Singer: Asymmetric Auction Bidding Caps Are Consumer Unfriendly

Hill spectrum hearing witness lays out case against limiting AT&T, Verizon

Hal Singer, senior fellow at the Progressive Policy Institute, plans to tell Congress that imposing asymmetric spectrum cap bidding conditions on the broadcast incentive auction is consumer unfriendly.

He suggests that it makes no sense to steer spectrum away from the carriers with the largest customer bases in faovr of smaller companies that "are ill‐suited for this colossal undertaking."[P]romoting small carriers is an invitation for higher costs. U.S. consumers take pride in supporting small businesses like cafes, brew pubs, restaurants, and boutiques, but when it comes to wireless services, they want their provider to blanket the country in LTE coverage."

That is according to Singer's prepared testimony for a Dec. 10 Senate Commerce Committee oversight hearing on the auction, which is now targeted for mid-2015.

FCC Chairman Tom Wheeler has indicated he may support imposing limits on local market aggregation of the low-band spectrum that is wireless broadband beachfront property due to its propagation characteristics. The Department of Justice has already weighed in in support of such caps. The FCC under chairman Julius Genachowski proposed adjusting the FCC's spectrum screen, which is the amount of spectrum controlled by one company in a market that would trigger additional competitive scrutiny.

Singer says from a competitive economic perspective such caps don't make a lot of sense. He says, for one, "it is hard to detect any impairment in the output market" The caps primarily would limit AT&T and Verizon and benefit Sprint and T-Mobile, but Singer says neither Sprint nor T-Mobile suffer from the kind of market impairment that needs government intervention.

In the absence of that evidence, he says, "this policy appears designed solely to benefit certain competitors at the expense of broadband consumers and taxpayers."

"If access to low‐frequency spectrum were essential to compete effectively, as the DOJ implies in its comments, then AT&T and Verizon would be running away with the wireless prize," he says, but "U.S. wireless concentration as measured by the FCC has held steady since 2008. And if Sprint and T‐Mobile continue to grow faster than and steal customers from AT&T and Verizon, wireless concentration could decline in the near future."

He also said that the FCC should concentrate on promoting wireless as a wired broadband competitor rather than "narrowly focus" on promoting wireless competition, and that less restrictive options to caps are available.