002) (https://wireless2.fcc.gov/omb/part/index.htm?doc=DA-02-2314A1.pdf). In addition, on February 1, 2006, the Commission established an automated process in the Universal Licensing System to terminate licenses after a specific period when either a notice of construction or a request for an extension of time to meet the construction requirements has not been filed by the applicable deadline. See: Wireless Telecommunications Bureau Announces Deployment Of "Auto-Term," the Automated Feature in its Universal Licensing System That Identifies Unconstructed Stations Resulting in Automatic Termination of Licenses, Public Notice, DA 06-45, (January 23, 2006) (https://wireless2.fcc.gov/omb/part/index.htm?doc=DA-06-45A1.pdf). The FCC's unjust enrichment rules were recently strengthened in Implementation of the Commercial Spectrum Enhancement Act and Modernization of the Commission's Competitive Bidding Rules and Procedures, Second Report and Order and Second Further Notice of Proposed Rule Making, FCC 06-52 (April 25, 2006) (https://wireless2.fcc.gov/omb/part/index.htm?doc=FCC-06-52A1.pdf), Order on Reconsideration of the Second Report and Order, FCC 06-78 (June 2, 2006) (https://wireless2.fcc.gov/omb/part/index.htm?doc=FCC-06-78A1.pdf).

Are funds (Federal and partners') obligated in a timely manner, spent for the intended purpose and accurately reported?

Explanation: Program funds are obligated consistent with overall program plans. Procedures are in place for requesting and approving funds from auction receipts and require review by two separate FCC operating entities. The FCC has in place a project time reporting and cost allocation process for capturing the full cost of its activities across its strategic and annual performance goals. Through this process, annual spending plans are established for obligations. Actual expenditures are tracked to intended uses as specified in spending plans and annually reported to Congress through a detailed expenditure listing. Annual outlays are within 1% of authorized funding levels.

Evidence: See FCC Office of Inspector General, Report on Audit of Auctions IT Capital Investment Practices (September 12, 2003) (https://wireless2.fcc.gov/omb/part/index.htm?doc=ITCapInvAuditReport9-12-03.pdf). For a discussion of the review and approval process, please refer to Report on Audit of the Federal Communications Commission's Contracts & Purchasing Center (November 4, 2005) page 10 (https://wireless2.fcc.gov/omb/part/index.htm?doc=04-AUD-10-20_Contracts_and_Purchasing_Activities.pdf#page=10). For an accounting of the program's outlays, see FCC's FY 2005 Performance and Accountability Report, pages 117-118 (https://wireless2.fcc.gov/omb/part/index.htm?doc=ar2005.pdf#page=121).

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: The program has recently adopted cost accounting measures and IT improvements that contribute to efficient administration. The Auctions program regularly follows extensive review and approval procedures for all resource outlays. Auctions Cost Recovery Guidelines and Procedures ("Guidelines") establish the parameters of costs that can permissibly be associated with the Auctions program, and therefore subject to reimbursement from auction proceeds. These internal Guidelines also outline the justification, review and approval process to ensure the cost-effective and appropriate use of auction funds. Investments in IT have yielded significant efficiencies. For example, a new auction application filing and bidding system known as ISAS, which was inaugurated in 2005, combines electronic auction registration with an on-line bidding component. Efficiencies have been gained in providing more timely authorizations to winning bidders through enhancements to the Universal Licensing System, which provides on-line application filing and research capabilities (see 3.1). The program measures the automation of transaction processing as well as the timeliness of such processing in order to track the benefits to efficiency of IT investments. Also, the FCC has sought to utilize the services of outside vendors when such contracting is appropriate.

Evidence: See Auctions Cost Recovery Guidelines and Procedures, revised 1999 (https://wireless2.fcc.gov/omb/part/index.htm?doc=Auction_Cost_Recov.pdf) [NON-PUBLIC] and FCC Office of Inspector General, Report on Audit of Auctions IT Capital Investment Practices (September 12, 2003) (https://wireless2.fcc.gov/omb/part/index.htm?doc=ITCapInvAuditReport9-12-03.pdf). For a discussion of ISAS, please refer to the About ISAS website (http://wireless.fcc.gov/auctions/default.htm?job=about_isas). The ULS homepage (http://wireless.fcc.gov/uls/) contains information specifically related to licensing. Efficiency objectives are provided in the Measures portion of the FCC Office of Inspector General's Report on Audit of Auctions IT Capital Investment Practices (September 12, 2003) (https://wireless2.fcc.gov/omb/part/index.htm?doc=ITCapInvAuditReport9-12-03.pdf). The FCC's 2003 Annual Program Performance Report at page 68 (http://www.fcc.gov/Reports/ar2003.pdf) addresses the FCC's progress in awarding performance-based contracts. Most of the current contracted auction support was awarded during the period covered in this report.

