Spectrum Auction Rules Should Maximize Competition, Panelists Say
The FCC should focus on crafting rules for the upcoming spectrum auction that ensure more competition in the wireless marketplace, said a pair of economists and a consumer advocate during a Capitol Hill event Thursday. The panel, hosted by the Computer & Communications Industry Association and Competitive Carriers Association (CCA), came ahead of the Senate Communications Subcommittee hearing on the wireless marketplace scheduled for June 4. Witnesses at the hearing will be: CTIA President Steve Largent; Doug Webster, Cisco vice president-service provider routing, mobility and video marketing; CCA President Steve Berry; Consumers Union Policy Counsel Delara Derakhshani; Thomas Nagel, Comcast senior vice president-business development and strategy; and Phoenix Center Chief Economist George Ford.
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"From the consumer point of view a good set of rules that promotes competition will lower prices, enhance competition and increase revenue,” said Mark Cooper, director of research at the Consumer Federation of America. Companies like Verizon and AT&T currently “have all the good stuff,” said Cooper. “Half of it they were given for free -- they were gifted the best spectrum on the planet. The other folks haven’t had a chance to get much of it … so this auction gives us the chance to redress that historical affront to competition.”
"No one has said you should completely exclude” Verizon and AT&T from the spectrum auction, said Cooper. “The objective of the auction is to maximize bidders -- the more bidders, the more competitive the spectrum is. If you limit AT&T’s participation by one-third you will see higher revenues,” Cooper said. Stanley Besen, senior consultant at Charles River Associates, added: “If the big guys are limited in what they can bid, some of the slack can be picked up by small carriers.”
Former Rep. Chip Pickering, R-Miss., said the auctions should be structured in a way that maximizes the revenue to the government, encourages greater competition in the wireless marketplace, and funds the buildout of FirstNet. Pickering, now a partner at Capitol Resources, said “functioning free competitive markets give us greater growth, greater investment, greater consumer benefits and an economy that functions more greatly.” Some lawmakers have pushed the FCC to ensure that the auction is designed to maximize the amount of revenue in order to fund FirstNet’s development and pay down U.S. debt. But there’s “no chance” the spectrum auctions won’t result in a “big pot of money,” Cooper told attendees. “The value of the spectrum is even higher than it was a few years ago. It’s really valuable stuff.”
The FCC’s pre-auction rules are key to ensuring a competitive auction, said Jonathan Baker, a professor at American University Washington College of Law. “A large incumbent firm entering an auction can outbid its rivals … because it can obtain or keep its market power by buying up spectrum in a way that forecloses smaller rivals,” he said. Therefore it’s essential to “promote competition in an auction with rules up front,” said Baker. Any attempts to do a post-auction review would likely create delayed costs and uncertainty, he added.
The Telecommunications Industry Association (TIA) separately urged lawmakers to ensure that the broadcast incentive auction moves forward “quickly and with the broadest possible participation from bidders,” in a letter Thursday. TIA President Grant Seiffert asked lawmakers to “continue to conduct oversight of the FCC to ensure that the voluntary incentive auction of television broadcast spectrum be conducted by the end of 2014. … Speedy action by the FCC is necessary simply to keep pace with the exploding demand for commercial wireless services,” according to the letter. CCIA Vice President-Government Affairs Cathy Sloan said on the panel it was “more likely” that the auction would take place in 2015 rather than 2014.