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But the experience of other countries, including Germany and Switzerland, suggests the opposite. There, the imposing power of the biggest companies scared off others from bidding for the top-quality spectrum, enabling the big players to buy the airwaves at bargain-basement prices, splitting the bounty even as they expanded their monopoly or duopoly power and leaving taxpayers in their countries with far less revenue then expected.
Rep. Henry Waxman (Calif.), top Democrat on the Energy and Commerce Committee, was almost alone in raising questions about this provision. He was able, with the help of Senate Majority Leader Harry Reid (D-Nev.), to get an offsetting amendment stating that the FCC can have a “generally applicable” rule about total permissible spectrum ownership. But reconciling that rule with the prohibition on auction conditions will be nearly impossible, ensuring protracted FCC proceedings and court challenges. Second, the House Republicans also instructed the FCC not to grant unlicensed spectrum — free spectrum any startup can use. Unlicensed spectrum is what we have all come to call Wi-Fi — the way most computers connect to the Internet in offices and homes. Wonder why you don’t have to pay a cellular company for most Wi-Fi? It’s because the FCC didn’t auction that spectrum to the companies but makes it available for free.
Thousands of devices are designed to use unlicensed spectrum. American technology leaders begged Congress not to deny this bargain for consumers. What they got was a limit on the FCC’s discretion so that only guard bands, historically very narrow spectrum separations to preclude interference, can be unlicensed.
Third, Congress gave another big wet kiss to broadcasters, who will be able to hold onto their extremely valuable public airwaves even longer and through the auction rules are set to get a much larger share of the proceeds than taxpayers. Indeed, as scholar James Snider has pointed out, it is possible that the revenue for taxpayers from these valuable spectrum licenses will be miniscule, while broadcasters will make out like bandits.
Most Members of Congress have no idea what was in the fine print of this compromise. If House Republicans were the drivers here, plenty of Democrats went along for the ride.
The stupefying details of how to conduct complicated auctions and the technical complexity of spectrum bands and their divisions and uses are tough for even experts to sort out.
The big players, including in the White House, were happy to get a deal extending the payroll tax cut and are content to declare victory and move on. But as time passes, the deal’s downside will become more apparent, underscoring how the near-complete breakdown in regular order can lead to things such as this.
Norman Ornstein is a resident scholar at the American Enterprise Institute.comments powered by Disqus