Anonymous Bids More Fair in 700 MHz Auction, Parties Say
Potential bidders and public interest groups urged the FCC Fri. to keep bidders’ identities anonymous in the upcoming 700 MHz auction. By maintaining anonymity, bidders wouldn’t be able to signal or use blocking techniques to exclude new entrants from participating in the auction, panelists at a New America Foundation lunch said. The process would help yield a better return to the public for auction of the public licenses.
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“Anonymous bidding is the best route,” said Greg Rose, economist with the U. of Tex. who has studied the issue for the Media Access Project. It would avoid the prospect of “retaliatory bidding,” when bidders act to put pressure on other bidders to sway prices or back out of the auction, he said. The result is that incumbents end up staying in the game, while new entrants don’t get a good chance to enter the market. It amounts to a type of “collusive behavior,” he said.
Rose released a study saying incumbents manipulated FCC rules to block broadband competition in the FCC’s 2006 advanced wireless services auction. He used the study as the basis for his opinion that anonymous bidding is the only auction rule that can prevent collusion by incumbents and other bidders. FCC auction rules were “manipulated to exclude new entrants… from obtaining spectrum in favor in incumbent cable companies, wireless operators and telephone companies which feared the competition those new entrants represented,” the study said.
The overarching goal in broadband policy is to create a 3rd pipe, said Harold Feld, senior vp-Media Access Project. Anonymous bidding is “highly controversial,” he acknowledged. Among established incumbents, only Verizon backs anonymous bidding; others want an open process, he said. Exclusion of existing incumbents would be the easiest way to create a class of new competitors, but that’s politically unrealistic. An alternative solution, which is outlined in the proposal that the Public Interest Spectrum Coalition (PISC) submitted to the FCC, would require the FCC to establish a “new entrant credit” that would make it possible for new competitors to go up against incumbents.
Asked if Google would qualify for a new entrant credit if it decided to enter the auction, Feld said it was a good question. What’s at stake is formulating policy that introduces new providers to the market, he said: “That’s what we're pushing for.” While Google is an established financial success, it can’t compete on the same grounds as wireless providers that already have the infrastructure, said Rick Whitt, Google’s Washington telecom counsel: “We're not specifically asking for new entrant credits.” But “even if we have deep pockets” it would only be fair to ask the FCC for some help should it move in that direction because “incumbents have the advantage,” he said.
Frontline Chmn. Janice Obuchowski and Public Knowledge Pres. Gigi Sohn both said they support anonymous bidding. Separately, Columbia Telecom released a study prepared for the Media Access Project showing that an open access network enables greater engineering efficiencies than a single- provider network. PISC supports an open access rule that would require winning bidders to make access to spectrum available to 3rd parties at wholesale rates.