Transcript: Excerpt from WaPo Live Event – Don’t Rig the Spectrum Auction

by Mike Wendy on June 21, 2013

Attached is a brief excerpt (with audio / pictures and transcript) from a Washington Post Live event, entitled “Spectrum – Supply & Demand,” held on June 18, 2013, in Washington, DC.  Participants featured in the excerpt are: Mary Jordan, Editor / Moderator – Washington Post Live; Ajit Pai, Commissioner – FCC; Matt Wood, Policy Director – Free Press; Tom Sugrue, SVP of Government Affairs – T-Mobile USA; and Jim Cicconi, SEVP, External and Legislative Affairs, – AT&T.

Excerpt transcript from “Spectrum – Supply & Demand,” June 18, 2013:

Mary Jordan, Editor / Moderator – Washington Post Live: Do we sell natural resources just to the highest bidder?  Is that the only criteria?

Ajit Pai, Commissioner – FCC: Certainly, there’s an analogy to be drawn to natural resources.  But in this context, Congress was very specific in the Spectrum Act.  They gave us the authority to conduct one incentive auction, and they also said in addition to funding the relocation of broadcasters – which I’m sure Rick would be happy to talk about as well – we need also, the FCC needs to make sure that when the gavel strikes at the end of the auction, there’s enough money left over: $7.7 billion for public safety, $1.75 billion for relocation, you know, a lot of other money for some of these other priorities.  And so, it’s not just a question about structuring the auction in a way where the supply exactly meets the demand.  We also need to have a surplus at the end of the auction per the congressional mandate.

Mary Jordan: Right.

Matt Wood, Policy Director – Free Press: And one more thing the statute did was give the FCC the ability to strike, to adopt competitive safeguards with generally applicable rules that allow all carriers to participate, but also look at the allocation and just how well that’s working out for customers at the end of the day.

Tom Sugrue, SVP of Govt. Affairs – T-Mobile USA: And could I add, caps are not inconsistent with maximizing revenues.  History has shown if there’s limits on the amount the largest carriers can take, that encourages broad participation by a lot of bidders, a lot of smaller players, a lot of disruptive players.  Not just the carriers in the market who are smaller, like T-Mobile, but may be new entrants as well.   And, you can raise not only as much, but likely more revenue in an auction where there’re fair rules as to prohibiting the dominant carriers from taking it all.

Mary Jordan: Jim, do you want to say anything, and then we’re going to ask, go to Carl about…

Jim Cicconi, SEVP, Ext & Leg. Affairs – AT&T: The notion that somehow Sprint or T-Mobile are uniquely disadvantaged, I think T-Mobile has been 100% owned until this year by Deutsche Telekom, which has all the capital capacity that AT&T has.  It’s one of the largest telecommunications companies in the world.  T-Mobile is still 75% owned by them.  If they decide they want to bid in the auction, if it’s important enough for them to get spectrum, they’ve got plenty of financial capacity to bid actively against AT&T and Verizon.  They have in the past in certain auctions and they’ve come away with spectrum.  This notion that somehow if they bid in a competitive auction against us they’d automatically lose is ludicrous, if you look at the balance sheet of the company.  And in Sprint’s case, they’re in the process of being acquired by a Japanese company with a lot of capital going in there.  They’ve got plenty of financial capacity, as evidenced simply by the way that this is playing out publicly. So, I think the notion that somehow that particular companies need some advantage going into the auction to insure quote-unquote that they come away with spectrum is frankly something I think Congress dealt with in the statue when they said they wanted an auction open to all bidders.  I think if there’s a rule of general applicability, that’s what I’m talking about in terms of the spectrum screen, as the Commissioner mentioned.  You know, I think that’s fine.  But some special sub-limit designed for the auction, you know, to enable particular companies to come away with some certainty of success, that’s not an auction.  That’s frankly rigging the game in favor of particular companies, and against other companies.

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