FCC Shouldn’t Use Spectrum Screen to Cut Off Participation in Incentive Auction, Boucher Says
The FCC should follow the direction of Congress and not keep Verizon Wireless and AT&T from bidding in the upcoming incentive auction of broadcast spectrum, ex-Rep. Rick Boucher, D-Va., former chairman of the Communications Subcommittee, said in an interview. “The FCC should not be in the position of picking winners or losers,” he said. “The marketplace can establish who the winners and losers are.”
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Congress didn’t place restrictions on which carriers could take part in the auction in spectrum legislation enacted in late February, Boucher noted. “That’s a very sensible approach.” The “theme” of the legislation was that no carrier should be prevented from bidding, he said. “The reality is that carriers are going to buy the spectrum that they need,” he said. “The spectrum is urgently needed.” Boucher is the honorary chairman of the Internet Innovation Alliance, which includes AT&T, Alcatel Lucent and Corning among its members, and head of the government strategies practice at Sidley Austin.
Boucher said he’s concerned the FCC could use its spectrum screen as a “backdoor” way of doing “what Congress has said the FCC cannot do directly, and that is disqualify the larger bidders.” There’s a concern the agency could “adjust” the screen in a way that would disqualify the larger bidders from the broadcast spectrum auction, Boucher said. Boucher said there are some unnamed “individuals” who have influence at the commission “who would like to see the larger carriers put on the sideline … as a way to give some of the smaller carriers a leg up.”
If the FCC makes an all-out push, Boucher said the incentive auction could get underway “within a couple of years.” But, he acknowledged, “That said, it’s a complicated process and it really involves two different rounds that are very different in nature.” One key set of decisions will be designing the initial round, where broadcasters offer their spectrum for sale in a reverse auction. “Some determinations will have to be made about the share of auction proceeds that go to successful bidders,” Boucher said. “This will almost necessarily have to be a market-by-market test because what successful bidders will get in a small rural market would be very different than what successful bidders would get in a large, urban market.” Boucher sees the reverse auction as straightforward.
Boucher said “it’s too early to tell” to what extent broadcasters will participate in the auction, especially in the so-called NFL cities, where wireless carriers have the biggest need for spectrum. “I am absolutely confident that to some extent there will be broadcaster buy-in,” he said. “It’s simply a matter of logic. In these NFL cities … there are a large number of broadcasters competing with each other for viewers. Some are quite large… . Others are quite small, maybe some unaffiliated stations that primarily are showing the reruns of syndicated programs or movies and their audience by comparison is quite small and their revenues are correspondingly small.”
Some of the smaller broadcasters will likely see financial advantages in selling spectrum rather than continuing to broadcast, Boucher said. “I have no doubt that there are going to be participants,” he said. One key is that the FCC share a significant part of the revenues from the auction with stations, he said: “Given the urgency that we have for new spectrum, it seems to me that the better policy course is to be more generous rather than less so.”