‘Crazy’ to Think AT&T Participation in Incentive Auction Will ‘Intimidate’ Other Bidders, Marsh Says
ASPEN, Colo. -- The FCC is pursuing many goals through its upcoming incentive auction of broadcast TV spectrum, not to maximize any one thing, said FCC Senior Economic Adviser Evan Kwerel on a panel at the Technology Policy Institute’s Aspen Forum. The “primary goal [is] to efficiently allocate spectrum from a lower value to a higher value use,” Kwerel said. But the auction faces pressure to “raise sufficient revenues to meet Congress’s objectives, including financing” FirstNet, he said.
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If it hopes to reach its revenue goals, the FCC shouldn’t put limits on AT&T’s participation in the auction, said AT&T Vice President-Federal Regulatory Affairs Joan Marsh. “There are no reasons, historically,” for the FCC to enforce these kinds of limitations, she said. “We think it would undermine the important revenue goals that need to be achieved here.” A single entity is not going to raise the capital to outbid others when “almost everyone agrees it’s north of $20 billion or $25 billion” that needs to be raised, she said. “There are revenue targets that have to be met for this auction to close,” which changes the incentives for all participants. Marsh pointed to the 700 MHz auction as an example of why such limitations are not needed. AT&T only obtained one block of spectrum through that auction, she said. “We did not achieve a national footprint. … This whole notion that we ran the table … is just wrong."
It’s unreasonable to think that AT&T’s presence is going to scare other bidders away from the auction, Marsh said. “This notion that we're going to somehow intimidate people away from this auction is crazy.” It is also unreasonable to think AT&T will come to the auction, pay “super-competitive” prices and then not use the spectrum it wins. “AT&T cannot afford to sit on spectrum,” she said: The company is “looking at spectrum opportunity everywhere,” including in secondary markets and reevaluating its use of its own spectrum. “The demand for capacity is enormous, and it continues to grow unabated,” leaving AT&T in a position where it must use any spectrum it can obtain, she said. “Our shareholders wouldn’t permit it, our board wouldn’t permit it, our network conditions wouldn’t permit it."
"The auction will fail at its inception unless the FCC succeeds in offering [spectrum at] prices that meet the expectations of potentially willing sellers,” said Preston Padden, executive director of the Expanding Opportunities for Broadcasters Coalition. The FCC has to provide adequate incentives to the broadcasters because they're not required to sell their spectrum, he said. “This is the first time the FCC has ever set out to sell something that it doesn’t have.” Padden was critical of the FCC’s consideration of scoring spectrum based on the size of the seller’s population. Population covered is not a good metric of “how much buying that station does or does not contribute to clearing” spectrum, he said: The ability of a transaction’s terms to reallocate spectrum is “the only metric that’s relevant.”