O'Rielly, Pai Should Halt, Redesign Incentive Auction, Says Max Media's Loving
The design of the incentive auction is flawed, and FCC Commissioners Ajit Pai and Mike O'Rielly should pause it and rethink “the entire process of spectrum allocation,” said broadcast company Max Media CEO Gene Loving in a letter to the…
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commissioners Thursday. “Taking a cue from President-Elect Trump’s efforts to reevaluate all government programs, I urge you to consider whether this auction, which was started under the previous administration, will likely end up as 'failed' just as the new commission takes over, leaving the new administration holding the proverbial bag,” said Loving. “I’m certainly not an expert in auction theory, but the results of the forward auction are clear evidence of a flaw in the design, possibly due to the wireless bidders being told over and over that if they don’t like the price, the auction will be rerun again and again and again,” the letter said. “Perhaps rather than announce the clearing values, the commission should have kept that information confidential. Wireless bidders should have been told only how much spectrum would be made available.” Under the new FCC administration, the auction could be temporarily halted and redesigned “to ensure the future spectrum needs are truly met that reflect the reality of the market, not a flawed auction process,” said Loving. “In line with the Trump administration business approach to running government, all 126 megahertz cleared in Stage 1 could be purchased by a specific purpose entity financed through the issue of bonds. That entity could then be charged with selling spectrum when demand merits the sale, meaning when prices are high enough so that the US Treasury could make a profit, or even better, leasing spectrum to the wireless industry at a monthly fee to create a long term income stream for the government and an ongoing return to U.S. taxpayers.”