Does the program collaborate and coordinate effectively with related programs?

Explanation: In its primary spectrum management activities, including the Auctions program, the FCC coordinates effectively with its main Federal partner, the NTIA. The spectrum management activities of the FCC are coordinated with the NTIA in several ways that relate to the Auctions program. The FCC and the NTIA executed an MOU in 2003 to promote the efficient use of the radio spectrum in the public interest by meeting regularly to exchange information and discuss issues related to spectrum allocation and assignment. One example of this collaborative relationship is the joint effort to relocate Federal entities from certain bands of spectrum so that it can be reallocated to commercial users. The Auctions program is integral to this effort, since revenue generated from the auction (scheduled for August 2006) facilitates relocation of Federal communications systems. All deadlines set in the guiding statute have been met. (See 2.5, 3.1, and 3.2.) However, the FCC does not coordinate with the Small Business Administration (SBA) in calibrating the appropriate level of support provided to small businesses in spectrum auctions through "bidding credits". While such credits (discounts) are intended to account for the more limited access to capital of such firms, the level of such support does account for Federal loan assistance available through SBA. The FCC does work with SBA when defining small businesses, and seeks SBA's approval for such definitions prior to their adoption.

Evidence: See the following: Memorandum of Understanding Between the Federal Communications Commission and the National Telecommunications and Information Administration (January 31, 2003) (https://wireless2.fcc.gov/omb/part/index.htm?doc=fccntiamou_01312003.pdf); and NTIA Manual, Procedures and Principles for the Assignment and Coordination of Frequencies, (https://wireless2.fcc.gov/omb/part/index.htm?doc=NTIA_manual_1.pdf). Recently the FCC and the NTIA have worked closely on the relocation of federal entities from spectrum that will be subject to auction pursuant to the Commercial Spectrum Enhancement Act, Pub. L. No. 108-494, 118 Stat. 3986, Title II (2004) (https://wireless2.fcc.gov/omb/part/index.htm?doc=108_494_Title2.pdf). With respect to the 1710-1755 MHz band, see, e.g., FCC to Commence Spectrum Auction That Will Provide American Consumers New Wireless Broadband Services, News Release, (December 29, 2004) (https://wireless2.fcc.gov/omb/part/index.htm?doc=DOC-255802A1.pdf). See also The Federal Communications Commission And The National Telecommunications And Information Administration - Coordination Procedures In The 1710-1755 Mhz Band, Public Notice, FCC 06-50, (April 20, 2006) (https://wireless2.fcc.gov/omb/part/index.htm?doc=FCC-06-50A1.pdf); and Testimony of John M. R. Kneuer, Acting Assistant Secretary for Communications and Information, National Telecommunications and Information Administration Before the Senate Committee on Commerce, Science and Transportation (March 14, 2006), discussing the NTIA's work to ensure that commercial services have adequate access to spectrum and implementation of the President's Spectrum Policy Initiative (https://wireless2.fcc.gov/omb/part/index.htm?doc=Kneuer_wireless_031406.pdf).

Does the program use strong financial management practices?

Explanation: An independent auditor has identified material internal control weaknesses associated with the FCC's financial management processes, and was unable to express an opinion on the 2005 financial statements of the agency. The independent auditor has made several recommendations to the agency, including: 1) clarify the FCC office responsible for the agency's financial activities; 2) make explicit a delegation of authority from the Office of the Chairman, when such delegation has occurred; 3) ensure timely financial reporting; 4) ensure that the Office of the Inspector General exercises independence. The FCC has indicated that it is addressing these findings and taking the appropriate steps to correct deficiencies.

