Hal Singer in his blog post, “Divining a Regulator’s Intent“, could not have said it better.
“The singular objective that should drive the Commission in all matters wireless is getting spectrum into the hands of firms that value it the most.”
No truer words have been said about the role of government in general, and the role of the Federal Communications Commission in particular.
FCC chairman Julius Genachowski appeared to signal that he’d like to pull another end around Congress, this time on the matter of writing and implementing the guidelines for a voluntary incentive auction that would see broadcasters giving up spectrum in return for fair compensation. Mr. Genachowski believes that “Giving the FCC the authority to implement incentive auctions with flexibility to design appropriate rules would increase social welfare.”
If Mr. Genachowski is really interested in a regulatory scheme that increases social welfare, he would not want a scheme where an agency picks the winner of an auction based on the agency’s “flexibility to design appropriate rules.” Instead he would encourage Congress to write clear, to the point statutory language that mandates spectrum going to the highest bidder. The wireless carrier showing their willingness to invest a premium in a national resource such as spectrum is signaling their immediate intent to use it.
Picking winners only increases the likelihood of a ripple effect of inefficiency running through the wireless industry. This will likely be the result of the FCC trying to replace price as the mechanism for distributing capital and resources with the agency’s determination as to which carrier should get spectrum. This is not how you increase social welfare.