RealTime IT News

FCC Turns Blind Eye to AWS Auction

WASHINGTON - In hopes of short circuiting attempts to game the system, the Federal Communications Commission (FCC) voted today to change key rules for a June 29 spectrum auction for advanced wireless services (AWS).

Amid allegations that some carriers may have colluded in past spectrum auctions, the FCC decided to change its rules and keep the identity of bidders secret following each round of the auction, unless certain competitive auction thresholds are met.

Under the new blind bidding approach, the FCC will disclose at the end of each round of bidding the gross amount of every bid placed but not the identity of the bidder.

The FCC hopes the new rules will prevent carriers from signaling each other to coordinate bids or retaliating against bidders who do not cooperate in the scheme.

"Although our auctions have generally functioned well, allegations of collusive behavior have been raised in regard to past auctions," FCC Chairman Kevin Martin said. "Unfortunately, the ongoing susceptibility of our auctions to these practices is no secret."

Martin added, "In light of this evidence, I believe it is essential that we make an effort to foreclose anti-competitive bidding behavior in this auction."

The auction is expected to draw strong interest from carriers desperate for additional spectrum to deliver video and wireless broadband services. Analysts estimate the auction will bring in as much as $8 to $15 billion.

In all, the FCC will put up for auction 1,122 AWS licenses in the 1710-1755 MHz and 2110-2155 MHz bands. The spectrum was previously occupied by the Department of Defense.

If pre-auction information indicates there will be three or more bidders for a specific license, the FCC will make available the names of bidders, as it has done in past auctions.

"I recognize that there may be some legitimate reasons why bidders want to observe the identities of the provisionally winning bidders," Martin said.

"I also share the concerns of some…that a departure from past practices could have unintended consequences. I believe [the new approach]...strikes an appropriate balance between these competing concerns."

Despite a unanimous vote, Martin's fellow commissioners expressed concerns about the FCC's actions.

"The schedule for the AWS auction needs to stay on track, and I concur today to ensure that it does," Commissioner Michael Copps said.

"I nevertheless remain concerned that our decision could lead to unintended consequences, as is often the case with significant changes arrived at quickly. A worse case scenario, of course, would involve fewer bidders...and less revenue raised in the process."

Fellow Democrat Jonathan Adelstein said he was concerned about the impact of the new rules on small companies hoping to participate in the auction.

"I was originally told that small companies would benefit from our blind bidding proposal because it would protect them from becoming victims of large carrier bidding strategies," he said.

However, Adelstein noted, it is the small carriers who have complained the most about the new blind bidding system.

"They have raised legitimate concerns about access to real time auction information that significantly informs their auction bidding strategy," he said. "They have pointed out to us that this is a completely new spectrum block with uncertain business models and equipment opportunities."

Without real time information on competitive bidders, Adelstein said, small carriers may scale back their auction plans.