Evidence: See FCC Fiscal Year 2005 Performance and Accountability Report at pages 119-172 (https://wireless2.fcc.gov/omb/part/index.htm?doc=ar2005.pdf#page=123) and FCC Office of the Inspector General, Report on the Audit of the Federal Communications Commission's Auction-Related Accounting, Audit Report No. 01-AUD-09-34 (January 4, 2005) at pages 3-12 (https://wireless2.fcc.gov/omb/part/index.htm?doc=Final_Auctions_1-4-05.pdf#page=9), Appendix VI (https://wireless2.fcc.gov/omb/part/index.htm?doc=Final_Auctions_1-4-05.pdf#page=27).

Has the program taken meaningful steps to address its management deficiencies?

Explanation: The FCC held three annual conferences (2000 through 2003), bringing together academic experts and industry stakeholders, for the purpose of ensuring that the FCC's spectrum auctions are conducted in accordance with the most advanced methods. In addition, the FCC reviews auction rules prior to the conduct of each auction. To this end, a public comment process is utilized, so that stakeholder input can be considered. This process ensures that the program is regularly re-calibrated for new technologies, services, and academic advances. The FCC should continue to evaluate means for ensuring that it small business preference program is protected from potential exploitation on that part of larger firms and wealthy individuals. The FCC has adopted accounting procedures that faciliate an accurate budget execution process for all auctions-related expenditures. The FCC has also indicated that it is taking steps to address the management deficiencies identified by an independent auditor in its evaluation of the FCC's 2005 financial statements. In FY 2005 the FCC was able to clear three of the prior year weaknesses, one related to cost allocation that was corrected prior to FY 2004 year end but not in sufficient time for the auditors to review, one related to collateral deposits maintained for funds held outside the U.S. Treasury, and one related to OMB Circulars A-127 and A-130 reviews.

Evidence: See FCC Office of the Inspector General, Report on the Audit of the Federal Communications Commission's Auction-Related Accounting, Audit Report No. 01-AUD-09-34 (January 4, 2005) at Appendix VI (https://wireless2.fcc.gov/omb/part/index.htm?doc=Final_Auctions_1-4-05.pdf#page=26). Additionally, the FCC Fiscal Year 2005 Performance and Accountability Report at pages 126-127 (https://wireless2.fcc.gov/omb/part/index.htm?doc=ar2005.pdf#page=126) discusses the steps the Commission is pursuing to correct its internal control weaknesses.

Did the program seek and take into account the views of all affected parties (e.g., consumers; large and small businesses; State, local and tribal governments; beneficiaries; and the general public) when developing significant regulations?

Explanation: The FCC has adopted, and where necessary modified, its competitive bidding rules in accordance with the requirements of the Administrative Procedure Act. The FCC also seeks public comment on the specific procedures to be used for each individual auction. All affected parties therefore have an opportunity to express their views regarding both the regulations codified in the Code of Federal Regulations and the particular procedures used for each auction (e.g., activity rules and minimum opening bids). The FCC thoroughly considers all views expressed and proposals made by commenting parties in developing rules and procedures. Industry submissions are also important indicators of demand for particular types of spectrum licenses, which the program carefully analyzes in planning for auctions.

