Competition Key to Incentive Auction Design, Task Force Chief Says

"The key to it beyond participation is competition,” said Incentive Auction Task Force Chief of Staff Edward Smith, describing the trigger envisioned as part of the auction design. “Once we hit a trigger, it may be a price-related trigger, but that’s going to be explored later -- once we hit a trigger, there’s going to be a relatively modest amount of spectrum that’s going to be placed aside,” Smith said, “for bidders who do not have a substantial amount of low-band spectrum in that market.” This would create pots of reserved and unreserved spectrum. “I've been in a few hundred ex parte meetings, so I've heard a lot of ideas,” Smith remarked, saying various stakeholders say one thing or another needs to happen for auction success and “apocalypse” will happen if not.

Shawn Chang, Democratic chief telecom counsel for House Commerce, said he “completely” agrees with Smith on auction design. “I can even say that ranking member Waxman would be OK with increasing the amount of reserve spectrum,” he said, emphasizing the difference between a spectrum cap and reserve spectrum. Chang pushed back against any type of cartel system, wherein “we'll never get the revenue targets we're looking for.” The key is “forcing the companies to bid against each other to win the licenses” to drive up auction revenue, said Chang.

The FCC must invite as many bidders as possible to an “open and fair auction on equal terms,” said Rep. G.K. Butterfield, D-North Carolina, repeating language used in a letter sent earlier this year by a group of 78 House Democrats, including himself. Butterfield is a member of the Communications Subcommittee and first vice chair of the Congressional Black Caucus. Every Republican on the House Communications Subcommittee also recently wrote the FCC demanding the agency not place restrictions on any auction bidders. Diversity must be a priority in the incentive auction, said Butterfield, emphasizing the decline in spectrum license ownership by women and minorities since 2006. He said the auction was something he had “never heard of until recently.”

Panelists and speakers at the MMTC event emphasized the crucial balance of unlicensed and licensed spectrum and the need to expand spectrum license ownership opportunities for minorities and women. Power mentioned “tensions” between licensed and unlicensed and said “figuring out the right balance is critical. The federal government tends to skew toward the licensed approach “because it raises revenue that’s badly needed,” he said. He finds the Capitol Hill focus on spectrum policy encouraging and mentioned legislation introduced by Rep. Doris Matsui, D-California, that would help incentivize clearance of federally owned spectrum. Chang, from the Hill perspective, has looked at 600 MHz as “the sort of future for super Wi-Fi, where you can have capacity from the higher band frequencies” along the lines of 5 GHz and then also the low frequency that can travel and has “great propagation characteristics,” Chang said.

FCC Commissioner Jessica Rosenworcel advocates for “an unlicensed game plan” and “believes very strongly in the power of unlicensed,” her aide David Goldman said. Investing in unlicensed spectrum is not quite as capital-intensive and allows new players, Goldman said. “The demand on spectrum is only going up,” Comcast Vice President-Regulatory Policy David Don said, describing Comcast’s plans for more Wi-Fi hotspots. Don said: “We can get really intoxicated with the auction revenues.” (jhendel@warren-news.com)