Groups Ask FCC to Revamp Auction Reserve

Say double trigger could be competitive double-cross
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Public Knowledge, Save Wireless Choice, and T-Mobile lobbyists and former Rep. Henry Waxman are pushing the FCC to revamp its broadcast spectrum forward auction reserve trigger to prevent it from being gamed by dominant wireless carriers.

Currently, the FCC is planning to set aside 30 MHz of spectrum for monodominant carriers. Public Knowledge's Harold Feld pointed out on a conference call with reporters that they would prefer a larger reserve, but in any event says the FCC should no longer condition that reserve on reaching a spectrum clearing and total bidding financial targets that the AWS-3 spectrum auction's success has essentially rendered unnecessary.

The groups argue that AT&T and Verizon would be able to game those triggers and extend the auction until, by the time the reserve is triggered, competitive carriers won't be in a position, or as good a position, to take advantage of it, which Waxman says would run counter to the intent of Congress in the spectrum auction legislation that it promote wireless competition.

Feld likened the issue to the dominant carriers being able to hack the FCC's computer model for the auction to advantage themselves.

The commission was scheduled to vote on its reserve proposal July 16, but put that vote off until Aug. 6.

Feld said he understood the FCC's reluctance to start adjusting the auction software and the staff's inclination to just "put it to bed." But he also said that given that T-Mobile had shown the double-trigger for the reserve could be gamed, it clearly would be gamed. "Why wouldn't you give yourself an advantage through strategic bidding," he asked.

He said that they had pressed their case to the commissioners that while it was a tough call, including politically, they should not let the work put into coming up with the reserve to be "washed away."

"The Commission has already adopted an unprecedented auction framework to give T-Mobile special treatment in the auction by creating a protected reserve auction that, by design, will allow T-Mobile to purchase large amounts of 600 MHz spectrum free from auction competition at the expense of taxpayers (auction revenues will be lower) and rivals (mainly AT&T and Verizon)," AT&T told the FCC Monday in a filing regarding the T-Mobile-backed proposal. "T-Mobile’s latest request seeks to further increase these windfalls through a rule change that would further depress prices in the reserve auction by effectively capping them at or near $2.00 per MHz POP in the 40 largest markets."

"T-Mobile, Sprint and DISH and SaveWirelessChoice continue to try to game taxpayers and the auction process," said Verizon in a statement, "They demanded and got a set-aside of three licenses, which allows them to win licenses of valuable spectrum at below-market prices without having to compete against Verizon or AT&T in most markets.  And they got the FCC to set aside the best licenses in the auction.  All the FCC asked was that they pay at least a minimum amount for those licenses, and that they pay a fair share of the costs of clearing broadcasters from the spectrum. Beneficiaries of the set-aside fought against a minimum payment to no avail and now argue that they should not have to pay for moving the broadcasters. If they don’t pay, the FCC will have less money to pay broadcasters and less spectrum for wireless use, risking the auction’s success.  These companies have one goal and that’s to get their bits of spectrum cheaply, even if that results in the delivery of a paltry amount of spectrum to meet America’s demand for mobile connectivity. " 

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