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Study: Limiting Incentive Auction Bidding Could Cost $12B

If the FCC limits the participation of either Verizon or
AT&T in the upcoming spectrum incentive auctions, it could reduce the
proceeds by as much as $12 billion (or 40%), which could mean there would not be
enough money to pay for all the spectrum broadcasters give up.

That is according to research
released on Tuesday
by the Center for Business and Public Policy at
Georgetown University's McDonough School of Business.

The research was conducted by Robert J. Shapiro, Douglas
Holtz-Eakin and Coleman Bazelon. According to a spokesperson for Georgetown, it
was funded by the McDonough School and not any outside company.

The authors warn that a $12 billion shortfall -- from a
potential $31 billion in proceeds with the big carriers participating to $19
billion without -- could mean that there might not be enough to build out the
national interoperable public safety broadband network and pay the $2 billion
in broadcaster re-packing costs and be able to pay for "the full amount [of
spectrum] made available by the broadcasters."

The research also indicated that if the wireless carriers
were discouraged or prevented from bidding, their plan B would be deploying
less efficient technologies that would ultimately cost consumers. They
estimated that strategy could increase monthly bills by 9%.

The FCC is considering modifying its local
market spectrum screen, which could limit the amount of spectrum any one
company can hold in a market. It has also been urged by Justice Department
antitrust officials to consider weighting those holdings according to the kind
of spectrum, giving more weight to low-band spectrum -- like that being
reclaimed from broadcasters for auction -- which is more valuable for wireless
service than higher-band spectrum.

If Bazelon's name sounds familiar, it may be because he is the same economist--with the Brattle Group--whose study of the value of reclaimed broadcast spectrum to the government and in the hands of wireless carriers was submitted to the FCC by the Consumer Electronics Association to support reclaiming it from broadcasters.

It was also his study on the economic impact of net neutrality regs, also for Brattle Group, that Mobile Future--which included AT&T--offered up in 2010 to argue that codifying the regs would slow economic growth and cost jobs.