FCC Passes 2015 Spectrum Auction Framework On Party-Line 3-2 Vote

Following its historic vote to proceed with new, and contentious net neutrality regulatory proposals, the Federal Communications Commission voted 3-2 to approve a framework for its coming spectrum auction, which it calls the ‘Broadcast Television Incentive Auction,’ that will ensure that the largest providers can’t snag all the new capacity.

The sale, to take place in 2015, will see broadcast companies voluntarily shed spectrum, that will then be sold to wireless companies, with the original broadcast firms collecting a cut of the proceeds.

Why is the plan controversial? Because the FCC intends to limit how much spectrum the two largest players in wireless in the United States — AT&T and Verizon — can purchase. The plan will preserve some of the new spectrum for smaller players like Sprint. The mechanism at play is the reservation of spectrum in each market for those who do not, as Reuters wrote today, “already have substantial blocks of low-frequency airwaves there.”

The goal is to ensure that smaller players can in fact compete, given that spectrum isn’t something that you can just whip up more of. As the Wall Street Journal notes, however, less spectrum was set aside in the end than expected, something that it called a “win” for AT&T and Verizon

The dissenting votes voiced opposition to the plan as limiting competition, and thus slanting the market. Here we can see the tension between short-term and long-term competition: If Verizon and AT&T were allowed to scoop up all the spectrum that will be offered, it would grant them a higher competitive edge than they already enjoy. This would be in essence allowing them to use their incumbency to increase their incumbency, to the detriment of smaller players. That would lead to a more tilted market in favor of a duopoly, harming competition.

Philosophical ramblings aside, the framework is now roughed out, if not fully fleshed. Timing and pricing information, as BroadcastingCable points out, are key next steps for the auction.