ASHINGTON, Oct. 13 — With growing congestion of the airwaves threatening the development of a new generation of hand-held wireless devices, President Clinton ordered the federal government today to review and then auction wide swaths of the spectrum now controlled by government agencies, as well as by private companies.
The extraordinary review is expected to lead to a fundamental reshuffling of how the spectrum is used and culminate in a huge auction in 2002 to award new licenses for companies to sell services like wireless telephones offering high-speed Internet connections.
The auction promises to raise tens of billions of dollars for the United States Treasury. It may also require the government to make huge payments to companies and to agencies including the Defense Department, law enforcement authorities and public safety organizations to shift their existing radio, phone and communications systems to new frequencies on the spectrum that are now underused but not considered useful for the newer hand-held devices.
Mr. Clinton's announcement follows months of dire predictions by communications experts that the United States might have already fallen behind Asian and European countries that had managed their airwaves more efficiently and had already conducted multibillion-dollar licensing auctions that would enable them to move ahead in the development of a wide array of innovative hand-held devices, from high- speed Internet telephones to wireless electronic credit cards.
Compounding the concern, officials said, is the fact that over the last five years, the information technology sector has accounted for nearly a third of the nation's economic growth. They said any slowing in the development of new broadband technology could impede future economic growth and also keep prices for new wireless services higher here than abroad.
"Time is of the essence," Mr. Clinton said today in a statement released by the White House. "If the United States does not move quickly to allocate this spectrum, there is a danger that the U.S. could lose market share in the industries of the 21st century. If we do this right, it will help ensure continued economic growth, the creation of new high-tech jobs and the creation of exciting new Internet and telecommunications services."
A report published today by the White House Council of Economic Advisers used to justify Mr. Clinton's intervention concluded that the two main industries affected by the order — wireless communications and the Internet — have been the linchpins in productivity improvements of the United States economy and that it was vital that steps be taken to continue to foster their development.
The report examined the economic impact of so-called third generation, or 3G, wireless technology. (First generation generally refers to analog telephones, while second generation is digital wireless services like voice mail, paging and call-waiting.)
"It is urgent that the United States follow other advanced countries in making adequate spectrum available for 3G applications," the report said. "Greater delay in providing additional spectrum licenses for high-speed applications reduces the likelihood that U.S. industry will take the lead in developing wireless technology and applications."
While officials said today that they knew of no other instance in which a president had become involved in major decisions in managing the spectrum, Mr. Clinton's involvement on one level was unsurprising because of the rising importance of the airwaves to the economy.
Spectrum has become the most valuable asset of this new economy, as important as oil and coal were in the Industrial Revolution. But the proliferation of hand-held devices and expanding consumption of the airwaves by agencies, including the Defense Department, have begun to sharply limit its availability. The volume of Internet traffic is already doubling every 100 days, and officials expect that traffic will rapidly migrate from personal computers to wireless devices like cell phones and hand-held computers, quickly crowding the airwaves.
Moreover, other countries have been moving quickly to open their airwaves to wireless companies developing third-generation devices, and in the process, their governments are reaping enormous windfalls. Two months ago, Germany concluded a spectrum auction in which six companies agreed to pay more than $46 billion for licenses. A few months before that, five companies won bids in Britain for licenses that yielded the government $35.4 billion. And Italy and Sweden are planning to hold auctions next month.
While some experts have raised concern that other countries have moved faster than the United States in encouraging wireless technology, others have said that many of those countries have a greater need to develop the technology because their wired networks are of far lower quality and afford far less coverage than networks in the United States.
For years, the Defense Department and other major consumers of the airwaves have been resistant to giving up their licenses, and today's announcement is only the first step in what is likely to be protracted negotiations over how much of the spectrum can be shared or reassigned.
Mr. Clinton's decision to conduct an accelerated review is likely to be continued by the next administration, particularly as congestion worsens.
The White House decision follows the conclusion of a world conference earlier this year in Istanbul setting out how governments should allocate frequencies for wireless hand-held devices. At the conference, the countries rejected setting any particular standards, agreeing instead to leave it to governments to choose the best available spectrum for third-generation technology. Regulators around the world have been trying to set up rules that will enable businesses and consumers to have use of the new wireless devices anywhere to perform functions like browsing the Internet and sending and receiving e- mail.
Mr. Clinton ordered the agencies to complete an interim report later this year that would provide details of how best to manage the spectrum, describing in particular detail what frequencies were available to be shared and reassigned. The Federal Communications Commission would then complete by next summer new rules for an auction that would be held in September 2002.
Administration officials said the executive memorandum issued by Mr. Clinton aimed to balance the interests of both those agencies and companies that are controlling the spectrum licenses at issue, and the wireless telecommunications and Internet companies that want them. The officials emphasized today that agencies and companies with licenses that might be reshuffled would be treated fairly and compensated for any changes.
The executive memorandum also made clear that the Defense Department would not have to surrender any licenses considered essential to national security, law enforcement or public safety.
"It's a matter of law that if an incumbent is moved, there are provisions made to continue their services," said Greg Rohde, head of the Commerce Department's national Telecommunications and Information Administration, which manages the government's use of the spectrum. "We are not looking at what we can shut down."
