FCC should promote real competition in incentive auction

It is no secret that the U.S. job market could use a good boost.  After years of struggling under the weight of heavy regulations and uncertainty, most Americans unfortunately have felt pains from the sluggish economy.  But instead of doing everything they can to spur job creation, new technologies, and economic growth, policymakers in Washington are considering a proposal that could turn a forthcoming auction of broadcast spectrum – the lifeblood of the thriving mobile economy – from a tremendous opportunity for our economy and the nation’s bottom line into an irreparable failure.

Spectrum auctions are nothing new to the FCC.  This auction, however, is different because it will be a two-sided auction.  First, broadcasters will have an opportunity to give up their spectrum, but they are hesitant to do so if the FCC places unwise bidding restrictions for the second phase of the auction involving the wireless industry. Wireless carriers will then bid on available spectrum, but only if they are allowed to without restrictions.

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The wireless industry requires additional spectrum to serve its growing customer base and their growing reliance on mobile devices to go online, capture and stream video, and make use of other data-intensive services. For instance, a study done by eMarketer recently found that 64.3 percent of mobile users in 2014 will use their mobile device to access the Internet, and an estimated 79.2 percent of mobile users will use their device to access the Internet by 2017.  These users are not just going online to surf the web, they are increasingly using mobile devices through the course of their work or using them to look for jobs. 

After all, the U.S. wireless industry is valued at nearly $2 billion, which is larger than publishing, agriculture, hotels and lodging, air transportation, motion picture and recording and motor vehicle manufacturing industry segments.  That equate to a lot of jobs – as in 3.8 million Americans are directly and indirectly employed by the wireless industry, and these are generally high-paying jobs.

For those reasons, ensuring the upcoming auction is designed to maximize the amount of spectrum that is freed up for commercial use is imperative. 

Limiting who can bid or what they can bid on, as the FCC is currently considering, is a recipe for disaster.  The best path to success is an open auction that puts all bidders on an equal footing.  History and countless studies demonstrate this.  Consider the 700 MHz auction: The FCC could not force companies to participate.  Sprint and T-Mobile – the very same companies who are relentlessly lobbying the FCC to restrict AT&T and Verizon’s ability to bid – sat out.  Additionally, all but two of the winners from that auction were considered small bidders, and the D-Block did not have a buyer because the rules around it assumed Frontline would be the buyer, but Frontline dropped out. Clearly, open competition, not attempts to manage competition, lead to the best outcomes.

While there is much riding on the success of the incentive auction, more can and should be done to free up additional spectrum for more economically beneficial use like incentivizing the government to free up some of its vast, yet underused, spectrum.

The government has 60 percent of the spectrum that is best suited for mobile use, and it averages nine years to bring spectrum to market.  Those statistics are unacceptable, especially as CTIA has said that bringing 500 MHz of spectrum to market by the end of the decade will create at least 350,000 new jobs.  The White House has also recognized the need for “greater spectrum availability,” noting that it “creates jobs for American innovators engaged in app development, content creation, and network design and build out.” 

Although, there has been some progress as spectrum used by the Department of Defense and others – the 1755-1780 MHz band – is set to be auctioned this fall as part of the AWS-3 auction.

Agencies and policymakers must build on this positive momentum and work toward freeing up more government spectrum so that we have a sustainable, long-term spectrum pipeline to fuel the mobile revolution.  Coupled with free and open spectrum auctions, these commonsense policies could pay off in the form of renewed investment in the American economy, job creation, and even some revenue for the U.S. Treasury.  

DeMaura is the president of Americans for Job Security, a pro-business organization.

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