Pai To FCC: Don’t Be Stingy In Auction

FCC Commissioner Ajit Pai warned against setting stingy “reserve prices” in the reverse auction of TV spectrum, arguing that it could discourage broadcasters from participating in the auction.

“My preference is for prices to be determined by the market, rather than set by fiat,” the Republican official said yesterday at the CTIA convention in Las Vegas. “To the greatest extent possible, we should rely on the auction itself to weed out patently unreasonable bids.”

But if the FCC ultimately chooses to set the prices, he said, they need to be high enough to get broadcasters to offer up their spectrum.

“It is not about buying broadcast stations,” he said. “[R]eserve prices should not depend on the value of a broadcaster’s business or on the population it serves.”

Pai said he recognized that setting high reserves could result in broadcasters getting more and the government less for certain channels, an outcome that could generate “bad press.”

“But we shouldn’t be penny-wise and pound-foolish,” he said. “If accepting a large bid from a Scranton station allows us to clear additional spectrum throughout the Northeast Corridor, we’ll be more likely to have a successful incentive auction, one that is good for consumers and the U.S. Treasury.”

The reverse auction is one half of the incentive auction that the FCC is planning. Participation by broadcasters is voluntary.

The other half is a forward auction in which the FCC would sell the recovered TV spectrum to wireless carriers with most of the proceeds earmarked for the federal treasury.

Congress last year authorized the FCC to proceed with the incentive auction and the agency hopes hold it next year.