Spectrum Auction Set-Asides Shortchange Consumers

[Commentary] All carriers will need more spectrum to provide fast, reliable service. But spectrum is a limited resource, and purchasing and deploying it takes time. That’s why it’s critical to identify spectrum (especially holdings of government agencies, some 60-70 percent of useable spectrum) that could be repurposed for commercial mobile use. In the meantime, the next big opportunity to acquire spectrum will be the Federal Communications Commission’s incentive auction in 2016. If there is one takeaway from previous auctions that should be applied here, it is that rules that pick winners and losers before bidding begins compromise the auction.

A spectrum set aside has the potential to make AT&T and Verizon pay more for a smaller share of spectrum while T-Mobile and Sprint pay less for a greater amount. In effect this means that subscribers of AT&T and Verizon are being punished by the FCC for choosing a provider that makes more efficient use of its spectrum and network. Competition means there are winners and losers. It’s not the job of the regulators to compensate for poor management. Companies like Sprint, T-Mobile, and DISH doesn’t need subsidies. There’s enough cash flow to purchase spectrum and build infrastructure. Spectrum set asides do more than hurt competition; they shortchange all Americans who entrust the FCC to maximize the value of auctions for everyone. It’s time to draw the line: No more set asides for the FCC’s favorites.

[Roslyn Layton is a PhD Fellow at the Center for Communication, Media and Information Studies at Aalborg University in Copenhagen and a Visiting Fellow at the American Enterprise Institute.]