Don’t Be Disappointed by the FCC’s Incentive Auction

[Commentary] After Stage 4 of the incentive auction, broadcasters asked for $10 billion to clear 84 MHz of spectrum—down from $86 billion to clear 126 MHz in Stage 1. Assuming that wireless providers will bid enough to allow the auction to close, FierceWireless noted, “that would bring a disappointing end to an auction that once was predicted to generate $60 billion or more…” Disappointment, however, is all a matter of expectations, and expectations for this auction had become unrealistic by the time it began last year. In reality, spectrum bids in the forward auction have been approximately in line with prices and expectations prior to the 2015 AWS-3 auction, which yielded prices more than twice what analysts had expected.

The lower-than-recently-expected revenues bears little relationship to whether the auction should be called a success. But the long time-frame from proposal to auction creates costs by keeping that spectrum otherwise tied up. It is time for the Federal Communications Commission to consider overlay auctions and other property rights-based options for ensuring spectrum is deployed in ways that create the most benefits.

[Scott Wallsten is an economist with expertise in industrial organization and public policy. He is also a senior fellow at the Georgetown Center for Business and Public Policy.]