Limiting bidding on spectrum auctions could be costly, study says

Georgetown paper makes the case that Verizon and AT&T should be allowed to bid in upcoming auctions

If the U.S. Federal Communications Commission limits the participation of the largest mobile carriers in upcoming spectrum auctions, it could cost the U.S. treasury billions of dollars, according to a study released Tuesday.

The U.S. Department of Justice's Antitrust Division and some digital rights groups have called on the FCC to ensure that small carriers can compete in spectrum auctions scheduled for 2014.

But a policy to restrict the ability of Verizon Wireless and AT&T to bid on the spectrum would drive down the bidding during the auction and leave less money for a nationwide public safety network and the U.S. treasury, said the new paper, from the business-friendly Georgetown Center for Business and Public Policy. The center has received funding in the past from both Verizon and AT&T, although the two large carriers did not commission this study, said center director John Mayo.

The upcoming spectrum auction would sell spectrum that is voluntarily turned over by U.S. television stations, and the FCC's spectrum rules "have the potential either to significantly boost or significantly hinder the ability of the auction to move spectrum to its most highly valued use," Mayo said.

The auction could raise up to US $31 billion, according to the paper's authors. Using bidding results from past auctions, the authors estimated that completely barring Verizon and AT&T from the so-called incentive auctions could cost $12 billion.

"Those revenues matter," said Douglas Holtz-Eakin, a co-author of the Georgetown study. "That has implications for public policy."

Even a partial restriction of bids by Verizon and AT&T could have a significant impact on auction revenues, he said.

The study considers scenarios that won't happen, countered Matt Wood, policy director at digital rights group Free Press.

"No one is talking about completely barring AT&T and Verizon from the incentive auction," Wood said in an email. "Sensible people are talking about making sure that more than two companies have a chance at obtaining spectrum. The fact that these duopolists hired economists to parrot the companies' own talking points isn't really that newsworthy."

Restricting the bids of the two largest carriers could also mean a price hike for mobile service because it would mean that carriers who make less efficient use of the spectrum would control it, said Robert Shapiro, a co-author of the Georgetown study. Shapiro estimated that mobile service prices would rise by 9 percent if Verizon and AT&T were excluded from bidding.

This, in turn, would lead to fewer U.S. residents adopting 4G service, costing the U.S. tens of thousands of jobs in the coming years, he said.

The calls to limit the participation of AT&T and Verizon are misplaced, he said. "There is no evidence of any lack of competition in this market," he said.

The study's authors don't believe Verizon and AT&T will be barred from the auction, but the study's "thought experiment" looking at that possibility shows the outer bounds of the economic impact of bidding limits, Shapiro said.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags governmentmobileregulationtelecommunication4gat&tfree pressU.S. Federal Communications CommissionVerizon WirelessMatt WoodRobert ShapiroDouglas Holtz-EakinJohn Mayo

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Grant Gross

IDG News Service
Show Comments

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?