In a blog post entitled “Buying regulation,” Susan Crawford wonders about the legality of the FCC reserve price scheme for the 700 MHz rules. (I.e., as long as the $4.6 billion reserve price is met for the much coveted C Block, then open access rules will apply. If the reserve price isn’t met, then the rules go away.) Crawford asks,
Think about it. How can the FCC condition regulations … on the payment of money? And then have the rules dissolve if it doesn’t get the money? This is such a pure quid pro quo – it’s government for sale. Completely screwy. But how do you say “completely screwy” in legalese?
Well, it is certainly a creative gambit by Kevin Martin to make Google put their money where their mouth is, and I don’t have an opinion about whether it’s technically legal. That said, I’m not sure it’s exactly a “quid pro quo.” It’s not as if the highest bidder gets their preferred rules applied to the spectrum block. One can conceive of AT&T, for example, winning the auction at a price above $4.6 billion and therefore being subject to rules it dislikes. What I think the scheme is meant to do is pacify Congress by addressing the concern that given the restrictive rules the spectrum block might fetch much less than the many billions Congress is anticipating (and probably has already spent).
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