They say that when people plan, God laughs. This can be doubly true when it is government doing the planning. Already, an upcoming government-run auction of spectrum more than proves the point. Yesterday, the FCC released the list of participants for the January auction of the so-called H Block, an obscure, but important swath of spectrum that will fuel even more mobile innovation, and key assumptions about who might participate are already out the window.
DISH network has vowed to bid the reserve price—the minimum bid the government is permitted to accept—but no other big names have entered the ring. While 34 companies have signed up to bid, other bigger rivals were widely expected to join the bidding, most notably Sprint, which controls other spectrum adjacent to the H Block. Yet in recent back-to-back 11th hour announcements, Sprint and T-Mobile — which claim to be so bereft of spectrum that they are seeking special treatment from the FCC to artificially increase their chances in other spectrum auctions — both declared they would not participate in this one — leaving DISH poised to scoop up the spectrum windfall.
The stakes are even greater in the upcoming incentive auctions, in which bullish prices for spectrum are needed in order to entice broadcasters to voluntarily put their spectrum assets up for auction. Fortunately, the FCC has 10 solid years of experience in how to manage spectrum auctions in the public interest. And, this real-life experience consistently points to the merits of an open-to-all, non-restrictive approach.
Opponents of open auctions insist that without restrictions or caps on participation, the two largest national carriers will dominate the auction process. The FCC, they say, should put its thumb on the auction’s scale to favor only certain competitors in order to create a level playing field. Yet actual auction history doesn’t support that claim. In fact, over the past decade, nine mobile spectrum auctions have been held in the U.S. without spectrum caps—and nearly two-thirds of that spectrum went to T-Mobile, Sprint, regional and local carriers. Moreover, Sprint and T-Mobile have strengthened their competitive position in the marketplace over the past year through transactions that enhanced their capital resources and spectrum holdings.
As FCC Chairman Tom Wheeler is undoubtedly aware, the FCC also has a full arsenal of authorities and enforcement tools already at its disposal to ensure fair and competitive outcomes—from build-out requirements that guard against stockpiling to the so-called spectrum screen, which is a case-by-case review to ensure winning bids don’t give any one company too much control over a specific geographic market. Given this context, additional restrictions—that restrict not only large companies but also their large base of mobile consumers—simply make no sense and serve no public benefit.
With the stakes so high for mobile consumers and our innovation economy, the U.S. should stick with the proven approach that has served consumers, competition and American innovation well. The FCC should continue to embrace the lessons – and best practices – of auction history and let innovation, rather than prescriptive policies, continue to revolutionize the marketplace. Chairman Wheeler understands that planning successful auctions require a deft touch. Now that he—and a full complement of FCC commissioners—are in place, it’s time to lay this solid foundation for an even brighter mobile future. If done right, that’s something all Americans can feel good about and benefit from.