While the national media is mostly focused on the Federal Communications Commission's latest net neutrality follies (still a regulatory solution in search of a problem), the far bigger policy challenge the Commission faces is executing the most complex spectrum auction in the agency's history. Unfortunately, the FCC seems more concerned with picking winners and losers than managing the auction effectively.
In this auction, the FCC will attempt to convince broadcasters to voluntarily relinquish their valuable spectrum in exchange for a portion of the auction proceeds paid by mobile wireless providers. And as if this isn't a big enough challenge, Congress also expects the auction to raise enough revenue to pay for both a new national public-safety network and to provide cash for deficit reduction that was crucial to a recent budget deal.
It would be a major challenge under the best of circumstances, but is headed for disaster because special interests have badly compromised the process. It now looks likely the largest domestic players, AT&T and Verizon, will be effectively excluded from the auctions - contrary to Congress's express statutory intent - to the benefit of their deep-pocketed foreign-owned competitors, Sprint and T-Mobile. If the FCC doesn't reverse course, the results will be disastrous for consumers, taxpayers, broadcasters, and public safety.
"The legislation makes clear that any party that is able to meet specific, traditional qualifications to hold a spectrum license is entitled to participate in the auction, and cannot be excluded," Reps. Fred Upton and Greg Walden said when the spectrum auctions were included in the fiscal deal they negotiated in early 2012. "Recent history has shown the Commission meddling in auctions and trying to 'shape' the market not only reduces federal revenue, it harms competition and spectrum policy. The new law puts a stop to this subjective and arbitrary practice. Congress sets the policy, not independent agencies."
Unfortunately, the Department of Justice and the White House have nonetheless urged the FCC to impose restrictions hamstringing AT&T and Verizon. And the FCC must have listened - their proposed auction structure does precisely that. Such restrictive rules could reduce auction revenues by up to 50 percent, jeopardizing the public safety and deficit reduction objectives of the auction, as well as broadcaster participation, which is needed for the auction to succeed.
Phil Kerpen is president of American Commitment, a columnist on Fox News Opinion, chairman of the Internet Freedom Coalition, and author of the 2011 book Democracy Denied.
American Commitment is dedicated to restoring and protecting America’s core commitment to free markets, economic growth, Constitutionally-limited government, property rights, and individual freedom.
Washingtonian magazine named Mr. Kerpen to their "Guest List" in 2008 and The Hill newspaper named Mr. Kerpen a "Top Grassroots Lobbyist" in 2011.
Mr. Kerpen's op-eds have run in newspapers across the country and he is a frequent radio and television commentator on economic growth issues.
Prior to joining American Commitment, Mr. Kerpen served as vice president for policy at Americans for Prosperity. Mr. Kerpen has also previously worked as an analyst and researcher for the Free Enterprise Fund, the Club for Growth, and the Cato Institute.
A native of Brooklyn, N.Y., Mr. Kerpen currently resides in Washington, D.C. with his wife Joanna and their daughter Lilly.