Evidence: The following are two recent examples of the FCC's response to requests for changes to its auction rules: In 2005, in response to petitions for reconsideration of an earlier decision, the FCC modified its test that rural telephone cooperatives must satisfy to receive a limited exemption from the attribution rules that are part of the Part 1 competitive bidding rules. In determining eligibility for small business status, the FCC attributes to applicants the gross revenues of the applicant, its controlling interests, its affiliates, and the affiliates of its controlling interests. However, the gross revenues of the affiliates of a co-op's officers and directors are exempt from attribution if a three-part test is met. In 2005, the FCC modified the third part of this test to allow a co-op to qualify for the exemption by showing either that it is eligible for tax-exempt status under IRS rules or that it operates pursuant to the cooperative principles described in Puget Sound Plywood, Inc. v. Comm'r of the Internal Revenue Service, 44 T.C. 305 (1965) (https://wireless2.fcc.gov/omb/part/index.htm?doc=Puget_Sound_Plywood.pdf). Amendment of Part 1 of the Competitive Bidding Rules − Competitive Bidding Procedures, Second Order on Reconsideration of the Fifth Report and Order, 20 FCC Rcd 1942 (2005) (https://wireless2.fcc.gov/omb/part/index.htm?doc=FCC-04-295A1.pdf). In 2006, based on a proposal made by an interested party and subsequent comments filed, the FCC modified its general competitive bidding rules governing benefits reserved for small businesses, rural telephone companies, and businesses owned by women and minorities to increase its ability to ensure that the recipients of such benefits are limited to those entities and for those purposes Congress intended. Implementation of the Commercial Spectrum Enhancement Act and Modernization of the Commission's Competitive Bidding Rules and Procedures, Second Report and Order and Second Further Notice of Proposed Rule Making, FCC 06-52 (April 25, 2006) (https://wireless2.fcc.gov/omb/part/index.htm?doc=FCC-06-52A1.pdf). Order on Reconsideration of the Second Report and Order, FCC 06-78 (June 2, 2006) (https://wireless2.fcc.gov/omb/part/index.htm?doc=FCC-06-78A1.pdf). A recent example of the FCC's response to the demand for certain types of licenses is its decision to reconfigure the 800 MHz Air-Ground Radiotelephone Service band and to offer at auction new licenses in three band configurations that are based on those proposed by interested parties. See, e.g., Amendment of Part 22 of the Commission's Rules to Benefit the Consumers of Air-Ground Telecommunications Services, Biennial Regulatory Review??Amendment of Parts 1, 22, and 90 of the Commission's Rules, Report and Order and Notice of Proposed Rulemaking, 20 FCC Rcd 4403 (2005); Public Notice, Auction of 800 MHz Air-Ground Radiotelephone Service Licenses Scheduled for May 10, 2006; Notice and Filing Requirements, Minimum Opening Bids, Upfront Payments and Other Procedures for Auction No. 65, February 21, 2006,(https://wireless2.fcc.gov/omb/part/index.htm?doc=DA-06-299A1.pdf). A recent example of the program establishing a particular procedure for a specific auction that represents a compromise in response to industry comments is the decision to make the availability of certain information regarding bids and bidders prior to and during Auction No. 66 contingent upon the competitiveness of the auction. See Public Notice, Auction of Advanced Wireless Services Licenses Scheduled for June 29, 2006; Notice and Filing Requirements, Minimum Opening Bids, Upfront Payments and Other Procedures for Auction No. 66, FCC 06-47 (April 12, 2006), at 140-57 (https://wireless2.fcc.gov/omb/part/index.htm?doc=FCC-06-47A1.pdf#page=39).

Did the program prepare adequate regulatory impact analyses if required by Executive Order 12866, regulatory flexibility analyses if required by the Regulatory Flexibility Act and SBREFA, and cost-benefit analyses if required under the Unfunded Mandates Reform Act; and did those analyses comply with OMB guidelines?

Explanation: The FCC has prepared adequate regulatory flexibility analyses for its auction-related rules, or where appropriate certified that the regulations would not have a significant economic impact on a substantial number of small entities, pursuant to the Regulatory Flexibility Act and SBREFA. To ensure their sufficiency and compliance with all applicable statutory provisions, these analyses are reviewed by the FCC's Office of Communications Business Opportunities, whose mission is to promote competition and innovation in the provision and ownership of communications and information services by supporting opportunities for small, women-owned, and minority-owned businesses. As an independent regulatory agency, the FCC is not subject to Executive Order 12866 or the Unfunded Mandates Reform Act.

Evidence: Recent examples of an Initial Regulatory Flexibility Analysis and a Final Regulatory Flexibility Analysis may be found at Implementation of the Commercial Spectrum Enhancement Act and Modernization of the Commission's Competitive Bidding Rules and Procedures, WT Docket No. 05-211, Declaratory Ruling and Notice of Proposed Rule Making, 20 FCC Rcd 11, 268 (2005) (https://wireless2.fcc.gov/omb/part/index.htm?doc=FCC-05-123A1.pdf), and Commercial Spectrum Enhancement Act and Modernization of the Commission's Competitive Bidding Rules and Procedures, Report and Order, FCC 06-4 (January 24, 2006) (https://wireless2.fcc.gov/omb/part/index.htm?doc=FCC-06-4A1.pdf).

Are the regulations designed to achieve program goals, to the extent practicable, by maximizing the net benefits of its regulatory activity?

