Complexity kills. Keep it away from the spectrum auctions.

[Commentary] The Federal Communications Commission faces a key policy decision. The FCC is contemplating rules for the most important auction of wireless spectrum since 2008, one that seeks to move underused broadcast TV spectrum toward higher value uses, like mobile broadband.

Even in its most basic form, this “incentive auction” would be a complex, two-part affair. TV broadcasters will be asked to “bid” on a price to give up their spectrum. And mobile service providers will bid to acquire that spectrum. The Department of Justice, however, has urged the FCC to effectively exclude the two largest bidders, AT&T and Verizon. Such a policy would not only hurt those two firms’ mobile customers who want fast service at reasonable prices. The exclusion could also throw the whole auction into question. With fewer large bidders, the TV broadcasters may not get the prices they’re looking for, and the amount of spectrum auctioned could plummet. An auction in which the government picks the winners isn’t an auction. (Ronald Coase looks down in disbelief.)

What it is is a high-stakes bet that the Department of Justice and FCC know exactly how the wireless industry should be structured and exactly how this two-side auction will play out. The private sector is good at mastering complexity and turning it into apparent simplicity -- it’s the essence of wealth creation. At its best, the government is a neutral arbiter of basic rules. The Administration says it is “discovering” how these “complicated” things can blow up. We’ll see if government is capable of learning.