McDowell Calls for Simplicity in Auction Rules, Stronger Support for Secondary Markets
DALLAS -- The FCC should do more to encourage secondary markets for spectrum, Commissioner Robert McDowell told the Telecommunications Industry Association conference. In a speech where he discussed a spectrum policy to promote U.S. growth and make the economy more “reliably business friendly,” he revisited critiques of the FCC for taking too long to review deals and discussed ways frequencies can be used more efficiently. Over the past decade, major transactions have taken an average of 321 days to get approved, and the commission’s voluntary 180-day clock to review deals means little when commission staff frequently stop it at will, McDowell said.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
McDowell noted with a raised brow that the commission apparently “has the power to stop time itself.” The lack of a fixed timetable increases the commission’s leverage to extract conditions, he said. “By working under this unwieldy, time-consuming and unpredictable process, the commission has essentially relegated the secondary market for spectrum transfers to the comparative hearing model of yore used to award broadcast licenses.” Such “bureaucratic sclerosis” fails to quickly get new spectrum to customers, McDowell said. “If these trends continue, today’s consumer frustration may quickly turn to outrage while we lose our global lead in wireless.” Carriers such as Verizon Wireless have also sought more active secondary spectrum markets (CD June 7 p6).
McDowell called for increased flexibility when examining public safety waivers, pointing to more than 30 jurisdictions awaiting decision on pending requests to build advanced public safety networks in the 700 MHz band (CD Feb 13 p1). “Common sense dictates that the commission handle these pending requests on a case-by-case basis rather than dismiss the lot out of hand,” he said. “One-size-fits-all policy making in this context rarely works … I hope that the commission will think twice before wielding a meat cleaver.” McDowell again encouraged the agency to implement the new incentive auction law with “humility, simplicity and regulatory restraint."
The voluntary spectrum auction will be complicated enough without added commission-caused complexity, he said, rattling off several unknowns: How many broadcasters will volunteer to participate in an incentive auction, whether the commission will see enough volunteers in the large contested markets that acutely need additional spectrum and how the commission will repack broadcasters that don’t participate. In light of so many variables, regulatory restraint will help “create greater certainty and thus a higher participation level,” he said, pointing to “overly-complex rules” governing the C- and D-blocks of the 700 MHz auction that “produced several harmful unintended consequences.” The FCC should “learn from the past and keep new auction rules minimal” to ensure bandwidth gets into the hands of consumers as quickly as possible, McDowell said.
In implementing the spectrum law, the commission should lay off extraneous conditions, McDowell told us. For example, the order approving Comcast’s buy of control in NBCUniversal had a lot of conditions that had nothing to do with the fact that a distributor of content was buying a producer of content, he said. “I think there was regulatory hubris with that, for instance. And you could find a lot of other mergers where there were lots of conditions put in there to satisfy some other desire, or please some constituency, but in reality it doesn’t have anything to do with the public interest standard, and is not specific to the issues raised by the transaction itself."
McDowell’s words “increased the urgency for the FCC and administration to do something faster,” TIA President Grant Seiffert told us. TIA members really just want the commission to act quickly and with certainty on spectrum so they can move forward, Seiffert said. “Just make a decision so that we can move on with our business plans, and create the road maps that stimulate investment, and hire engineers, and invest in R&D.”
Meanwhile, the West Wing should “demand” that executive branch agencies “redouble their efforts” to find spectrum to bring to auction by a date certain, McDowell again (CD May 18 p1) said Thursday. A March NTIA report on the viability of accommodating commercial wireless broadband in the 1755-1850 band was “disappointing,” he said, “primarily because other executive branch agencies did not provide NTIA with sufficient data to support many of the assumptions and conclusions.” Importantly, the report does not discuss how efficiently the federal government uses its spectrum, McDowell noted. “The federal government occupies about 60 percent of the best spectrum. Federal users have no incentive to move off of this prime real estate, but do have an incentive to keep the rest of us in the dark about how much it really would cost to move them and how long the task would really take,” he said.
"In general, spectral efficiency has to be a big part of the conversation whether it’s the private sector or the public sector,” McDowell told us. “But the federal use of spectrum is a big black box. It’s very opaque in terms of who’s using what spectrum, where, and how efficiently might they be using it.”