Limiting Spectrum Bids May Lower Auction $$

Restricting the ability of wireless giants AT&T and Verizon to bid for repurposed broadcast TV spectrum during the FCC’s planned incentive auction could reduce auction revenues by more than $5.8 billion, according to a new study released today.

The study, sponsored by the Expanding Opportunities for Broadcasters Coalition and the Consumer Electronics Association, also says an FCC staff proposal to reduce the auction payoffs of smaller broadcasters could undermine station participation in the auctions, which have been tentatively set for next year.

“To attract the critical mass of broadcasters necessary to make the auction a success, we need competitive bidding among all wireless carriers for every license, and the assurance that every TV station will be fully compensated for its spectrum rights,” said Preston Padden, executive director of the broadcasters coalition, in a statement. The coalition represents about 70 stations that are considering selling their TV channels during the auction.

“The future of our mobile broadband ecosystem depends in large part on the success of the incentive auction,” added Gary Shapiro, president-CEO of CEA. “This study provides timely guidance for ensuring that the auction succeeds and that our mobile ecosystem thrives long-term, bringing new, innovative devices and services to America’s consumers,” Shapiro continued.

The study, Maximizing the Success of the Incentive Auction, was conducted by Fred Campbell, former chief of the FCC’s Wireless Telecommunications Bureau.

The study says, among other things, that previous auctions in which the FCC imposed bidding restrictions reduced net auction bids by 31-61%.

Some public interest groups and federal regulators are concerned that AT&T and Verizon, the nation’s two largest national wireless providers, will scoop up virtually all the broadcast channels auctioned — unless their ability to bid is restricted. But the study argues that Sprint and T-Mobile — the nation’s two other national wireless carriers — will not be harmed by the unfettered participation of  AT&T and Verizon.

“The success of the incentive auction depends on the ability of every TV station to sell its spectrum license for its value in the wireless broadband market and the ability of every bidder to compete for all available spectrum,” Campbell said in a statement.

Read the full study here.