Alternatively, the budgets of non-AT&T/Verizon bidders would need to increase by 80 percent to offset the same adverse effects. Such increases in the number of bidders, or in the budgets of existing bidders, are so large that they are implausible. If it sounds too good to be true, it usually is. There is no economic support for the argument that limiting participation will increase revenue — in fact, the opposite is likely true, to the tune of billions of dollars.
In a time when the federal government needs more revenue, the proposals under consideration to limit participation in the upcoming FCC auction of 600 MHz spectrum seem particularly misguided. With so much money at stake, those who care about our fiscal balance should focus on how to maximize the returns from this auction and weigh in on this spectrum debate.
Jonathan Orszag is a senior managing director of Compass Lexecon LLC, an economic consulting firm. He served as an economic policy adviser on President Bill Clinton’s National Economic Council. The study mentioned in this op-ed was funded by AT&T.