Pai Urges FCC to Allow Market to Drive Incentive Auction Rules

The FCC should “let the market, rather than government fiat,” guide how the upcoming 600 MHz incentive auction is structured, said Commissioner Ajit Pai said Wednesday at a Mobile Future event. A market-based approach includes “letting all companies participate” in the auction by not adopting overly restrictive rules that limit participation by top wireless carriers Verizon Wireless and AT&T, he said. Pai has long advocated for the agency to follow industry’s advice in developing the rules for the incentive auction. The auction rules must also be fair to all stakeholders, Pai said, saying broadcasters and carriers have collaborated well during the process. “That’s something we should embrace,” he said. The FCC must also stay within statutory bounds allowing the agency to hold the auction and complete the rulemaking process within a reasonable time frame, Pai said. Uncertainty about the timeline doesn’t serve anyone well, he said. If the ultimate goal of the auction is to provide funding for programs like FirstNet, the FCC must “impose little or no restrictions” on the auction to make it successful, said Recon Analytics analyst Roger Entner in a related panel discussion. “The more you're imposing restrictions, the less money you'll get."

The incentive auction remains one of the FCC’s top priorities -- one that will almost certainly be at the top of chairman nominee Tom Wheeler’s agenda if the Senate votes to approve him, Pai said. FCC Commissioner nominee Mike O'Rielly and FTC Commissioner nominee Terrell McSweeny sat with the Senate Commerce Committee Wednesday. (See separate report in this issue.) The committee approved Wheeler’s nomination in July, clearing the way for a full Senate vote. Observers have said they believe the Senate could approve both Wheeler and O'Rielly before Columbus Day (CD Sept 13 p1). Pai said he’s “confident” that Wheeler will be a decisive leader for the agency -- something that will be important going forward, Pai said. A decisive FCC chairman is important now because the agency has a “reputation of speaking, not doing,” said Wells Fargo analyst Jennifer Fritzsche during a related panel discussion. O'Rielly’s experience within the industry will be an asset to the entire FCC, Pai said.

The global communications industry has seen “historic” levels of merger and acquisition activity, with the total monetary value of M&A announced or completed this year already totaling more than $231 billion, Mobile Future said. It said that includes the $130 billion Verizon Communications agreed to pay Vodafone for its 45 percent of Verizon Wireless. That level of U.S. M&A shows the communications sector is the most “dynamic” part of the U.S. economy -- an indication that the FCC should stick to the merits of the transactions it reviews, Pai said. The FCC’s reviews need to narrow any transactional stipulations to those that address only competitive harms, and the agency also needs to codify its unofficial 180-day transactional “shot clock” review deadline into its rules, Pai said. (jphillips@warren-news.com)