Will the FCC Comply With Harmful DOJ Recommendations on Spectrum?

Since 1994, the Federal Communications Commission (FCC) has been conducting competitive auctions for the use of electromagnetic spectrum, which is used to send electromagnetic signals through the airwaves. Spectrum carries signals used for radio, TV, mobile phones, mobile broadband, and other personal communications systems. To be considered a qualified bidder, companies must submit an application and a down payment. These auctions in the past have been conducted over the Internet so they can be tracked by those bidding.

However, over the last few months there have been some developments in how the process for bidding may be moving forward, which coincides with a change in leadership at the FCC.  Last week President Obama tapped former fundraiser Tom Wheeler to head the FCC after current FCC Chairman Julius Genachowski announced his retirement.  According to Forbes, there are a host of issues that will be welcoming him in his new role, “Mr. Wheeler will be confronted with several pressing issues, ranging from the FCC’s merger-review authority to the broadcast-spectrum auctions to net neutrality to the IP transition.”

The first issue that will be at the doorstep of the new FCC Chair will be DOJ’s attempt to weigh-in on Spectrum auctioning, as the department authored an ex-parte submission to the FCC a few weeks ago calling on the commission to “ensure that the allocation of spectrum at auction does not enable carriers with high market shares to foreclose smaller carriers from improving their customers’ coverage.” The DOJ’s wading into this issue comes as the FCC will be opening up a new auction in the 600MHz band (used primarily for TV, Radio and Mobile Broadband). The direction that the FCC takes with spectrum may depend entirely on Wheeler. Outgoing FCC Chair Julius Genachowski appears to share the view of the DOJ, as The Hill reported earlier he characterized the dominance of ATT&T and Verizon as a “very bad thing for our innovation economy.”

There are many who believe otherwise and selectively “rigging” the auction system, will do more damage to our economy and the industry in terms of revenue and innovation. A newly released study out of Georgetown University conducted by Robert J. Shapiro, Douglas Holtz‐Eakin and Coleman Bazelon concludes that limiting participation on Spectrum auctions could lead to a decrease in revenues by as much as 40 Percent, while increasing the Spectrum deficit.

Fred Campbell of the Competitive Enterprise Institute’s Communications Liberty and Innovation Project blasted the DOJ recommendations writing, “New ‘findings’ in the DOJ filing fail to cite any factual record and are inconsistent with the DOJ’s factual findings in recent merger proceedings that contain extensive factual records.” Even members of Congress have taken notice and expressed concerns to the FCC over this issue. In a letter signed by House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) and several other committee members, they voiced their concerns and disagreement to the submission made by the Department of Justice.

This issue is still being debated and we will know more once Tom Wheeler takes the reigns at the FCC.  The federal government is hoarding valuable spectrum that can be sold and used by the private sector to continue to innovate and the proceeds can be used by taxpayers to reduce the deficit.  TPA will be active in the coming months to make sure that the FCC makes the right decisions.