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from: National Journal

FCC Urged To Change Auction Rules

By Heather Greenfield

On a day when Congress was out of session, the New America Foundation packed a Senate hearing room for a panel discussion on what seemed to be a specialized topic -- the next spectrum auction at the FCC. But the issue could affect how most consumers and companies communicate via high-speed Internet.

Panelists including representatives from Google, Public Knowledge, and the Media Access Project are calling for a fundamental change in the auction rules for how the FCC allocates spectrum.

The FCC is poised to issue rules on its 700 megahertz spectrum auction, which must take place by Jan. 28. The auction is expected to raise between $10 billion and $20 billion. It is considered especially valuable airwave real estate because it's better than WiFi or cellular phone spectrum because it can penetrate trees and buildings.

Google's telecom counsel Rick Whitt, said his company's mission is organizing the world's information and making it easy to use, and therefore customer accessibility to broadband is something the firm cares about.

"If we want a competitive (broadband) environment, we must take a look at the rules," said Harold Feld, the Media Access Project's senior vice president. "If we use the same rules as last summer's auction, the same people are going to win."

By same people, Feld and others were referring to some of the incumbent telecom carriers. Greg Rose, a University of Texas at Austin economist and expert on game theory, released a report summarizing a pair of studies on the most recent auctions that concluded the rules limited competition.

"Auctions are mathematical games," Rose said. "The rules determine the outcome."

The rule changes called for Friday, echoed many of those mentioned by Democratic presidential candidate John Edwards in a letter to the FCC earlier this week.

The Public Interest Spectrum Coalition, which includes Feld's group, Public Knowledge, Consumers Union and others, favors anonymous bidding to prevent retaliatory action by wealthier incumbents against newcomers and an open access provision requiring winning bidders to make half the spectrum available to third parties at wholesale rates. The bidders names would be public, but what's being bid on and the amount would be secret until the end of the auction.

Gigi Sohn, director of Public Knowledge, said Europe has "taken up open access and you see far better speed and far better prices. It's no accident in our opinion."

The coalition also is asking licensees be required to operate networks in a way that protects consumers' rights to use any equipment, content, application or service on a non-discriminatory basis -- essentially a net neutrality provision with a right to attach any equipment to the wireless access.

Feld said the coalition would like to ban incumbents from bidding so that a viable "third pipeline" emerges that gives consumers more broadband choices. But Feld acknowledged that was unlikely and instead asked for rules to level the playing field to give extra consideration to newcomers.

One by one, the coalition's supporters shot down opposing arguments. "People who say let the market decide amounts to saying 'let the people with market power decide'," Rose said.

"Whatever the government does in this case, it is picking winners and losers," Feld said.

Posted by Michael Martinez on June 5, 2007 3:45 PM