The WasteWatcher: The Staff Blog of Citizens Against Government Waste

Spectrum Auction Winners or Losers

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


The federal government is once again picking winners and losers.  On April 12, 2013, the Department of Justice (DOJ) submitted its recommendations to the Federal Communications Commission (FCC) for the upcoming broadcast spectrum incentive auctions.  Among the DOJ’s suggestions are that the FCC adopt rules that prohibit larger mobile competitors from bidding on low-frequency spectrum in order to give smaller nationwide carriers the ability to purchase blocks of this spectrum. The DOJ’s recommendations for the upcoming spectrum auctions are not the first time the federal government has tried to choose corporate winners and losers.  In 2003, Northpoint Technology sought $100 million worth of spectrum directly from Congress to provide wireless and satellite services.  The company attempted to subvert the FCC’s auction process by mounting a large lobbying campaign for the inclusion of language in authorization and appropriations bills. The language nearly made it into the law, except for protests from some legislators and groups like the Council for Citizens Against Government Waste.  CCAGW called the proposal “a $100 million giveaway to an organization whose only asset was knowing the right people in Washington.”  Ultimately, the company failed to obtain the free spectrum allocation from Congress. In addition, smaller carrier bids do not always lead to increased competition in the marketplace, particularly if a smaller, less experienced company wins a large segment of spectrum in the auctions.  In May 2000, Winstar Communications was awarded 931 spectrum licenses in the FCC’s closed 39 GHz auction #30 to provide wireless broadband services.  However, the company was unable to generate enough sales to cover its large capital infrastructure build outs, and eventually filed for Chapter 11 bankruptcy protection in 2001. While DOJ asserts that its recommendation is meant to provide a level playing field, it is in fact anti-competitive.  The FCC would be determining winners and losers in the spectrum auctions before they even begin.  According to an April 15, 2013 article in ZNet, Verizon and AT&T have indicated that if the DOJ recommendations reduce their ability to bid on prime low-frequency spectrum, it might lessen their participation in the upcoming auctions. Past mistakes of opening up spectrum auctions to only to politically-connected or inexperienced telecommunications companies should be avoided.  The FCC should allow a truly free market competitive bidding process to move forward that will benefit everyone.

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