DISQUS

Ryan Radia · 1 year ago

I agree with your conclusion that the D-Block failure was the result of excessive FCC restrictions on the would-be winner of the public safety spectrum auction. The high reserve price didn’t help, either.

What if a single company were to outbid all others for both national licenses? Should revenue maximization be the FCC’s main objective in the auction, or is it more important to promote competition by ensuring that there are multiple players? In that case, spectrum fungibility comes in to play. How does the FCC decide whether to auction two, or three, or even ten national licenses, or instead regional licenses?

I also wonder whether it’s necessary for a special chunk of spectrum to be set aside for public safety purposes. As you’ve mentioned before, public safety departments purchase lots of specialized goods and services from the free market without any special government-regulated supply chain. Spectrum is a unique animal, of course. Still, where there is a buyer, sellers should emerge, and so as long as public safety departments have requisite funding to sign contracts for communications services, there should exist an incentive for firms to construct reliable networks utilizing spectrum that isn’t allocated for public safety uses. Perhaps some of the revenue generated by auctions could be transferred to public safety departments to be used exclusively to fund wireless communications.

Jerry Brito · 1 year ago

Ryan,

I didn't make it clear, but there would also be a rule that would prevent one firm from buying both licenses. The reason we want two firms is precisely to avoid a monopoly. Second, why not five or ten or whatever number the market figures out is optimal? You're right, but I'm trying to work within the constraints of the spectrum licensing system as it exists. It's also a question of how many competing networks are viable in the amount of spectrum available from the D Block and PSST. I chose two because it's just one more than what the FCC had planned and it gets us competition.

As to why not just have flexible spectrum and let public safety agencies buy whatever they need without having any special chunk of spectrum be designated for PS, you're right, that would be ideal. But the fact is that today all agencies have spectrum licenses handed to them for free. If you built a public safety network on flexible-use spectrum you'd have to compete with all that free spectrum. It also wouldn't get built in the first place because the alternatives are much more profitable. Given the constraints we have, you have to have a PS obligation to lower the value of the spectrum and get private competitors in.