Spectrum and Net Neutrality Lessons from the FCC's Spectrum Auction

SPECTRUM AND NET NEUTRALITY LESSONS FROM FCC'S RECENT SPECTRUM AUCTION
[SOURCE: Public Knowledge, AUTHOR: Harold Feld, Media Access Project]
[Commentary] Although the FCC's spectrum auction will not formally close for another month or so, the likely winners of the licenses will be the incumbent wireless companies and SpectrumCo LLC. The much ballyhooed hope that the this auction would produce a new, disruptive competitor for either mobile phone service or broadband service died when the DBS partnership of DIRECTV and Echostar exited the auction after getting systemically outbid by the incumbents and Spectrum Co. Of course, this outcome was entirely predictable to anyone who has actually looks at the economics of bidding in open, ascending spectrum auctions. I pushed the FCC for anonymous bidding rules back in the spring and have argued that we should not allow incumbent cable operators to bid on spectrum if we want competition. The FCC has a chance to learn some lessons here for the upcoming auction of returned analog television spectrum, the so called “700 MHz Auction.” Unfortunately, it will be hard to convince the FCC that an auction with almost 170 bidders raising close to the maximum anticipated $15 billion in revenue was a failure because it further entrenched the incumbents and failed to produce a meaningful new competitor. For those devoted to the dogma of the perfection of “the market” as the ultimate arbiter, the failure of a new competitor to emerge indicates that there is no need for another competitor or that another competitor is not economically viable (the notion of strategic behavior to preserve market dominance apparently being a heresy to be firmly rejected by orthodox free market theologians).
http://www.publicknowledge.org/node/607