Boulder Thinking About The Incentive Auction. Preston Padden Principal, Boulder Thinking, LLC May 12, 2017 The FCC Spectrum Incentive Auction: Lessons for the Future Center For Innovation Policy At Duke Law Washington, D.C.
An Unsung Father Of The Auction - Phil Weiser - Hatfield Professor Of Law, Former Dean, Colorado Law 2008 Brookings Paper - A conceptual framework for enabling spectrum now dedicated To UHF TV to be transferred to Wireless Broadband - As White House Advisor On Technology And Innovation, He Championed Auction Statute
Four FCC Chairs, Gary Epstein, Several Bureau Chiefs And 100+ Dedicated FCC Staff - Turned A Bare Statute Into A Flawlessly Executed Auction - Like Walking On Water!
Wireless Industry Lobbied Hard For The 600 MHz Auction - CTIA, 3/17/11, It is absolutely critical that Congress act as rapidly as possible to authorize voluntary incentive auctions carriers must gain access to more spectrum - CTIA, 2/15/11, Carriers will bid as much as $48 Billion for 600 MHz spectrum - CTIA after passage of Spectrum Act, "For more than three years, CTIA and its members have been advocating for more spectrum so America's wireless industry can remain the world's leader in the deployment of advanced wireless services. -
Sprint, Verizon & AT&T Lobbied Hard For The 600 MHz Auction Sprint: the 600 MHz Band represents a potentially pivotal allocation in the Commission s spectrum management legacy of unleashing spectrum for competitive mobile use. https://ecfsapi.fcc.gov/file/7022112071.pdf Verizon: the 600 MHz auction is essential to freeing that spectrum for wireless use. https://ecfsapi.fcc.gov/file/7022113916.pdf AT&T: Prompt, successful completion of the 600 MHz auctions is essential to the continued health and growth of the U.S. broadband wireless marketplace. https://ecfsapi.fcc.gov/file/7520954453.pdf
Accommodating Wireless Claimed Need For 600 MHz Spectrum Hurt Another Industry To Accommodate The Wireless Demands For 600 MHz Spectrum, Congress Disadvantaged TV Broadcasters To Make 600 MHz Spectrum Available To Wireless, Almost 1000 TV Stations Will Be Moved Involuntarily The TV Stations Must Buy New Antennas And Engage In Extensive And Costly Tower Work
But, When The Auction Began, Verizon, AT&T And Sprint Were Missing In Action - Despite All That Lobbying, Three Of The Four Major Carriers, Disrespected The Congress, The FCC And The Broadcasters - Verizon And Sprint Did Not Bid At All Nothing Nada! - AT&T Showed Up In Stage 1, But Then Shed Demand As Fast As FCC Rules Would Allow
Why? We Simply Don t Need It. Nicola Palmer, Verizon s Chief Network Officer 4/28/17 Verizon Web Site NOTE: To Their Credit, T-Mobile Showed Up And Did Everything They Said They Would Do
#1 Takeaway From Incentive Auction Never Again Let Those Claiming To Need More Spectrum Disadvantage Others - And Then Not Show Up
The Auction Was Inefficient In Two Respects - Despite The Wireless Industry s Continued Lobbying For More High, Mid And Low Band Spectrum, The Auction Left 42 MHz Of Pristine 600 MHz Spectrum On The Table - The Auction Failed To Clear Out Many Low Value TV Stations That Now Remain On The Air Complicating The Channel Repacking Process - Fortunately, There May Be Free Market Mechanisms Available To Clear Out These Stations On Terms Acceptable To Both The Stations And Winning Forward Auction Bidders
The Auction Put Too Much Power In The Hands Of Individual Forward Bidders - By Focusing On Excess Demand In The Top 40 Markets, And By Allowing Bidders To Express Less Than Their Full Eligibility, The Auction Rules Enabled A Single Bidder To End A Stage By Hiding Their Demand In Smaller Markets - OR One Bidder Could Force A Round To Remain Active By Adding Significant Demand Into One Top 40 market (i.e., New Orleans In S4) - Forward Auction Bidders Were Given Stage Price Information Before Each Round Began Broadcasters Were Not
Lessons Learned 1. Current Spectrum Holders Need Price Guidance 2. Current Spectrum Holders Need Options 3. Avoid Micro Managing Auction For Other Policies 4. Need Some Way To Make Sure Bidders Show Up
Spectrum Holders Need Price Guidance -The Incentive Auction Became Real Only After The FCC Provided Price Guidance To Broadcasters
Spectrum Holders Need Options - Spectrum Holders Need To Be Able To Continue Their Business Or Activity - Workable Channel Sharing Options Were Key To Broadcaster Participation - 92% Of TV Stations That Exited The Auction Without A Channel Are Planning To Channel Share (133 of 145) - Nomadic Licenses Must Be Transferable
Avoid Micro Managing Auction For Other Policies - Incentive Auctions Are Complicated Enough Without Micro Managing To Achieve Other Policy Priorities - FCC Created A Complicated Spectrum Reserve Based On Fear That Verizon And AT&T Would Buy All The 600 MHz Spectrum To Foreclose Existing And New Competitors - Given Verizon And AT&T s Non-Participation, The Reserve Was A Needless Complication - Broadcaster Pricing Was Based On Pops Dogma Rather Than What It Would Require To Clear
Need To Make Sure Bidders Show Up - Future Incentive Auctions Will Be Planned To Satisfy Perceived Needs For Spectrum - In This Case It Was The Claimed Urgency To Provide More Low Band Spectrum For Wireless Carriers - Particularly Where Other Parties Will Be Hurt Or Inconvenienced By The Auction, Some Way Must Be Found To Assure That Those Claiming To Need Spectrum Show Up - Because Technology Changes, Conducting Future Auctions More Quickly Could Help