Study Finds FCC Spectrum Auctions Anti-Competitive

STUDY FINDS FCC SPECTRUM AUCTIONS ANTI-COMPETITIVE
[SOURCE: WirelessIQ]
A new study filed with the Federal Communications Commission (FCC) finds that the FCC's use of auctions for assigning spectrum licenses could be subject to anti-competitive behavior by incumbent carriers. The study performed by Dr. Simon Wilkie, former chief economist at the FCC and current head of the University of Southern California Center for Communications Law and Policy, reviews past auction results and finds that auctions do not work in all circumstances to secure for the public the benefits of the efficient use of spectrum as the law requires the FCC to do. For example, in the recent AWS auctions, the study found that 98% of the spectrum in major metropolitan areas went to incumbents, effectively shutting out any new entrants. _Spectrum Auctions are not a Panacea: Theory and Evidence of Anti- Competitive and Rent Seeking Behavior in FCC Rulemakings and Auction Design_ identified and analyzed four anti-competitive tactics that incumbents use to manipulate the spectrum auction process: 1) Strategically warehousing spectrum in order to prevent entry for potential competitors; 2) Delaying the decision-making process at the FCC by drawing out debates over service rules and unquantifiable arguments over technical matters and other means: 3) Adopting a no holds barred bidding strategy to block new entrants in auctions with insufficient safeguards against incumbent carriers' potentially anti-competitive tactics, and no caps on the overall amount of spectrum that incumbents may hold; and 4) Slicing new available bands for private commercial use that make it more costly or impossible to build a viable national competitive business plan to challenge the incumbents' dominant position.
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