WASHINGTON-The federal budget will play a large role in determining the future of spectrum auctions, according to several panelists taking part in “Spectrum Auctions: Pay or No Play?” last week during the ComNet ’95 conference.
“The budget will be the driving issue in American politics for the next decade. Congress continually will wonder how it can fund things with spectrum auctions,” said Donald Gips, director of strategic policy at the Federal Communications Commission’s Office of Plans and Policy,
“The political process on the Hill has overtaken everything. The thought is, `When can we expect our next $7.7 billion check?’ This all will end when the spectrum does, and then we probably will be looking at user fees,” agreed Gary French, an economist and principal of Telecommunications Research Inc.
“We couldn’t make comparative hearings work, and lotteries never were good,” said Michael Kennedy, vice president of regulatory relations for Motorola Inc. “The good news for Motorola and the public is that spectrum is getting out quicker. However, our worst fears are now realized, because the major budget battles have turned auctions into cash cows, and the only concern is money.”
The real test will come five years from now, added French. At that time, new wireless systems, including personal communications services and advanced messaging, will have been built out, and carriers will have determined if the price they paid for spectrum was right.
Will the demand for “pay to play” spectrum diminish as more and more frequencies are offered for sale, and as more potential competitors enter the marketplace? Kennedy said, “One can imagine the price will drop and penetration will increase.”
As one means of saying “whoa” to the “auction anything” trend that has taken hold of Congress, Mark Crosby, president of the Industrial Telecommunications Association, praised the FCC for the quick post-furlough rescheduling of its spectrum en banc hearings March 5. The hearings, designed to poll the wireless industry on future wants and needs for spectrum, are long overdue, Crosby said.
Even so, Gips pointed out that the commission is planning to begin the D-, E- and F-block PCS auctions this summer. Later in the year, the remaining 220 MHz licenses will go on the block, and there is a possibility that some 800 MHz channels and satellite frequencies will be auctioned as well.
Despite last week’s passage of telecommunications legislation, the fate of broadcast spectrum and the return of analog channels to the FCC probably won’t be determined for some time. “Whether they auction or loan channels is a policy debate,” Kennedy said. However, French said that broadcast auctions “are not purely an economic question. People have grown up with free TV. I can’t believe that charging broadcasters something would kill this. There should be some way to charge everyone, including users, something.”
