IPcentral Weblog
  The DACA Blog

Wednesday, September 1, 2004

Get Rid of the Middleman
(previous | next)

In January, the FCC plans to conduct an auction of "C Block" PCS spectrum licenses, which were returned to the Commission as a result of the now-infamous NextWave bankruptcy. Nearly half of these licenses will be available through closed bidding to "designated entities," in furtherance of meeting congessional objectives to distribute spectrum to small businesses.

Recently, I filed reply comments to the FCC supporting a waiver of the closed bidding rules for this auction or, in the alternative, for a rulemaking to drop them altogether. Due to exceptions in the FCC's rules, large regional or national carriers can back DEs in these auctions through careful construction of affiliate relationships. In the end, the DE set asides create a perverse set of incentives by creating a layer of "middlemen" who obtain valuable spectrum licenses, meet their first construction benchmark, and then (if they don't go bankrupt first) flip the spectrum to larger regional or national carriers for a hefty profit. By keeping valuable spectrum out of the hands of those firms who value it the most, the rules make little sense where, as here, the market for wireless services is predominantly national in scope.

In an article on the subject in today's issue of Wireless Week, FCC Wireless Bureau Chief John Muleta responded to the "middleman" concern by stating that "the market will sort it out." Which is true, just as the market does with liquor wholesalers, car dealers, and other intermediaries who are paid a ransom for no reason. Here, the possibility of further delay in getting rid of the DE rules and adopting an open bidding approach, with the use of bidding credits, likely outweighs the harm to consumer welfare.

posted by @ 4:31 PM | General

Share |

Link to this Entry | Printer-Friendly

Post a Comment:

Blog Main
RSS Feed  
Recent Posts
  EFF-PFF Amicus Brief in Schwarzenegger v. EMA Supreme Court Videogame Violence Case
New OECD Study Finds That Improved IPR Protections Benefit Developing Countries
Hubris, Cowardice, File-sharing, and TechDirt
iPhones, DRM, and Doom-Mongers
"Rogue Archivist" Carl Malamud On How to Fix Gov2.0
Coping with Information Overload: Thoughts on Hamlet's BlackBerry by William Powers
How Many Times Has Michael "Dr. Doom" Copps Forecast an Internet Apocalypse?
Google / Verizon Proposal May Be Important Compromise, But Regulatory Trajectory Concerns Many
Two Schools of Internet Pessimism
GAO: Wireless Prices Plummeting; Public Knowledge: We Must Regulate!
Archives by Month
  September 2010
August 2010
July 2010
June 2010
  - (see all)
Archives by Topic
  - A La Carte
- Add category
- Advertising & Marketing
- Antitrust & Competition Policy
- Appleplectics
- Books & Book Reviews
- Broadband
- Cable
- Campaign Finance Law
- Capitalism
- Capitol Hill
- China
- Commons
- Communications
- Copyright
- Cutting the Video Cord
- Cyber-Security
- Digital Americas
- Digital Europe
- Digital Europe 2006
- Digital TV
- E-commerce
- e-Government & Transparency
- Economics
- Education
- Electricity
- Energy
- Events
- Exaflood
- Free Speech
- Gambling
- General
- Generic Rant
- Global Innovation
- Googlephobia
- Googlephobia
- Human Capital
- Innovation
- Intermediary Deputization & Section 230
- Internet
- Internet Governance
- Internet TV
- Interoperability
- IP
- Local Franchising
- Mass Media
- Media Regulation
- Monetary Policy
- Municipal Ownership
- Net Neutrality
- Neutrality
- Non-PFF Podcasts
- Ongoing Series
- Online Safety & Parental Controls
- Open Source
- PFF Podcasts
- Philosophy / Cyber-Libertarianism
- Privacy
- Privacy Solutions
- Regulation
- Search
- Security
- Software
- Space
- Spectrum
- Sports
- State Policy
- Supreme Court
- Taxes
- The FCC
- The FTC
- The News Frontier
- Think Tanks
- Trade
- Trademark
- Universal Service
- Video Games & Virtual Worlds
- VoIP
- What We're Reading
- Wireless
- Wireline
Archives by Author
PFF Blogosphere Archives
We welcome comments by email - look for a link to the author's email address in the byline of each post. Please let us know if we may publish your remarks.

The Progress & Freedom Foundation