Industry debates FCC auction rules for AT&T and Verizon
The FCC was recently decided that they are going to auction off a section of the broadcast spectrum , known as the “H” Block, that could increase the network speeds for whoever did win this auction. The Senate subcommittee was hearing from representatives from the two main trade associations (AT&T and Verizon). Many heads in the industry, including Steve Largent, head of CTIA, an industry group, said “the industry would not be able to keep up with the demand for more data hungry services.
I think that it is really interesting that the FCC is authorizing an incentive auction to decide how the 600MHz will be distributed for the TV broadcasters. However, I also think it is particularly interesting that the FCC is trying to allow smaller carrier to gain market share. Currently AT&T and Verizon own 75% of the market so by allowing smaller is definitely fascinating.
The argument for the rules is logical, that Verizon and AT&T each own roughly 41% and 39% respectively. That there should be rules isn’t being argued, every FCC auction has had some level of rules. Its how they plan to divide up this spectrum, whether by Mhz size, region, or company bids that is in question.
To tie this back to what we are learning in class, it would be interesting to see how the rules that the FCC put in place will affect the auction and how that should happen. Theoretically, the seller ( the government) would want the highest net value that they could get for the broadband. Therefore, AT&T and/or Verizon would be able to bid the most and gain this additional network. This seems like the “fair” approach based on what we learned in class. However, because there are many regulations, the FCC is trying to make it so that AT&T is on the same playing field as Sprint, or another small carrier. This will effect how the players will act in the game. Depending on the rules, and assuming that its based on the amount each company can buy, I believe that AT&T and Verizon will both pay high premiums for the additional spectrum they can get. After that, I think it’s going to be a first price or second price auction for the smaller carriers to gain as much spectrum as possible. They will definitely be paying a lower price than what the larger carriers will be paying.
http://www.cnet.com/news/industry-debates-fcc-auction-rules-for-at-t-and-verizon/