U.S. Courting Disaster in Skewing Incentive Auction, FSF Fellow Says
History shows that to guarantee a successful TV incentive auction, the FCC should do as little as possible to offer preferences for some bidders over others, said Gregory Vogt, visiting fellow at the Free State Foundation, in a Monday blog…
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post. Policymakers need look no further than the AWS-3 auction in Canada versus an auction of similar spectrum in the U.S., Vogt wrote. “The Canadian government specifically intended that a major goal of its AWS-3 auction was to inject more competition in the market, rather than obtaining auction revenues,” he said. “Thus, it set-aside a block of 30 MHz available only to bidders that were smaller than the ‘big three,’ who currently have roughly a 90 percent market share. All other bidders had to vie for two 10 MHz blocks.” The AWS-3 auction in Canada brought in $2.2 billion, versus close to $41.3 billion for the U.S. version, he said. “The skewed Canadian auction resulted, according to one assessment, in a cost of about 11 cents per MHz/Pop for the favored bidders, while Telus paid $3.02 per MHz/Pop and BCE paid $2.96 per MHz/Pop,” Vogt said. A skewed system “could prove catastrophic for the U.S. incentive auction,” he said. “If broadcasters believe that the potential outcome of the incentive auction is relatively low, they may well just hang on to their spectrum. In that case, the government, broadcasters, mobile providers, and consumers will all lose.” The Hispanic Technology and Telecommunications Partnership, meanwhile, met with Commissioner Mike O’Rielly to argue against providing additional benefits for competitive carriers in the auction. “HTTP made it clear that it does not support multi-billion [dollar] companies getting multi-billion dollar, taxpayer funded discounts on spectrum by trying to masquerade as a small DE and that HTTP is opposed to further set asides in the upcoming auction,” the group said in a filing in docket 14-28.