Federal Communications Commission Uses Gurobi Optimization to Reduce Federal Deficit

Operations research used to repurpose wireless spectrum, generating nearly $20 Billion in revenue with $7.3 Billion used to reduce federal deficit

Beaverton, OR (January 8th, 2019) – Gurobi Optimization, LLC today announced the Federal Communications Commission (FCC) used the Gurobi Optimizer to conduct the world's first two-sided "incentive auction" to meet the exploding demand for wireless services by reclaiming valuable low-band electromagnetic spectrum from TV broadcasters. This unique and unprecedented auction generated nearly $20 billion in revenue from wireless providers of which $7.3 billion will go to the U.S. Treasury to reduce the federal deficit. In recognition for utilizing this revolutionary approach, INFORMS, the largest international association for operations research and analytics professionals, presented the FCC with its esteemed 2018 Franz Edelman Award for Achievement in Advanced Analytics, Operations Research and Management Science.

Since new, unoccupied spectrum cannot be manufactured, one way to create supply to meet new demand is to repurpose spectrum from one use to another. In 2012, based in part on the FCC’s preliminary operations research studies demonstrating the feasibility of the concept, Congress passed a law directing the FCC to relieve the “spectrum crunch” by conducting the world’s first two-sided “incentive auction” using market incentives to repurpose some over-the-air broadcast television spectrum to wireless communications services.

The FCC was required to determine how much spectrum was available to be repurposed, how to determine channel availability for nearly 3,000 stations across the United States and Canada on as few as 28 channels, and what new channel assignments would be feasible substitutes for television broadcasters who would remain on the air after the auction. This required analyzing massive quantities of data, creating optimization and feasibility models, and determining appropriate policy objectives to serve American consumers, the wireless industry, and television broadcasters. Without the use of operations research and optimization, the auction would not have been possible.

To solve these challenging problems, the FCC created two tools:

  • A distributed optimization solver to address all optimization problems using the Gurobi Optimizer, combined with a set of custom heuristics and decomposition approaches to determine optimal or near-optimal solutions for each problem.
  • A highly customized portfolio of satisfiability solvers that determine, usually within a fraction of a second, whether a given station repacking was feasible or infeasible.

The FCC’s use of optimization enabled the market to determine the maximum amount of spectrum to repurpose, while giving all stations that remain on air a channel equivalent to their pre-auction channel. Importantly, these tools ultimately enabled the FCC to assign most of the remaining TV stations to their original channel, thereby significantly reducing transition costs and TV viewer inconvenience.

“The auction was one of the most successful in FCC history,” said Jean L. Kiddoo, chair, Incentive Auction Task Force, FCC. “175 TV stations agreed to sell their channels for a total of over $10 billion US dollars. We were therefore able to sell 84 MHz of valuable spectrum to wireless companies. The auction generated nearly $20 billion US dollars in revenue, $7.3 billion of which will go to reducing the federal deficit. The spectrum we repurposed will enable wireless carriers to increase mobile broadband coverage and deploy new next-generation 5G services. By some estimates, the deployment of this new spectrum capacity will increase productivity and stimulate the US economy by many billions of dollars and hundreds of thousands of jobs. The incentive auction broke new ground in spectrum policy in the United States and around the globe. Operations research was a core pillar of its success."

To learn more about how the FCC used operations research to solve the spectrum crunch, visit: https://www.informs.org/Impact/O.R.-Analytics-Success-Stories/FCC-Advancing-wireless-communication

Disclaimer: This disclaimer is required by Contract No. [273FCC19P0001]. The Federal Communications Commission (FCC) has not reviewed or approved any statement in this document for accuracy or validity. The FCC and its employees do not endorse goods or services provided by this firm or any other firm, except as allowed by 5 C.F.R. 2635.702(c)(1)-(2), which do not apply here.

About Gurobi Optimization

Gurobi (http://www.gurobi.com) is in the business of helping companies make better decisions through the use of prescriptive analytics. In addition to providing the fastest math programming solver, as well as tools for distributed optimization and optimization in the cloud, the company is known for its outstanding support and flexible licensing.

The Gurobi Optimizer is a state-of-the-art solver for linear programming (LP), quadratic programming (QP), quadratically constrained programming (QCP), mixed-integer linear programming (MILP), mixed-integer quadratic programming (MIQP), and mixed-integer quadratically constrained programming (MIQCP). Gurobi was designed from the ground up to exploit modern architectures and multi-core processors, using the most advanced implementations of the latest algorithms. Founded in 2008, Gurobi Optimization is based in Beaverton, OR (+1 713 871 9341).