Harold Feld of Public Knowledge had a post last week about why Congress shouldn’t micromanage incentive auctions for spectrum. I largely agree with many of Feld’s points, particularly that 1) Congress should not impose restrictions, except for a few “express limitations on FCC discretion”, 2) Congress’s desire to spend the auction revenue (such as on pet projects or public safety) shouldn’t drive the policy discussion, and 3) unlicensed spectrum (like Wi-Fi and white spaces) is a good thing. But Feld knowingly avoids an equally important point: the FCC shouldn’t micromanage spectrum auctions either.
Harold’s piece suggests that instead of Congress muddying the spectrum auction waters, the FCC should do so instead. Here is where I disagree. Neither branch of government should be putting restrictions or conditions on spectrum auctions. But if Congress gives an unconditional thumbs-up to the FCC, look for the Commission to place enormous regulatory burdens on auction winners.
The FCC could impose more stringent open-access or Net Neutrality regulations on wireless broadband auction winners, just as they did in 2008. They could impose significant network build-out and signal coverage mandates, just as they did in 2008. They could set minimum auction prices that let the government – not the market – value the spectrum, just as they did in 2008. They could make it a closed auction, barring certain providers from even offering bids. The list goes on and on.
Feld also seems concerned that a broader conversation about auction revenue will distract from his regulatory demands, which he knows the FCC will be more apt to accommodate. But licensing restrictions and conditions don’t just devalue the spectrum in terms of revenue; they devalue the spectrum. Period. Setting mandates cages innovation, hampers the ability for the spectrum holders to offer new options in the market, and can ultimately lead to spectrum being under- or inefficiently utilized (the FCC and Congress’s restrictions arguably botched the “D Block” auction).
Feld also pans the idea that auction revenue should go toward deficit elimination. But directing the unknown amount of revenue toward the deficit prevents Congress and the White House from talking about how to spend the money (an idea Feld seems to like), and it helps on a small level to bring the deficit down – both good policy and politics.
Demeaning auction revenue because it isn’t the main reason we need spectrum is one thing. But Feld demeans the revenue because he knows his desired regulations will lower it. If there is anyone that will micromanage more than Congress, it’s the unelected and unaccountable FCC. And if Congress does anything, it should be to provide a check on the FCC’s regulatory ambitions. After all, it authorized the agency’s existence to begin with.