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What is Licensed Spectrum?

Wireless Communications are critical to countless functions we take for granted.  Some, like Wi-Fi, ham radio, garage door openers, etc. occur over what are called unlicensed frequencies. These bands are set-aside for anyone to use for approved, low power applications. However, because radio waves from multiple transmitters can cause interference and prevent clear reception, many wireless systems require dedicated channels.  Commercial operators including television and radio stations, mobile phone companies, etc. acquire protection from interference in the form of FCC spectrum licenses which provide for exclusive use and protection from interference in specific areas.

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 Beginning in 1994, the FCC began to assign the rights to new area licenses through auctions.  Winning an auction gives an operator the rights to use a specific frequency in a specific area for a fixed period of time. However, operators are almost always able to renew these licenses every 10 years, so licenses are generally considered an intangible permanent asset for accounting purposes.

Licenses vary considerably in value; in general, seven attributes determine the value of a specific license.




 

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Spectrum Prices:  Spectrum auctions provide good examples of spectrum prices but are infrequent.  Secondary market transactions also provide useful spectrum value information.  Generally spectrum license prices are measured in $/MHz-POP where the numerator is the total value of a license and the denominator is the product of spectrum bandwidth measured in millions of cycles per second and the population living in the covered areas.  Select Spectrum also maintains a database of spectrum value information and provides valuation estimates to clients as one of its service offerings.