Explanation: In evaluating regulatory options, the FCC seeks to to promote competition, innovation, and other benefits for American consumers through the Auctions program. In so doing, the FCC generally seeks to evaluate the perspectives of interested parties through the public comment process. The FCC also conducts regulatory flexibility analyses and considers the reporting burdens of its regulatory process. However, the agency generally does not conduct formal cost-benefit analyses, nor does it generally provide detailed economic analysis of its regulatory actions. Such analysis may be useful in several aspects of the auctions program, such as determining the optimal geographic coverage of licenses, and the calibration of small business bidding credits. In the absence of quantitative analysis of regulatory options, the FCC cannot determine with any certainty that its regulatory actions maximize net benefits.

Evidence:

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: While the FCC has not yet determined how the program's general long-term goals can be expressed by a limited number of measures, the program does track several annual measures that provide insight into performance. These measures have generally demonstrated improvement over time, reflecting progress in achieving the program's goals. For example, progress in encouraging the highest and best use of spectrum is suggested by the increased number of subscribers to wireless services (from 129 million to 208 million during the period from 2001 to 2005) and the decline in the average price of wireless service per minute. Success in ensuring a competitive framework for communications services is suggested by the percentage of licenses won by entities identified as small, very small, or entrepreneurial; the steady increase in the percentage of U.S. consumers that can choose between multiple wireless service providers; and the decline in the average price per minute per month. Progress in promoting competition, innovation, and investment in broadband services is demonstrated by the more than 42 percent increase in consumer access to broadband services via satellite or fixed wireless services between December 2001 and December 2004, as well as increased deployment of mobile Internet access services for cell phones, laptops, PDAs, and other wireless devices by mobile wireless carriers. The program has also achieved progress in achieving the statutory goal of disseminating licenses to small businesses, rural telephone companies, and minority- and women-owned businesses. Since the inception of the program through May 2006, 28,749 licenses have been won in 62 auctions; based on applicants' self-reporting, small businesses or entrepreneurs have won 16,046 licenses; rural telephone companies have won 988 licenses; minority-owned businesses have won 1,059 licenses; and women-owned businesses have won 1,156 licenses.

Evidence: New Figures Show Broadband Deployment Accelerating in the U.S., FCC Adopts Fourth Report on Broadband Availability, News Release (September 9, 2004) (https://wireless2.fcc.gov/omb/part/index.htm?doc=DOC-251959A1.pdf); Availability of Advanced Telecommunications Capability in the United States, Fourth Report to Congress, FCC 04-208 (September 9, 2004) (https://wireless2.fcc.gov/omb/part/index.htm?doc=FCC-04-208A1.pdf). See also the CMRS Competition Reports (http://wireless.fcc.gov/cmrsreports.html). Data on small businesses, rural telephone companies, and minority and women-owned businesses are self-reported and used for internal purposes only; there is expected to be overlap among these categories.

Does the program (including program partners) achieve its annual performance goals?

Explanation: Annual CMRS Competition Reports and FCC Performance and Accountability Reports (and its predecessor, the Annual Program Performance Report) show that the program has achieved positive annual market outcomes, including rapid subscriber growth (approximately double the 2000 subscriber level), significant increases in monthly usage per subscriber (approximately triple the 2000 usage), and steep declines in the prices consumers pay for wireless telephone service (less than half the 2000 rate). However, the FCC's annual measures of program performance are not conducive to target-setting, since they consist of marketplace outcomes. The FCC is examining the development of annual measures that may be more appropriate for setting ambitious annual targets.

Evidence: Annual performance measures are found in the FCC Performance and Accountability Reports (http://www.fcc.gov/omd/strategicplan/) and the CMRS Competition Reports (http://wireless.fcc.gov/cmrsreports.html). Detailed performance measures are found in this assessment's Measures section. See also New Figures Show Broadband Deployment Accelerating in the U.S., FCC Adopts Fourth Report on Broadband Availability, News Release, (September 9, 2004) (https://wireless2.fcc.gov/omb/part/index.htm?doc=DOC-251959A1.pdf); Availability of Advanced Telecommunications Capability in the United States, Fourth Report to Congress, FCC 04-208 (September 9, 2004) (https://wireless2.fcc.gov/omb/part/index.htm?doc=FCC-04-208A1.pdf).

