The FCC Veers Off Course on Mobile Auctions

[Commentary] In early 2012, Congress authorized the Federal Communications Commission to conduct new auctions for radio frequencies (or “spectrum”) urgently needed to expand mobile networks. The auctions are aimed at solving capacity constraints already causing regular headaches for many mobile broadband consumers, a problem the agency’s former chairman, Julius Genachowski, first referred to in 2009 as the “spectrum crisis.”

The FCC’s deliberative pace has proven an irresistible lure for some who see the auctions as a chance to make a fast buck. Industry representatives and their proxies are flooding the FCC with proposals to rig the auctions in their own favor, claiming vaguely and implausibly that doing so will benefit US consumers. Self-serving statements from the carriers aside, there is utterly no evidence that crippling spectrum auctions in the name of competition would accomplish any of the Obama administration’s admirable policy objectives for universal broadband. The real risks of tampering with auction design are palpable. According to a recent analysis of past auctions sponsored by the trade group Mobile Future, restrictive and preferential auction rules have consistently translated to losses, not gains, for mobile users. According to some lawmakers and legal scholars, limiting auction participation would also be illegal. At the very least, the proposed restrictions will generate lawsuits aplenty, and with them even more delays. At worst, the FCC will be forced to start over again. Open the auctions to everyone, and let the spectrum go to the highest bidder.

[Downes is a consultant on developing business strategies in an age of constant technological disruption]