On May 30, 2013, CCIA and Competitive Carriers Association
hosted a panel briefing on wireless competition and the upcoming FCC wireless
spectrum auction. In a Senate
committee room on Capitol Hill, anti-trust and wireless policy experts spoke to
a room of congressional staffers and reporters about the necessity of
appropriate FCC rules for ensuring fair competition in the wireless market.
The speakers were: Jonathan Baker, Professor at American
University Washington College of Law, Stanley Besen, Senior Consultant at
Charles River Associates, Mark Cooper, Director of Research at the Consumer
Federation of America, and Chip Pickering, a former member of Congress and
Partner at Capitol Resources, LLC. Cathy Sloan, Vice President of Government Relations
at CCIA, served as moderator.
The FCC auction, which will include 5MHz blocks in the 600MHz
band, is particularly important to mobile companies because it will give them
access to lower frequencies (generally those under 1GHz), which travel well
over long distances and are more capable of penetrating buildings. For consumers, this means better,
more consistent reception and faster downloads on their mobile devices.
The overarching theme of the discussion was simple:
appropriate FCC auction rules should ensure fair market competition in the
wireless industry, which will in turn promote technological innovation and keep
downward pressure on consumer prices.
The potential effects of inadequate FCC rules are
devastating. AT&T and Verizon,
who, according to an April filing by the Department of Justice’s Antitrust
Division, currently control 78% of the high-quality low-frequency mobile spectrum,
could gain substantially more of it. This potential wireless duopoly would allow the dominant companies
to charge exorbitant rates without improving their technology, leaving
consumers without recourse to alternate providers. It would also increase the likelihood of collusion between
the big companies. Whether they
would actually abuse their market power is a matter of speculation, but, as Mr.
Cooper somewhat cynically stated, “that’s what you do
with market power, you abuse it.”
In any case, monopolies and duopolies are contradictory to basic
free-market economic principles, and their existence threatens the proper
functioning of a competitive wireless marketplace.
The panelists also made it clear that FCC rules could be applied
without reducing important federal
revenue from the auction. Mr.
Besen explained that if large companies are unrestricted in their bidding,
smaller ones will be precluded from access to the auctions because the anticipated
prices will be driven so high.
On the other hand, if everyone knows the bidding reach of big-money
players will be limited, then anticipated prices will fall. This will likely increase the amount of
participants, causing the actual prices of spectrum blocks to rise with
demand. As Mr. Pickering aptly put
it, “history shows the more bidders you have, the more revenue you have.” Mr. Baker echoed this sentiment,
saying, “auction participation will drive revenues.”
If, as Ms. Sloan suggested, “spectrum is the oxygen that
wireless carriers need 24/7 to operate their networks and serve customers,”
then licensing a disproportionate amount of that spectrum to only two major
companies will suffocate smaller wireless companies and strangle the
free-market principles that are the life force of our American economy.
