Do you think President Clinton and Congress are rethinking spectrum lease fees this week?
The government’s auction dream has ended. (Or turned into a nightmare, depending on how dramatic you want to get).
The sale of 128 Wireless Communications Services licenses ended last week, racking up $13.6 million for the U.S. Treasury. Yes. You heard correctly. $13.6 million, with an “M.” Not the $3 billion the government once projected the flexible use auction would raise, not even the revised $1.8 billion the government bean counters said could be produced, but $13.6 million.
I could have afforded to bid-and win- in this auction. Heck, RCR’s editorial staff could have pooled its pennies and won a regional cluster of licenses. San Francisco-the same market where 30 megahertz of spectrum garnered more than $200 million each in the A- and B-block personal communications services auction-went for $6. Guam, which didn’t receive any bids, could have been had for pennies.
Perhaps this stark auction reality will force Congress to consider a bill by Sen. John McCain (R-Ariz.) designed to stay the auction flood. Although McCain favors auctions, he is conceding that holding them too close together depresses the value of the spectrum. (McCain apparently is taking a few lessons from DeBeer’s and the NFL. Neither one of those cash cows flood the market with too many diamonds or football teams at one time).
Regardless of what excuses are made or explanations offered, the WCS auction proves McCain’s point. Six dollars was bid for San Francisco.
Clinton and Congress have viewed spectrum auctions as their pot of gold at the end of the rainbow. And auction dollars could prove to be just as elusive. Companies paid too much for bandwidth, and now money may not even be collected on some licenses until foreign contributions can be liberalized. In the meantime, no lofty government goals of diversification have been reached. In cases where the government can point to increased competition, it is between deep-pocket carriers.
Washington liked auctions because they were a quick fix. No one stopped to ask how often a quick fix actually works.
In the meantime, the private wireless industry is getting closer to its wish of lease fees to pay for its spectrum use instead of auctions. But auctions may be the route to pursue, after all-unless spectrum lease fees for San Francisco cost less than $6.
