Preston Padden Offers Spectrum Auction Lessons Learned

He says FCC should make sure forward auction bidders show up next time

Preston Padden, the former News Corp. and Disney-ABC top exec who was intimately involved in the FCC's spectrum auction, says that one of the lessons learned from that first-ever double-sided auction was three of the four major wireless carriers who insisted there was a spectrum crunch/crisis and lobbied hard for the auction essentially didn't show up.

That is according to a planned presentation at a May 12 "lessons learned" event in Washington sponsored by Duke Law. 

Padden headed up the Expanding Opportunities for Broadcasters Coalition, which advocated for rules that would make it attractive for stations to participate and maximize their returns.

Padden, now principal of Boulder Thinking, argues that in accommodating the "claimed need" for wireless spectrum, the FCC disadvantaged broadcasters, requiring almost 1,000 stations to move involuntarily as part of the voluntary auction.

His advice for future auctions is make sure forward auction bidders show up and avoid complicating the process by adding policy objectives like the set-aside for competitive carriers so the big players didn't get all the spectrum, which he says wound up being a needless complication given that Verizon didn't participate and AT&T didn't buy much spectrum. He also suggests giving spectrum holders price guidance and "options."

Padden also argues that the way the auction was structured, forward auction bidders had too much power, including for one bidder to be able to end a stage by "hiding" their demand in smaller markets.

He says the auction was inefficient in two ways: it left 42 MHz on the table that broadcasters were willing to sell but forward auction bidders wouldn't pay their price for, and it failed to clear out many "low value" stations that will complicate the repack.

Padden also plans to put in a plug for allowing winning bidders who sold their spectrum to—separately—sell their license and must-carry rights rather than use them to share a channel and remain on the air, something the FCC has asked for input on in connection with a request by a winning bidder to do just that.