Fairness in telecommunications auction

The U.S. mobile phone marketplace has never been more innovative and competitive than it is today. Just 10 years ago we were plugging five-pound “bag phones” into the cigarette lighters in our car, yet today the credit-card sized devices that slip into our shirt pockets are allowing us to conduct business, surf the Internet, listen to music, take and send photos, video and e-mail, watch live television, play video games and make phone calls. And this is just the beginning.  

The wireless device has so quickly evolved from a bulky, one-dimensional “car phone” to a sleek, multi-functional mini-computer due primarily to one simple factor: competition. Today, 94 percent of Americans live in a county with access to four or more wireless providers and 98 percent may choose between three or more.  This fierce competition among providers gives wireless consumers a powerful voice when it comes to product design, functionality, capability, cost and service plan options.  The history of personal wireless communications in America has proven that if a provider ignores growing consumer demand for a particular application or service plan option, a pack of hungry competitors will quickly step up to the plate and fill the void. In other words, fail to produce what consumers want and need and wireless providers will soon be utilizing their smart phone search engines to find reputable bankruptcy attorneys in their area.

In addition to providing meaningful benefits for more than 235 million wireless consumers, the domestic wireless industry is one of America’s most dynamic and growing economic engines. A report by analyst firms Indepen and Ovum indicates the U.S. wireless industry contributes about $100 billion toward the annual gross domestic product and about 3.6 million jobs are either directly or indirectly dependent on the industry. To put this in context, if the domestic wireless industry were a nation, today its economy would rival that of Egypt and would rank as the 46th largest in the world.

The report also concludes that the wireless industry will contribute an additional $450 billion to the GDP over the next 10 years, and account for as many as 3 million additional jobs.

So with such clear evidence of a vibrant, healthy and successful marketplace at work, one might wonder why there are calls for unprecedented government intervention into the wireless industry. I’m referring to the upcoming 700 MHz spectrum auction in which a handful of groups are lobbying against an open and unbiased auction process and in favor of one that is pre-ordained to promote certain bidders over others. If these groups succeed in convincing the Federal Communications Commission to place unprecedented conditions on spectrum usage, it will be a sharp departure from recent auctions, which attracted a diverse and growing number of bidders and produced record amounts of revenue for the American taxpayer.

At the end of the day, an auction simply isn’t an auction if the rules are written in such a way that ties one group of bidders’ hands behind their backs while the others are free to swing away at will. In this scenario, what was once an ultra-competitive and high-yielding proceeding quickly disintegrates into a bargain basement fire sale with the federal government choosing private-sector winners and losers and American taxpayers left holding the bag.

Experience tells us there is no good reason for the FCC to travel in this risky and untested direction. The uncomplicated and clear-cut auctions of the recent past — most notably the $12 billion Advanced Wireless Services auction which concluded in September 2006 — have been enormously successful and have yielded tangible, long-term benefits for the American taxpayer and the American wireless consumer. Some have also argued that additional spectrum from the 700 MHz auction needs to be set aside for public safety concerns. However, nearly every spectrum expert who has studied that question concludes that the 24 MHz that Congress has already reserved for public safety is more than enough to provide for the very finest in interoperable wireless communications.

 Spectrum is a precious and finite public resource that should always be put to its highest and best use, and any regulatory effort to significantly devalue it should be strongly resisted. By keeping the 700 MHz auction rules simple and straightforward we can ensure that this valuable public resource will be aggressively sought after by the largest number of bidders possible. And history teaches us the winning bidders will put the spectrum to use by offering highly innovative wireless services that the American consumer wants and needs. Anything else simply won’t fly.


Largent, a former House member from Oklahoma and a member of the Pro Football Hall of Fame, is president and CEO of CTIA – The Wireless Association.

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