The FCC voted and adopted a revised 700 MHz band plan and service rules yesterday. There were really no surprises. We knew Chairman Martin had the votes and we heard him justify his proposal last week in the House Commerce Committee.
With regard to the rules, I thought an interesting take-away from the meeting was majority concern with the Chairman mandating a reserve price on the spectrum auction. As you may know, Martin has put a reserve price on the C-block spectrum of $4.6 billion and the whole auction at $10 billion. Martin has taken this step to make sure that the auction brings the miniumum expected proceeds to the federal treasury (which Congress will use for deficit reduction and other initiatives).
Here’s what they said:
Adelstein – “the reserve price and second auction requirements set out in this item leave open a real potential for gaming and may result in unintended consequences.”
Copps – “the item now imposes reserve prices on each of the individual spectrum blocks, something without precedent in previous auctions and something, it seems to me, rather at odds with letting the market pick the auction block winners.”
McDowell- “with respect to auction reserve prices, I believe these are best left to market forces.”
Micro-managing competition is never a good idea. Trying to satisfy one large company’s business model at the expense of other carriers (especially small rural carriers) is not in the public interest. at&t and Verizon will survive the tailored 700 MHz rules – the small guys will sell. The auction process is not perfect but it has proved to be better than any beauty contest the FCC has held. Chairman Martin may have cooked up a recipe that nobody seems to be craving - only time will tell…
Dish disclosure – Our firm represents CTIA and the Wireless Broadband Coalition (at&t and Verizon Wireless are members) on spectrum issues.