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Opinion: New Spectrum Policy to Decide U.S. Wireless Future

Stocks in this article: SVZT

DOJ is urging the FCC to restrict the two largest carriers, Verizon (VZ) and AT&T (T), from participating in the auction. DOJ seeks to accomplish the restrictions by having the FCC adopt an ad-hoc spectrum screen in a proceeding whose main purpose is to set the organizational structure of the 600 MHz spectrum auction.

Limiting the amount of spectrum these carriers can acquire would potentially rig the auction results, prevent some carriers from getting the spectrum necessary to give customers the service quality they demand, and forestall future wireless innovation. It's also at odds with Congress' clear preference for a competitive, level playing field among qualified bidders.

With fewer qualified participants, the auction is less likely to meet Congress' desire to maximize auction proceeds to fund a planned nationwide public safety broadband network, to compensate broadcasters for the auction of their spectrum and to reduce the federal budget deficit. A recent Georgetown University study contends that severe bidding restrictions could cut revenues by as much as 40%.

With the Spectrum Act, Congress reaffirmed that sunshine always improves decision-making. In the past, the spectrum screen was adjusted without public notice or debate, during reviews of individual transactions, and then applied broadly to the entire industry. That's a recipe for uncertainty that makes companies wary to invest, thereby doing consumers a disservice.

Further, the screen often has been applied inconsistently. For example, when determining the total amount of spectrum that can be used effectively for mobile service in a given market, a huge chunk of Sprint/Clearwire (S)spectrum over which mobile broadband service is now provided is excluded from the FCC's current screen. Regulators decided it was less valuable -- even though Sprint/Clearwire today uses that spectrum to compete in the broadband market.

Irrespective of DOJ's specific policy prescription on spectrum aggregation, the FCC should avoid using the incentive auction design process as a vehicle to craft spectrum policy. Spectrum aggregation policies should be considered and adopted in a separate, transparent rulemaking that will then apply uniformly to every company and all spectrum transactions -- everybody needs to know and live by the same rules.

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