With an approval rating that is heading for sub-zero, Congress would do well to take this advice on many subjects. But the one topic I’m focusing on — as the former chairman of the Federal Communications Commission — is just this: please do not tell the FCC how to auction spectrum.
If there is one thing that all should agree that the much-maligned FCC has done well since the early 1990s, under Democratic and Republican chairs, it is spectrum auctions.
Yet this is the one thing the Republican majority wants to condition, limit and micromanage, and almost certainly foul up. The bill that passed the House earlier this week would tell the FCC how to sell spectrum. It would tell the FCC who should be allowed to bid. It would tell the FCC not to grant spectrum for the unlicensed uses that include, for example, the way many people use Wi-Fi to connect from their laptop to a router in or near their cable box. It would even tell the FCC how to hold auctions. In all these respects, Congress would break, by pretending to fix, the methods and techniques that the FCC has perfected, for the benefit of the taxpayers and to the envy of every spectrum agency in the world.
Everyone, Republican and Democrat members alike, wants spectrum auctions to occur. Everyone knows they will benefit taxpayers, increase investment, create jobs, and help firms provide better service to customers. What the country should want is for the Congress to get out of the way and let the FCC, the premier spectrum auction authority in the world, figure out how and when to hold the auctions.
In 1993, Congress gave the FCC the authority to sell spectrum in the open market. On my watch as chairman, the FCC then held the first spectrum auctions in any country other than New Zealand. By using auctions to jumpstart competition, we were able to deregulate wireless at the same time, telling states not to set wireless prices. We raised in one auction alone more than seven billion dollars for the taxpayers. That was a check I was proud to give the President. Not just the auctions, but the explosion of investment that followed led to a boom in wireless that has now reached four billion people worldwide. That is four billion —- a number worth repeating. Meanwhile, even as the industry has expanded around the world, since that first auction the FCC has held almost a hundred more auctions, and raised tens and tens of billions of dollars.
Even more important, because auctions are a fair way to enter the wireless market, entrepreneurs and big businesses can buy at a market price the opportunity to use the airwaves. Neither the Congress nor the FCC picks winners. The market does. A few auctions have failed. Some winners have failed in business. That happens. No one is perfect and not every business succeeds.
But by all accounts the auctions – done without micromanaging by Congress and with complete transparency to Congress and the public – have been fairly conducted. The FCC’s decision-making has been open to firms, consumers, experts and all stakeholders. The FCC’s auctions have not fallen prey to soft corruption or been manipulated by lobbyists. They have not turned on partisanship or been politicized Indeed, spectrum agencies all around the world have copied the FCC’s processes, and the United States Government has beseeched other countries to follow these processes in order to immunize themselves from charges of favoritism. Economists have studied them, filling scholarly journals with praise and also useful suggestions.
The existing broadcasters should be treated fairly in the important conversion of spectrum from broadcast to wireless broadband uses. Neither I nor any other observer gainsays the broadcasters’ interests. But no one will benefit if Congress insists on telling the FCC – as the House bill does – who is eligible to bid or how the auction should be conducted. To have an efficient, fair, unpoliticized, neutral, pro-market auction the FCC should continue to be an auctioneer that is above political concerns.
Apparently some in Congress want to squeeze this House spectrum bill into the last minute flurry of deal making about other issues, such as the payroll tax deduction. If lawmakers get the policy right, this might be acceptable, given the procedural problems posed by the Senate rules, but under the circumstances, this is exactly the sort of legerdemain that will lead Congress to ever lower approval ratings. By contrast, facilitating the continuation of two decades of neutral, non partisan, fair and open spectrum awards by auction is exactly what can and should earn the trust of the public.
Former FCC Chairman Reed Hundt is CEO at the non-profit Coalition for Green Capital as well as principal at REH Advisors, an advisory firm serving private firms. Contact him at firstname.lastname@example.org.