Back To Spectrum Giveaways

In 1993 Congress substituted auctions for the deplorable practice of giving away valuable spectrum to well-connected commercial entities.

Lawmakers who think spectrum is a valuable public resource for which the taxpayers should be compensated need to wake up for a minute. FCC rulemaking could render the remaining assets worthless, distort wireless competition and contribute to the unfortunate perception of the FCC as a candy store.

Google has made it clear that it plans to weigh in at the FCC as it determines how to re-auction the D-block from the recent 700 MHz auction, and that it wants to open the white spaces between channels 2 and 51 on the TV dial for unlicensed broadband services.

Anna-Maria Kovacs, a regulatory analyst, reported that in the recent 700 MHz auction AT&T Mobility paid an average price of $3.15 per POP in the B-block while Verizon Wireless paid 77 cents per POP in the C-block which was subject to special rules advocated by Google.

Now comes an admission that Google’s main goal was not to win C-block licenses in the auction but to jack up the price just enough so the reserve could be met, according to the New York Times.

“Our primary goal was to trigger the openness conditions,” said Richard Whitt, Google’s Washington telecommunications and media counsel.

This certainly isn’t consistent with the way Google presented the open access proposal to the Federal Communications Commission last summer.

Google stressed that open access was for the purpose of leading to the introduction of new facilities-based providers of broadband services.

Chairman Martin has articulated the critical issues at stake in this proceeding:

The most important step we can take to provide affordable broadband to all Americans is to facilitate the deployment of a third “pipe” into the home. We need a real third broadband competitor….The upcoming auction presents the single most important opportunity for us to achieve this goal. Depending on how we structure the upcoming auction, we will either enable the emergence of a third broadband pipe – one that would be available to rural as well as urban American – or we will miss our biggest opportunity. Such a status quo outcome certainly would not sit well with consumer groups that have been strongly urging us to adopt rules that facilitate the ability of a “third pipe” to develop.

Further, Chairman Martin has observed that Google and other members of the Coalition for 4G in America are “the only parties that have promised to try to provide a national, wireless broadband alternative.”

As Chairman Martin recognizes, the actual method of providing a broadband alternative is through a “real third broadband competitor.” This means that the would-be new entrants should not be aligned with either an incumbent wireline carrier or incumbent wireless carrier. Those carriers, quite rationally, seek to extend and protect their legacy business models, and in particular not take any actions that would jeopardize existing and future revenue streams. For this reason, the appropriate public policy stance is not simply to facilitate an additional spectrum-based broadband platform, but rather to facilitate independent broadband platforms.

Obviously, the idea that an open access requirement would facilitate a third “pipe” was naïve on the part of pliant regulators.

We now have a block of spectrum owned by an incumbent with an open access requirement which aligns nicely with Google’s business model. Yet it’s fairly obvious that the open access requirement contributed to a substantial loss for the Treasury.

The admission by Google’s counsel that winning the spectrum wasn’t the company’s goal and that Google submitted bids for the purpose of spiking the auction price casts doubt on the company’s motivation and veracity in view of Google’s previous representations to the FCC.

It may be that “everyone” attempts to “influence” the regulatory process when they can get away with it, but that doesn’t make it right.

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