Since 1994, the Federal Communications Commission (FCC) has conducted auctions of licenses for electromagnetic spectrum. These auctions are open to any eligible company or individual that submits an application and upfront payment, and is found to be a qualified bidder by the Commission.

FCC auctions are conducted electronically and are accessible over the Internet. Thus, qualified bidders can place bids from the comfort of their home or office. Further, anyone with access to a computer with a web browser can follow the progress of an auction and view the results of each round.

In 1993 Congress passed the Omnibus Budget Reconciliation Act, which gave the Commission authority to use competitive bidding to choose from among two or more mutually exclusive applications for an initial license. Prior to this historic legislation, the Commission mainly relied upon comparative hearings and lotteries to select a single licensee from a pool of mutually exclusive applicants for a license. The Commission has found that spectrum auctions more effectively assign licenses than either comparative hearings or lotteries. The auction approach is intended to award the licenses to those who will use them most effectively. Additionally, by using auctions, the Commission has reduced the average time from initial application to license grant to less than one year, and the public is now receiving the direct financial benefit from the award of licenses.

In the Balanced Budget Act of 1997, Congress extended and expanded the FCC's auction authority. The Act requires the FCC to use auctions to resolve mutually exclusive applications for initial licenses unless certain exemptions apply, including exemptions for public safety radio services, digital television licenses to replace analog licenses, and non-commercial educational and public broadcast stations.