The Federal Communications Commission is looking to once again become a regulatory agency instead of a money maker. (New employees must be shocked. What do you mean we’re not a bank?!)
The FCC was never meant to be a bank. And now-after several smaller C-block license winners have defaulted on auction payments and lost their licenses-the FCC is seeking to change its policy.
FCC Chairman Reed Hundt last week proposed that financial institutions become the collections agency for auction payments. It is a sound idea, especially if those financial institutions are willing to give license winners a little extra time to make their payments in exchange for a little higher interest rate. It is too bad this policy shift comes a little too late for the C-block winners that defaulted on payments.
But since we’re changing policy mid-course, I think the FCC should listen to CIBC Wood Gundy’s Robert Stuart. Stuart believes the government made a mistake in auctioning too much spectrum for wireless communications in too short of time. When auction winners go belly up-and some will-the companies that pick up that spectrum won’t be willing to pay quite so much for it because there will be enough spectrum in supply.
Stuart is probably behind the ridiculous Tickle-Me-Elmo craze taking place. But his point is well taken. Much like parents who wait until after the holidays to buy Elmo will pay sticker price for the toy, businesses that wait to buy spectrum once the original licensee defaults, will probably get a bargain. (This was not the case in the C-block reauction, but the reauction was done too close to the original auction to count as a legitimate reauction. It was merely a continuation of the original auction.) If MobileMedia declares bankruptcy and decides to give up its narrowband PCS licenses, we could soon see this theory put to the test.
But since the FCC isn’t a bank, why follow sound business principles like supply-and-demand?
… Some PCS PR person is doing a really good job. My in-laws want to buy a cellular phone. They are seeking my advice about which phone they should buy (I know, they really meant which service contract they should sign) because they have heard some horror stories (their words) about the phone breaking and being tied to a service contract even though they can’t use the phone. A few days later, Sprint Spectrum places an ad that says essentially the same thing in one of the local newspapers.
