The Washington Post published an article back on 28 November 2012 about Federal Communications Commission Chairman Julius Genachowski’s approach to regulation. The article, written by Cecilia Kang, describes Mr. Genachowski’s approach as “painstaking”. Question is, who received the most pain from Mr. Genachowski’s staking.

Mr. Genachowski’s approach may have been “painstaking”, but his major accomplishments show a penchant for replacing market driven approaches with quasi government determination of market structure with a bias toward the opinions of advocacy groups like Free Press and Public Knowledge.

Let’s face it. Free Press and Public Knowledge, who both got a lot of play from Ms. Kang in this article, had a good time under the Genachowski regime. These grass roots advocates got their net neutrality rules codified much to the chagrin of lawmakers on Capitol Hill, and pushed the FCC to consider reclassifying broadband as telecommunications, a move that would have driven broadband regulation to the auspices of a 20th century regulatory regime that would have slowed down investment in broadband deployment, negatively impacting shareholders and consumers alike.

If the FCC wants to appear effective in the 21st century, the agency should focus on promoting commerce by opening up access to spectrum and making sure it gets to the carrier placing the highest value on it. Those carriers tend to be the larger carriers who have invested the most to reach the most customers.

Driving a stake in the broadband industry by inflicting the pain of overly intrusive regulations should not be the legacy Mr. Genachowski pursues. The FCC shouldn’t try to inorganically create a competitive market in its own image.

The Hill.com reporting that Verizon and T-Mobile have entered into a deal that would see Verizon selling T-Mobile some spectrum in return for T-Mobile discontinuing efforts to stop Verizon’s purchase of AWS spectrum from SpectrumCo.

Our old friends Public Knowledge claim that the sale is Verizon’s way of buying off T-Mobile.

Sounds like Verizon and T-Mobile are using the tried and true method of autonomous contracting to resolve an issue. It looks like a plain and simple voluntary divestiture, versus the buy off the far left opponents of anything free market i.e. Public Knowledge claim. Hopefully the swap agreement will move the spectrum transfer from SpectrumCo to Verizon a lot faster.

Public Knowledge has been on a little rampage, referring to Verizon’s petition to obtain AWS licenses from SpectrumCo, LLC as synonymous to a cartel. Specifically, Public Knowledge is saying that the aggregation of spectrum on the part of Verizon, combined with joint marketing, reseller, and joint operating entity agreements entered into between Verizon and SpectrumCo would effectively result in a cartel.

Should the transfer go through, Verizon and SpectrumCo, a joint venture between Comcast, Time Warner, and Bright House, will cross-sell each others’ services.

In its ex-parte letter posted on the Federal Communications Commission’s website on 18 June 2012, Public Knowledge made its cartel claim, but doesn’t seem to provide evidence of current or projected cartel behavior. For example, a cartel is defined as a group of firms with an explicit, formal agreement to fix prices and output shares in a particular market. Public Knowledge offers no evidence supporting the particular market Verizon and Spectrum intend to carve up, the level at which prices are to eb fixed, or how shares of that undefined market are to be divided up.

Without a showing that Verizon and SpectrumCo have entered a contract, combination, or conspiracy to restrain trade, a cartel argument is a non-starter.

Besides, why even bring this allegation to the FCC? This claim should be in front of the U.S. Department of Justice.

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.

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.