Phoenix Study: Bidder Exclusion Rules Won't Help Incentive Auction

A new Phoenix Center study of the 2006 AWS-1 spectrum auction asserts that Verizon and AT&T's participation in that auction accounted for nearly 70% of the auction proceeds even though together they only won 10% of the total licenses.

AT&T's bids, winning or not, accounted for a 21% premium to the final prices above that of a typical bidder. "The influence of a bidder in an auction is more than what it buys, because a losing bid forces other bidders to reveal their true valuations,” said study co-author and Phoenix Center chief economist Dr. George S. Ford in announcing the study findings Tuesday. Verizon was found to have minimal indirect effect, however.

The study also found no evidence that AT&T and Verizon's participation reduced the number of bidders.

The FCC is considering capping the amount of low band spectrum AT&T and Verizon can bid on in the incentive auction as a way to insure competitors get a shot at what is considered by many to be beachfront wireless spectrum given its propagation characteristics. The Justice Department has backed that plan.

"Given these results, the Phoenix Center’s study contradicts almost every key aspect of the arguments for restricting the participation of large carriers from the upcoming voluntary incentive auction," said the Phoenix Center in a statement.

A copy of the study is available here.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.