Public Knowledge, one of the Dark Lords of the Progressive Sith, filed a petition with the Federal Communications Commission asking the agency to deny confidential treatment of a joint operating agreement between Verizon and SpectrumCo and Verizon and Cox. Verizon wants to purchase spectrum from these two entities in exchange for the cross selling of each other’s services.

Public Knowledge believes that the FCC should not apply confidential treatment to information about the companies’ governance structure under their joint agreement. Public Knowledge argues that the information does not consist of trade secrets or any other information that if released would harm either of the companies’ competitive positions.

My take is, how does removing confidential treatment help the FCC make a better decision about the optimal use of a natural resource. Public Knowledge argues that keeping the information confidential may stifle innovation, and stifling innovation threatens of the public interest. Public Knowledge is probably taking some comfort in hiding behind a concept, the public interest, that has successfully avoid a concrete definition for decades if not the past couple centuries.

This comfort is more apparent when you consider that Public Knowledge, the group bringing the assertion, brings no quantitative analysis to justify its position. How do we know that keeping a joint operations agreement confidential will drive up costs for consumers? Will making its details public increase the likelihood of broadband adoption?

So quick is Public Knowledge to cite the Freedom of Information Act, it feels like they are simply happy to forego the consumer welfare analysis good public policy requires. First address quantitatively or qualitatively the consume harm. Then move to analyzing any barriers to market entry failure to act may cause or help maintain. Jumping to a FOIA analysis, though acceptable by jurisprudential warriors, only tells me that Public Knowledge is more interested in being overly nosey.

DISH Network’s Charlie Ergen would like to see the Federal Communications Commission approve the use of the company’s satellite spectrum for terrestrial mobile broadband. Unfortunately the FCC is also considering rules for the use of satellite spectrum for the entire satellite sector.

I guess I can see the FCC’s dilemma. Cut DISH a waiver now, and the FCC would have to justify why other satellite company’s and wireless carriers couldn’t get the same exception. The rule would be gutted before it was even released in final form.

On the other hand, wait until a final rule is issued and add to the delay in getting spectrum into the hands of wireless carriers who need it in order to meet well documented consumer demand.

Hate to say it, but I have to side with the FCC on this one. Cutting DISH a waive now will only create regulatory gridlock down the road.

I’m digging Holman Jenkins’ column in The Wall Street Journal about the allocation of spectrum. Mr. Jenkins makes the argument that politics should not be used to allocate a valuable resource like spectrum. The economics says that the resource should go to the entity that wants to put it to best use and is willing to pay for it. Groups like Free Press and Public Knowledge are too busy with their quixotic quests to realize that society, particularly the underserved, benefit when firms with the scale and willingness to use spectrum receive it.

Not only do the Don Quixote groups not advocate for the underserved, they advocate for an allocation system based on inefficiency. The FCC is allowing itself to be persuaded by a decision matrix not based on hearings. I get tired of notices of rulemaking that come out of nowhere; with just one more step to go before showing up as a final rule. Sure the FCC allows the public to comment, but public comment does not bring the rigorous economic and policy analysis necessary for determining the efficacy and feasibility of proposed rules or other actions that impact how spectrum will be allocated.

Instead the FCC relies on a behind the door, ex-parte approach of arm twisting and brow beating to help guide its policy meetings. They may as well make their decisions at some alumni picnic. The FCC-Free Press-Public Knowledge Triumverate doesn’t seek optimality. It doesn’t care about getting the most out of the use of spectrum. It’s focused too much on keeping the reins on all participants in the wireless broadband sector.

Jamal Simmons’ piece in today’s The Podium raises two important issues. First, we should not take for granted how much the private sector has invested in meeting the increasing demand for broadband services. According to his piece, broadband providers have invested tens of billions of dollars last year in broadband deployment. I remember when the fiber deployments of AT&T and Verizon started up back in 2005. The companies were investing upwards of $30 billion a year to compete with entrenched cable monopolies and provide the competition not only for cable programming but higher broadband speeds.

That was private investment. No government subsidies were being provided. No universal service. Ironically the impediment to broadband deployment was onerous franchise agreements that AT&T and Verizon, new to the cable franchise game, had to face. They could have slowed down or worse yet yanked their deployment plans off the board. Instead they marched ahead with the intent of meeting consumer demand, again without subsidies.

Second, there is the issue of flow of capital. Mr. Simmons’ piece is a reminder that as regulator of commerce, the federal government should be willing to avoid applying unnecessary regulations that would discourage investment in the private sector in general and the broadband sector in particular. I saw a number of cable firms that may have ended up providing competitive broadband services had not entry fees and other franchise requirements kept them out of certain markets.

These requirements didn’t even have anything to do with consumer protection, but more so with localities extracting onerous obligations such as cable TV studios and I-Nets; items that municipalities should have funded from their own general funds. Now these same municipalities complain about a lack of competition in their local franchise areas. Go figure.

We have heard over and over again how regulatory uncertainty can impede decision making on the part of business. The same holds true for the communications industry. In an article published in the National Review Online, Kevin Hassett provided an example of the dampening effect on growth ill-advised policy can have.

Mr. Hassett referred to the Federal Communications Commission’s finding that transferring licenses from T-Mobile was not in the public interest and that such a transfer would have a negative impact on competition. What Mr. Hassett points out is that decisions like the one by the FCC would have a negative impact on the nation’s growth. He wanted us to envision the collective negative impact these types of decisions would have on an industry that accounts for one-sixth of the economy.

Private investment, such as the investment that would have been initiated by the merger, is at the base of any economic recovery. As much as we may talk about government making investments, it was private investment that drove growth during six years of the Clinton Administration and five years of the Bush II Administration.

On the issue of competition, the FCC’s decision to deny the license transfers was based in part on giving smaller carriers the opportunity to either enter or, in the case of Sprint, stay in the market. Smaller, regional carriers don’t have the economies of scale or other capital necessary to provide the same level of national output of wireless services, even with access to additional spectrum. Just ask T-Mobile.

If smaller carriers are not increasing their services, and AT&T and Verizon are not allowed to increase their services due to a lack of spectrum, these carriers will raise their rates in order to regulate the increase in consumer demand for wireless services. Reduced output and increased prices are characteristics of a monopoly, the very scenario the FCC allegedly wanted to avoid. Consumers get shafted on both ends.

This is the irony of over regulation. Not only is capital investment impeded, but the regulatory agency creates a non-competitive market.