Frontline-Backed Economists Support Spectrum Auction Conditions


As the clock ticks down to the FCC's Tuesday meeting, at which it plans to set auction rules for reclaimed analog TV spectrum, a quartet of economists have written a letter to the Bush administration's chief telecom policy adviser arguing that putting open access conditions on the spectrum and allowing it to be resold wholesale would not lower auction estimates.

Saying they were responding to FCC Chairman Kevin Martin's statement last week that “Maximum flexibility does tends to lead to maximum revenues,” the economists said in a letter to

National Telecommunications & Information Administration chief John Kneuer that Martin’s statement had "intuitive appeal," but "has no basis in auction theory."

They argue that putting conditions on the auction can increase revenue because, without them, new firms can be discouraged and incumbents can get the spectrum "for a song."

Google has pledged to put up at least the minimum $4.6 billion the FCC is asking for a certain swath of spectrum, but only if it has both open access and wholesale conditions. FCC Chairman Kevin Martin supports the former, but not the latter. Frontline Wireless, which is proposing to create a public-private national network whose public part would be an interoperable emergency communications network, also backs the open access and wholesaling provisions.

The letter-writing economists were Peter Cramton of the University of Maryland; Andy Skrzypacz and Robert Wilson, both of Stanford; and Simon Wilkie of the Annenberg Center at USC.

Frontline has funded auction-revenue analysis by the economists, including a paper unveiled at a Frontline press conference.