Success of AWS-3 Shows Demand for Mid-Band Spectrum, Pai Says

The success of the AWS-3 auction shows there's a demand for mid-band spectrum, and highlights an FCC error in establishing an enhanced review process for low-band spectrum as part of mobile spectrum holdings item, Commissioner Ajit Pai said in a Q&A session on the second day of the Practising Law Institute’s Institute on Telecommunications Policy and Regulation. Pai described the reaction to the success of the AWS-3 auction as “pleasantly shocked” and cited the FCC decision to have open eligibility for the auction as “greatly increasing participation” and one of the reasons it generated total provisional winning bids of $41 billion so far (see 1412050052). Pai and members of panels of privacy experts and consumer electronics industry officials also discussed net neutrality, the Internet of Things and possible ways the Communications Act could be updated to improve the FCC.

Pai said allowing the market to act with minimal regulatory interference helped make the auction a success, He said “it’s a dangerous proposition for a regulatory agency to decide what the optimal number of competitors in a market should be.” Regulators should “practice regulatory humility,” he said. On a panel on new communications technology, Intel Associate General Counsel Peter Pitsch said the AWS-3 auction's success boded well for the incentive auction. “Clearly, there’s feedback between this and what we expect from the incentive auction," Pitsch said. Buyers have been willing to buy the AWS-3 spectrum even with the higher demand raising its price, indicating they won’t shy away from spending in the incentive auction, he said.

Open Internet rules based on Title II of the Communications Act would lead to higher taxes for industry and higher Internet connection fees, Pai said. He pointed to Google’s choice not to offer voice as part of its fiber offerings as evidence of the burden Title II would put on ISPs. Though other FCC officials have said the commission could impose Title II and make it less burdensome by forbearing on many aspects of the classification, that route is likely to face opposition, Pai said. The commission can’t necessarily forebear the more challenging parts of Title II regulation, he said. Though President Barack Obama’s recent support for Title II has “dramatically changed the conversation,” Pai said he still hoped the commission could come to a compromise decision that “abides by the Hippocratic Oath.” Title II regulation would also “curtail” some of the FTC’s oversight of common carriers, said FTC Division of Privacy and Identity Protection, Bureau of Consumer Protection Associate Director Maneesha Mithal during a PLI privacy panel discussion.

It would be easier for the commissioners to work out compromises if they weren't largely prevented from discussing the issues before them in private, Pai said. The FCC would be better able to “hash things out” if sunshine laws were changed to allow them to meet more freely, he said. The current rules are “outmoded,” Pai said. Such a change could be made as part of the congressional effort to update the Communications Act, he said. A certiorari process that requires the FCC to decide whether to act on an item in a fixed timeline would also improve FCC efficiency, said NextNav Vice President-Corporate Development and Strategy Chris Gates. Pai has made similar suggestions in the past. A cert system would increase certainty for companies waiting on an FCC decision, Gates said. Pai also said a Telecom Act update should increase the FCC’s forbearance authority, which would allow the agency to be more flexible.

IoT could pose special privacy concerns, because companies rushing to provide “smart” products may not immediately consider security, said Mithal and others on the privacy panel. That may not be an immediate concern, said Debbie Matties CTIA vice president-privacy, because IoT would likely not be viable until interoperability standards are developed.