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: Since fiscal year 2003, the FCC has implemented the Auctions program at a fixed funding level of $85 million. As the purchasing power of this fixed funding level erodes through inflationary pressures, the program continues to demonstrate success at achieving its long- and short-term goals. The program reduced its effective FTE staffing by 7 percent between fiscal years 2004 and 2005, but maintains the same or an improving level of efficiency and productivity. Additionally, the program continues to develop and implement advanced and improved auction designs. Two fiscal year 2006 auctions, one completed and the other scheduled (for 800 MHz Air-Ground and Advanced Wireless Services licenses) are among the most innovative and complex spectrum auctions that have been conducted. In the Air-Ground auction, completed on June 2, 2006, the FCC for the first time offered licenses in three alternative band configurations and allowed bids to determine which band configuration will be implemented. The upcoming AWS auction involves innovative and complex procedures that are necessary to ensure that the CSEA's revenue requirement is met. The FCC maintains several efficiency measures which track the program's effectiveness. These measures track the Commission's progress in increasing efficiency in its workload processing and leveraging limited financial resources. The program has taken steps to automate as many review steps as practical and encourage electronic submission of transactions in order to expedite licensing of auctioned spectrum. The program also maintains a robust process for monitoring the processing time of auction-related licensing transactions. Both of these objectives have been incorporated within the agency's Strategic Plan under the goal of Modernize the FCC. Recently, the FCC has redesigned its auction system, resulting in estimated annual savings of $3 million (see 3.4).

Evidence: A discussion of the annual funding level for the auction program can be found in the FCC's FY 2007 Performance Budget, page 22 (https://wireless2.fcc.gov/omb/part/index.htm?doc=fcc2007budget_main.pdf#page=22). For additional information regarding the Air-Ground and AWS auctions, see Auction of 800 MHz Air-Ground Radiotelephone Service Licenses Scheduled for May 10, 2006, Public Notice, DA 06-299, February 21, 2006 (https://wireless2.fcc.gov/omb/part/index.htm?doc=DA-06-299A1.pdf) and Auction of Advanced Wireless Services Licenses Scheduled for June 29, 2006, Public Notice, FCC 06-47, April 12, 2006, (https://wireless2.fcc.gov/omb/part/index.htm?doc=FCC-06-47A1.pdf). The Commercial Spectrum Enhancement Act, Pub. L. No. 108-494, Title II, 118 Stat. 3986, 3993-94 (2004) (https://wireless2.fcc.gov/omb/part/index.htm?doc=108_494_Title2.pdf) requires the FCC to recover 110 percent of the estimated costs of relocating Federal agencies out of certain spectrum bands that then become available for commercial use and auction. Efficiency measures directly associated with the auctions program can be found within the measures section of this PART presentation. For a more robust discussion of the FCC's overall processing efficiency measure, refer to the FCC's FY 2005 Performance and Accountability Report, page 71-72 (https://wireless2.fcc.gov/omb/part/index.htm?doc=ar2005.pdf#page=71). The savings resulting from the redesigned auction system can be found through a comparison of the FCC's exhibit 53 for the fiscal years 2004 (https://wireless2.fcc.gov/omb/part/index.htm?doc=FCC_356-FY04.pdf) [NON-PUBLIC] and 2005 (https://wireless2.fcc.gov/omb/part/index.htm?doc=FCC_365-FY05.pdf) [NON-PUBLIC].

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: The FCC is the only entity in the United States, public or private, that auctions unassigned spectrum licenses for commercial use (see 1.3). However, other countries' governments have used auctions to assign spectrum licenses. The FCC's auctions program compares very favorably to those of other countries. Peter Cramton, a leading expert on auctions, testified as follows to the Senate Budget Committee: "In comparison with other countries, the FCC auctions represent the state-of-the-art in spectrum auction design and implementation. The FCC began its auctions with an innovative design, and has continued to improve the auctions since then. The FCC's leadership in spectrum auctions has had positive consequences worldwide. Many countries wisely have imitated the FCC auctions; those that have not have suffered from inefficient license assignments and other flaws." In addition, the Government Accountability Office (GAO) noted in a December 2005 report that the Auctions program is superior to prior mechanisms for assigning spectrum licences. GAO noted in particular that auctions are quicker, less costly, and more transparent than either lotteries or comparative hearings. GAO also noted a broad consensus of support for the Auctions program, including the extension of the FCC's auction authority, which expires under current law at the end of fiscal year 2011.

