Spectrum: Keep Auctions Open and Competitive

By Rick Boucher

In a letter yesterday to 20 congressional leaders, a group of wireless providers led by Sprint and T-Mobile essentially called on Congress to grant the Federal Communications Commission (FCC) power to pick winners and losers in the wireless market. From the letter:

Congress’ challenge today is to authorize the FCC to conduct inventive auctions to bring additional spectrum to market while preserving the FCC’s ability to manage auction eligibility and structure to promote the benefits of vibrant wireless competition for consumers and the economy.

To this end, the letter argues the FCC should be able to take into account the amount of spectrum carriers have when it comes to crafting spectrum auction rules – in other words, not an open, competitive auction at all.

Given the unprecedented adoption of mobile broadband, the upcoming spectrum auctions are simply too important to limit the involvement of any bidder, be they large or small. The development of next-generation wireless services, and the ability of all carriers to obtain the necessary spectrum to improve service and keep up with customer demand, is critical not just for the health of the wireless industry, but for America’s economy.

While it’s not surprising that Sprint, T-Mobile, and other wireless providers would want to inhibit the nation’s two largest carriers from participating in full in spectrum auctions, doing so would severely limit the amount of revenue the government would receive in return for spectrum sold. Contrary to claims in the letter to Congress, the current House Bill (H.R. 3630) regarding spectrum auctions will ensure a level playing field continues to exist. It will also maximize auction proceeds, bringing American taxpayers the full benefit from the sale of one of our most vital public resources.

History has shown that when the FCC has tried to pick winners and losers in the wireless market, American consumers have lost. Past attempts by the Commission to favor certain bidders and/or impose rigid regulations on auction winners have drastically diminished auction proceeds, left major blocks of spectrum unused, and led to what FCC Chairman Julius Genachowski himself has labeled “America’s looming spectrum crisis.”

The simple truth is America’s wireless industry continues to be fiercely competitive (in fact, when it comes to spectrum holdings, letter signee Sprint is in arguably the best position due to its partnership with Clearwire). Allowing the FCC to impose conditions on spectrum auctions will not make the industry more competitive. And the spectrum critically needed by all providers to keep up with increasing demand will not be put to its full use, leading to spectrum shortages, reduced investment and innovation, and higher prices for consumers.

Only through truly competitive, open spectrum auctions will America’s wireless industry continue to thrive. After all, the best way to ensure competition is to encourage everyone to compete.