AT&T: Open and Free Auctions are the Way to Go

The Federal Communications Commission has done some creative tinkering with auctions in the past, with dubious results. For example, the FCC created set asides for Designated Entities, which led to valuable spectrum laying fallow for years when a major DE landed in bankruptcy. They also imposed conditions on both the C Block and D Block spectrum in the recent 700 MHz auction. From AT&T’s perspective, however, we fear that this time around, some of its tinkering may be aimed at specific auction participants, like us. Why are we fearful?

Two years ago, in the license transfer deal between SkyTerra and Harbinger (now known as LightSquared), a mysterious condition appeared at the last minute that imposed conditions if LightSquared were to engage in a commercial relationship with AT&T or Verizon. Not a single commenter in that proceeding asked for any conditions, yet that one miraculously appeared at the 13th hour (the actual first mention of the infamous Verizon/AT&T condition was not posted on the FCC website (March 31, 2010) until 5 days after the FCC had approved the Order (March 26, 2010) – and over a month after that particular ex parte had been filed (February 26, 2010) at the agency, see screen shot below. And let’s not forget that the FCC’s annual Wireless Competition Reports no longer address the competitiveness of the wireless industry (which is frankly remarkable to anyone who just came back from CES). Instead, the report discusses the different “values” of different swaths of spectrum, like the below 1 Gigahertz spectrum that would be auctioned off under this legislation, which could make it harder for certain carriers to obtain that spectrum.