Evidence: Peter Cramton, a leading expert on auctions, testified as follows to the Senate Budget Committee: "In comparison with other countries, the FCC auctions represent the state-of-the-art in spectrum auction design and implementation. The FCC began its auctions with an innovative design, and has continued to improve the auctions since then. The FCC's leadership in spectrum auctions has had positive consequences worldwide. Many countries wisely have imitated the FCC auctions; those that have not have suffered from inefficient license assignments and other flaws." Lessons Learned from the United States Spectrum Auctions, Prepared Testimony of Peter Cramton, Professor of Economics, University of Maryland, President, Market Design Inc., Before the United States Senate Budget Committee (February 10, 2000) (https://wireless2.fcc.gov/omb/part/index.htm?doc=PeterCramton_testimony.pdf). See GAO, Strong Support for Extending FCC's Auction Authority Exists, but Little Agreement on Other Options to Improve Efficient Use of Spectrum, Report to Congressional Committees, GAO-06-236 (December 2005)

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: The GAO's report on spectrum management issued in December 2005 found that the FCC's auctions are "quicker, less costly, and more transparent" than previous methods of assigning spectrum licenses, and, based on the assessments of experts with widely diverse viewpoints, that the FCC's auctions have had "little to no negative impact on end-user prices, infrastructure deployment, and competition??." Congress has found that the Auctions program has been effective in serving the purposes for which it is intended. Academic experts on auctions have also found that the program has been "a tremendous success" and "the outstanding success story in policy."

Evidence: See the GAO's Strong Support for Extending FCC's Auction Authority Exists, but Little Agreement on Other Options to Improve Efficient Use of Spectrum, Report to Congressional Committees, GAO-06-236 (December 2005) (https://wireless2.fcc.gov/omb/part/index.htm?doc=d06236.pdf See also the Balanced Budget Act of 1997, H.R. Rep. 105-149, at page 588 (June 24, 1997) (https://wireless2.fcc.gov/omb/part/index.htm?doc=0_279d.pdf) ("Auctions, for the most part, have proven to be consistent with the Committee's long-term goals for telecommunications policy. The FCC has used auctions to assign licenses... far more expeditiously than under comparative hearings or lotteries. A wide array of radio-based services... have expeditiously reached consumers as a result of auctions. Auctions also ensure that licenses are assigned to the entity that most values the frequencies. Consequently, consumers now enjoy the benefits of new and improved services that are offered in a more price-competitive marketplace."). In Congressional testimony, auction expert Peter Cramton stated: "Overall, the auctions have been a tremendous success, putting essential spectrum in the hands of those best able to use it. The auctions have fostered innovation and competition in wireless communication services. Taxpayers, companies, and especially consumers have benefited from the auctions." Lessons Learned from the United States Spectrum Auctions, Prepared Testimony of Peter Cramton, Professor of Economics, University of Maryland, President, Market Design Inc., Before the United States Senate Budget Committee (February 10, 2000) at page 1 (https://wireless2.fcc.gov/omb/part/index.htm?doc=PeterCramton_testimony.pdf). See also John McMillan, "Market Design: The Policy Uses of Theory," The American Economic Review, Vol. 93, No. 2, Papers and Proceedings of the One Hundred Fifteenth Annual Meeting of the American Economic Association, Washington, DC, January 3-5, 2003 (May 2003) at page 139 ("The spectrum auctions are the outstanding success story in policy....") (https://wireless2.fcc.gov/omb/part/index.htm?doc=Market_Design-McMillan.pdf); and Peter Cramton, "Simultaneous Ascending Auctions," in Peter Cramton, Yoav Shoham, and Richard Steinberg (eds.), Combinatorial Auctions, Chapter 4, MIT Press (2006) at pages 2-3 (https://wireless2.fcc.gov/omb/part/index.htm?doc=cramton-simultaneous.pdf).

Were programmatic goals (and benefits) achieved at the least incremental societal cost and did the program maximize net benefits?

