A Broadband Pipe, or a $12B Pipe Dream?

In the coming weeks, the FCC will set the bidding and service rules for the auction of the 700MHz channels being freed up by the DTV transition—“beachfront” airwaves ideal for the provision of high-speed wireless broadband services. This last big sale of prime spectrum is expected to raise $10 to $20 billion in federal revenue. But far more important to the economy and to consumers is whether this auction promotes broadband deployment and price competition in every part of the country—or, instead, further consolidates the nation’s over-priced and under-performing broadband duopoly.

Thousands of potential wireless broadband competitors could extend coverage and improve quality if they had greater access to these high-penetration frequencies, but under current FCC auction rules, incumbents are likely to lock out new entrants. Recent studies demonstrate that the FCC’s spectrum auction process is fundamentally flawed, both thwarting competitive entry and depressing potential public revenue. For example, in a new study released at this event, economist Gregory Rose finds that while last year’s big AWS spectrum auction brought in over $13 billion, the auction rules allowed incumbent providers to collude to block the entrance of new national wireless providers, ultimately reducing auction revenues as well.

Recently, a coalition of consumer and media policy groups (Public Interest Spectrum Coalition) filed comments at the FCC seeking rules to maximize competition and consumer choice in wireless broadband. The groups asked the FCC to remedy flaws in its auction rules by adopting “anonymous” bidding, “package” bidding, and other mechanisms to encourage competitive entry. The group also requested the FCC to ensure “open” (wholesale) access to this valuable portion of the public airwaves and to adopt basic consumer protection and openness principles for wireless broadband.

These reforms were debated at the event, along with a proposal by Google to facilitate a real-time wholesale auction mechanism to provide spectrum access to any broadband competitor on an as-needed basis. Video of the discussion is available at right, while an MP3 audio recording can be downloaded below.

The Public Interest Spectrum Coalition (PISC) includes the New America Foundation, the Champaign-Urbana Community Wireless Network, Consumer Federation of America, Consumers Union, EDUCAUSE, Free Press, Media Access Project, Public Knowledge, and U.S. Public Interest Research Group.

Attachments

• MP3 Audio Recording of this Event
• Speaker Bios (PDF, 3pp.)
• Obuchowski Presentation Slides (PDF, 13pp.)
• 700 mhz onepage (PDF, 1p.)

• Spectrum Auction Breakdown: How Incumbents Manipulate FCC Spectrum Auctions to Block Broadband Competition
  Working Paper by Dr. Gregory Rose

• PISC Comments

• PISC Comments Fact Sheet

Location

Senate Commerce Committee Hearing Room

253 Russell Senate Office Building

Washington, DC, 20515

See map: Google Maps

Participants

• Gregory Rose
  Consulting Economist
• Rick Whitt
  Washington Telecom Counsel
  Google
• Janice Obuchowski
  Chairman
  Frontline Wireless
• Harold Feld
  Senior Vice President
  Media Access Project
• Gigi Sohn
  President
  Public Knowledge
• Michael Calabrese (moderator)
  Vice President and Director, Wireless Future Program
  New America Foundation