Public Safety or Commercial Use? A Cost/Benefit Framework for the D Block

The issue of whether the government should assign the D Block of spectrum to public safety or auction the spectrum for commercial use requires an assessment of the relative benefits and costs of these two alternatives. We propose such a framework, and preliminary analysis suggests that the 10 MHz D Block plausibly provides at least $3.4 billion more in social benefits if assigned to public safety rather than to commercial use. Much of this difference is attributable to the unique opportunity to create a contiguous 20 MHz block of spectrum, and to the fact that this opportunity exists only for the public safety community. As for the lost auction revenue, we observe that the loss of auction revenues today is more than offset by the gain of higher auction revenues and lower public safety network deployment cost in the future. Thus, an auction of the D Block adds, rather than relieves, stress to the public budget. Finally, we estimate that if policymakers choose not to give public safety the D Block and instead opt to require service obligations on other 700 MHz spectrum that would permit the encroachment of public safety users during episodes of resource scarcity, then such encumbrances could materially diminish the auction value of any newly allocated 700 MHz spectrum by as much as 86%