Explanation: Using several processes, the FCC monitors the effects of its regulations on a regular basis to ensure that the program's goals to evaluate their impact on stakeholders. However, the agency generally does not conduct formal cost-benefit analyses, nor does it generally provide detailed economic analysis of its regulatory actions. It is therefore difficult to determine if the agency's regulatory actions have in fact maximized net benefits and achieved their ends at the least incremental cost. Regular review of the agency's regulations takes place through a number of processes, which helps to reduce regulatory burden on impacted entities. First, pursuant to Section 257 of the Communications Act, 47 U.S.C. § 257, the FCC reports to Congress every three years on its progress in eliminating market entry barriers for entrepreneurs and other small businesses. Second, as required by Section 610 of the Regulatory Flexibility Act, 5 U.S.C. § 610, the FCC regularly publishes plans for the ten-year review of rules adopted by the agency that have, or might have, a significant economic impact on a substantial number of small entities to determine whether such rules should be continued without change or should be amended or rescinded. Third, pursuant to Section 11 of the Telecommunications Act of 1996, 47 U.S.C. § 161, the FCC conducts a biennial review of its regulations that affect the operations and activities of telecommunications service providers and determines whether any of them are no longer in the public interest because of the development of competition and therefore can be repealed or modified. Fourth, pursuant to Section 706 of the Telecommunications Act of 1996, the FCC conducts regular inquiries into whether advanced telecommunications capability is being deployed to all Americans??including traditionally underserved populations such as those in rural areas, those with low incomes, and those with disabilities??on a reasonable and timely basis, reports to Congress on such deployment, and takes action to accelerate deployment if necessary. Fifth, the FCC reviews certain data after each auction (such as the number of small businesses that won licenses) to assess the effectiveness of its rules and procedures; these are internal reviews that do not necessarily result in published reports but that provide the program with a basis for judging the effects of its rules. These efforts provide some indication that the program seeks to minimize costs while maximizing benefits, and the FCC should seek to more rigorously assess the costs and benefits of its regulatory actions in order to determine their impact.

Evidence: The most recent of the FCC's reports to Congress under 47 U.S.C. § 257 were completed in 2000 and 2003. See Section 257 Report to Congress, Identifying and Eliminating Market Entry Barriers For Entrepreneurs and Other Small Businesses, Report, 15 FCC Rcd 15376, 15407-08 76, 15437-38 157-58 (2000) (https://wireless2.fcc.gov/omb/part/index.htm?doc=fcc00279.pdf) which reports on outreach initiatives such as free seminars for bidders prior to each auction and the provision of bidding software training at industry trade shows, as well as implementation of regulatory incentives to serve Indian tribal lands. See also Section 257 Triennial Report to Congress, Identifying and Eliminating Market Entry Barriers For Entrepreneurs and Other Small Businesses, Report, 19 FCC Rcd 3034, 3041 5, 3075 133, 3081 154, 3082 157-58, 3083-87 161-66 (2004) (https://wireless2.fcc.gov/omb/part/index.htm?doc=FCC-03-335A5.pdf) which reports on, for example, efforts to evaluate the effectiveness of various regulatory tools in facilitating delivery of services to rural areas, including bidding credits; the implementation of competitive bidding procedures that enhance participation of small businesses, such as auctions of licenses for smaller areas and band manager licenses; statistics on small businesses and rural telephone cooperatives; and the streamlining of competitive bidding rules. The most recent plan for the ten-year review of rules under 5 U.S.C. § 610 included the FCC's general competitive bidding rules. See FCC Seeks Comment Regarding Possible Revision or Elimination of Rules Under the Regulatory Flexibility Act, 5 U.S.C. § 610, 20 FCC Rcd 10384, 10390-91, 70 Fed. Reg. 33416, 33418, Public Notice, (2005) (https://wireless2.fcc.gov/omb/part/index.htm?doc=DA-05-1524A1.pdf). A variety of rules have been eliminated in connection with the FCC's use of auctions. One example may be found in Biennial Regulatory Review - Amendment of Parts 1, 22, 24, 27, and 90 to Streamline and Harmonize Various Rules Affecting Wireless Radio Services, WT Docket No. 03-264, Report and Order and Further Notice of Proposed Rulemaking, FCC 05-144, at 38-39 (August 9, 2005) (https://wireless2.fcc.gov/omb/part/index.htm?doc=FCC-05-144A2.pdf). Reports to Congress pursuant to Section 706 of the Telecommunications Act of 1996 have been submitted in 1999, 2000, 2002, and 2004. The fourth and latest report is Availability of Advanced Telecommunications Capability in the United States, Fourth Report to Congress, FCC 04-208 (September 9, 2004) (https://wireless2.fcc.gov/omb/part/index.htm?doc=FCC-04-208A1.pdf). The FCC also publishes data on advanced and high-speed services twice a year, see e.g., Wireline Competition Bureau, Local Telephone Competition and Broadband Deployment (http://www.fcc.gov/wcb/iatd/comp.html).