Wireless Spectrum Auction Depends Increasingly on Broadcasters

House oversight addresses how FCC can make it successful

Perhaps the best chance Washington has to alleviate dropped calls, limited data services and other mobile nuisances caused by a lack of wireless spectrum is the Federal Communication Commission’s auction of wireless spectrum voluntarily relinquished by broadcasters.

Working out all the rules of the road by 2014 or early 2015 is the subject of growing debate in Washington and fodder for ongoing hearings in Congress.

But while the GOP, Democrats, consumer groups and wireless companies all debate the details and try to influence how the FCC designs the auction, the ultimate fate of the world’s most complex auction of wireless spectrum likely rests in the hands of one former broadcaster: Preston Padden.

The one-time ABC and Fox executive is now an adjunct professor at the University of Colorado. More importantly, Padden also heads up a coalition of 70 TV broadcast stations that are willing, if the price is right, to voluntarily auction off their spectrum to wireless companies.

One of five experts who testified Tuesday before the House subcommittee on communications and technology, Padden explained in plain English what it will take for the auction to succeed: “If a large number of TV stations offer to sell their spectrum, the FCC will succeed. If an insufficient number participate, the auction will fail.” Padden noted that broadcasters have other attractive alternatives besides the auction to sell their stations.

“The devil is in the details,” said Rep. Greg Walden (R-Ore.), chairman of the subcommittee on communications and technology, during the oversight hearing. “The auction is voluntary and we should look askance at FCC policies that would dissuade participation.”

No surprise, GOP and Dems are split over how the FCC should design the auction. Ironically, during Tuesday’s hearing, the debate focused more on what will happen in the wireless marketplace after the auction. Worried that AT&T and Verizon will gobble up the spectrum and solidify market-leading positions at the expense of smaller wireless carriers, Dems, the Department of Justice and some consumer groups are advocating that the FCC figure out a way to make sure all the spectrum up for auction doesn’t go to the two companies with the deepest pockets.

“It makes no sense to allow the two biggest companies, with an already dominant market position, to acquire all of this high-quality, beachfront spectrum,” said Rep. Henry Waxman (D-Calif.) “These expert views from the [Department of Justice’s] antitrust division deserve careful consideration.”

GOP and broadcasters worry that policies that might restrict the leading two wireless companies from bidding could discourage broadcasters from giving up the much-needed spectrum.

“Concerns about market concentration should be left to another proceeding, on another day, especially given that such concerns may well have been obviated by the recent dramatic marketplace strengthening of Sprint and T-Mobile,” Padden said.

Even though representatives from AT&T and T-Mobile disagreed about whether the FCC should put aggregation limits on the bidding process, they both agreed that broadcaster participation is paramount for the auction to succeed.

“If there is less spectrum, there is much more likelihood that AT&T and Verizon will divide and conquer. We’re talking about ensuring there is competition after the auction,” said Kathleen Ham, T-Mobile’s vp of federal regulatory affairs.

Policy limitations on the bidding of wireless companies in the auction aren’t the only factor broadcasters will consider before selling.  A number of outstanding issues will also need to be worked out, including how the FCC will value TV stations and how it will repack the remaining broadcasters in the spectrum that is left.

For the FCC on wireless issues, it’s going to be a long year.