Martin Wants Sign-Off on Blind AWS Bidding

If both items come to votes April 12, the AWS auction a would be the meeting’s main topic. Blind bids have strong Justice Dept. support and backing from FCC Chief Economist Leslie Marx and other economists. The BRS/EBS item includes a matter the Commission wants to handle ahead of the auction -- moving BRS operators out of the 2150-2162 MHz band to allow awarding of AWS licenses (CD March 23 p8).

A full FCC vote on the bid issue is a plus for carriers large and small wanting bidders’ identities to be known, as usual, in the June auction. Verizon Wireless is nearly alone among carriers in seeking bidder anonymity.

“Blind bidding is controversial and Martin seems to want to make sure he doesn’t get all the blame if there are problems,” a regulatory attorney said: “It’s an astute political move.” Martin’s move isn’t novel, another lawyer said: “It has been done in the past. It’s a substantial decision. If he wants to bring it up, he has the ability to do that.”

The FCC won’t let the AWS auction slip, said a company executive involved in recent meetings at the Commission. “This Commission remains committed to the June 29 start date, which is pretty amazing when you think about what they had to accept,” he said: “It shows the resolve on Martin’s part. He keeps things on track.”

Advocates of openness have been vocal in promoting their approach. In a typical comment, T-Mobile, which has been active on the issue, said in a recent filing that the FCC “has an extremely successful record over the last 10 years in running major auctions using full transparency. There is no empirical evidence that revealing bidder identities and bidding information has reduced auction revenues or harmed efficiency.” Regional carrier Dobson said in a filing this week it needs to know who’s bidding in adjacent markets before it bids on licenses. “Dobson may have to [forgo] participation in the auction, or if we do bid, to withstand significantly greater risks,” the company said.

But others back blind bidding to keep participants from using bids to signal or otherwise game the auction. The Media Access Project, a frequent FCC critic, said it’s pleased Martin seems to support blind bidding. In a letter this week, Senior Vp Harold Feld told the FCC that collusion in past auctions is well documented. “Tacit collusion in auctions occurs because each player can recognize the resource asymmetries between themselves and the other bidders and complementarities based on public information are recognized and understood,” he wrote. “This allows parties to evaluate the level of ’seriousness’ when a bidder signals proprietary interest in a license.” And since auctions occur in multiple rounds, “there is plenty of opportunity to establish tacit ‘rules’ and punish parties that disobey them,” he said.

“The current system, which is based on outmoded assumptions from the initial auctions in 1994 and 1995, has been tweaked but there has not been a substantial overhaul of the process,” Feld told us Thurs. “We're not slow to criticize the FCC when they screw up or we think they have rolled over for an industry. But you've got to give credit where credit is due.”

Signaling is common in FCC spectrum auctions, a source who closely follows them said Thurs. Blind bidding “makes it easier for a new entrant to establish a footprint,” the source said. “If someone doesn’t want a new entrant, they can pick off a market the entrant needs. If it’s blind, you can’t do that.” The source said Verizon Wireless appears to support blind bidding because it feels it has been “victimized” by behavior in past auctions. “When people identify markets they know Verizon needs they'll park… in those markets,” the source said. “They know they'll get taken off by Verizon.”