Spectrum Auctions and the Public Interest Ellen P. Goodman Rutgers School of Law - Camden

Policy Tradeoffs Valuation: what are public interest policy goals worth and how much will they cost? Transparency: how has the FCC actually weighted public interest policy goals in selecting among them? Auctions as heuristic

700 MHz Auctions

C Block – 22 MHz Competition and innovation goals –> open platform conditions (OPC) – Network operators cannot discriminate against applications (no block) or prohibit devices (no lock) Recover spectrum value – reserve price of $4.6 billion for C Block If reserve price is not met, licenses automatically re- auctioned – OPC dropped – license sizes reduced

Auction Heuristic The FCC says we can know from reserve price shortfall whether OPC produce net public interest benefits. That is: “benefit of fostering the development of innovative devices and applications” > “potential negative effects on network operations” = “magnitude of the devalued bids”

In fact, No auction could tell us: -Public interest benefits of OPC (externalities) Auctions might tell us costs, but…

C-Band auction was not structured to do this Reserve price is Boolean; does not measure magnitude of devalued bids. #1 #2 $bil 4.5 reserve55.56 Re-auction mechanism did not isolate OPC variable x x x x

What Could an Auction Tell Us? Simultaneous auctions, differentiated by a single variable, could price the cost of a public interest condition Decisional value – valuation, transparency Informational value