In a typical auction, the prize goes to the highest bidder. But what if bidders with the deepest pockets are kept out of the house?
That question faces the Federal Communications Commission as it works out rules for an auction of spectrum currently used by broadcasters, planned for 2014. The FCC has been considering whether to restrict bidding by giants Verizon Communications and AT&T to give smaller competitors a chance.
Last week, Leslie Marx, former FCC chief economist and a Duke University professor, weighed in via a report filed with the regulator. Ms. Marx asserts previous decisions by smaller carriers not to buy similar spectrum suggests they aren’t at risk of being shut out. And the use of unlimited plans by Sprint and T-Mobile US suggests they don’t have capacity constraints, she argues.
Moreover, Ms. Marx’s simulations of the FCC’s last major auction show that without Verizon and AT&T, revenue would have been 45% lower. That could mean less broadcaster willingness to relinquish spectrum.
Compelling arguments. Until you consider who commissioned Ms. Marx’s report: Verizon.