DISH, the Spectrum Auction, and the Wrath of Commissioner Pai

[Commentary] Federal Communications Commission member Ajit Pai has actually picked up an issue I've championed since 2006 -- reform of the "designated entity" bidding credit. Unfortunately, as is too often the case in my opinion, Commissioner Pai directs his outrage at the wrong target.

Rather than seeking constructive solutions to the tension between auction theory (which favors the largest incumbents) and competition theory (which holds the need to make sure someone wins licenses other than the largest incumbents), Commissioner Pai has decided to direct his wrath at DISH for finding a loophole in the auction structure stacked against them. In doing so, Commissioner Pai misses the real outrage of the auction. For DISH to make even a quasi-decent showing in the auction, it needed to use a bidding credit AND still spend more than $10 billion. T-Mobile, the next highest bidder at almost $2 billion, walked away with a mere handful of licenses that will do nothing to overcome the spectrum dominance of the two largest carriers. The fact that the two most robust competitors participating in the auction could spend a combined $12 billion and not appreciably alter the market structure one iota ought to raise very real concern. Bluntly, the fact that DISH could "save" $3 billion is not so much a scandal as a flashing red-light indicator that without regulatory intervention we can forget about any kind of competition in the wireless industry.