CEA, Broadcasters Group Voice Spectrum Aggregation Concerns For Incentive Auction
CEA and the Expanding Opportunities for Broadcasters Coalition released a paper Monday from former FCC Wireless Bureau Chief Fred Campbell that says they too have concerns about imposing spectrum aggregation limits in the incentive auction of broadcast TV spectrum. The fight had mostly been between AT&T and Verizon Wireless, which oppose any limits, and such smaller carriers as T-Mobile and Sprint that say some limits are needed to guarantee a competitive auction.
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"Part of the debate has been, ‘well, this only hurts Verizon and AT&T,’ but that’s not really true,” said Campbell, who was chief during the AWS-1 and 700 MHz auctions and is now director of the Competitive Enterprise Institute’s Communications Liberty and Innovation Project. “To the extent it drives down the revenue,” the incentive auction “could potentially hurt the broadcasters,” he said. “To the extent that the risk of licensees getting spectrum they don’t intend to immediately deploy occurs it hurts device makers and those who are all around this ecosystem."
Preston Padden, who heads a coalition of broadcasters with an interest in offering their spectrum for sale, told reporters during a call Monday that the FCC “will begin the auction without having in its possession the spectrum that it proposes to auction.” To get that spectrum, “the FCC will need to attract hundreds of willing broadcast TV sellers,” he said. The paper makes clear that proposals to restrict bidding in the forward auction and score stations in the reverse auction “create the real risk of lower auction revenue and nonparticipation by TV stations,” Padden said. “Together these effects could lead to a failed auction."
"We believe that restrictions would unduly hinder the success” of the incentive auction, said Julie Kearney, CEA vice president-regulatory affairs, also on the call.
"If the FCC adopts proposals to restrict the participation of Verizon and AT&T in the incentive auction and ’score’ the value of television broadcast stations, it would discourage the participation of broadcasters and increase the likelihood that the auction will fail,” the paper said (http://bit.ly/1hHVkaO). “If the auction fails, the recommendation of the 9/11 Commission to create a nationwide interoperable broadband public safety network would remain unfulfilled, the spectrum crunch would remain unresolved, and consumers would pay the price.”
The paper said bidding restrictions could delay the provision of new wireless services to 68 percent of the public by a weighted average of nearly seven years and reduce auction revenue by lowering net bids by 31-61 percent. “Lowering the prices paid to broadcasters by ’scoring’ television stations based on factors irrelevant to the value of the spectrum for mobile use would be inconsistent with the authorizing statute and would further discourage the participation of television broadcasters in the auction,” the paper said.
Aggregation limits are not needed to protect smaller carriers, Campbell said. “There’s no significant likelihood of substantial harm to T-Mobile and Sprint given recent FCC and [Department of Justice] findings that those two companies are well positioned to compete in the wireless market,” Campbell said. “The risk is if the FCC imposes bidding restrictions it could actually result in a kind of reverse foreclosure where Sprint and T-Mobile prevent potentially Verizon and AT&T from getting spectrum they need to increase their capacity,” he said. Broadcasters have alternatives to monetizing their spectrum other than selling in the auction, including using part of their spectrum for purposes such as mobile broadband, he said.
"Sprint is in the process of reviewing the study,” a spokesman said. “However, the FCC already has before it a well-developed record establishing that spectrum aggregation limits for the 600 MHz auction are necessary to promote competition, encourage innovation and advance the public interest.”