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Ocobter 11, 2002
CONTACT: David Fish
(202) 289-8928

FCC Spectrum Refund Would Boost Economy
Eisenach Urges Agency to Reach "Swift and Honorable Conclusion"

WASHINGTON, D.C. - Refunding down payments and releasing bidders from their obligations pertaining to twice-auctioned spectrum would give a “substantial boost” to the battered telecommunications and IT sectors, while protecting the integrity of the federal auction process. That is the view of Progress & Freedom Foundation President Jeffrey A. Eisenach, who filed comments with the FCC today on the “Auction No. 35” proceeding.

“The issue now before the Commission is whether to allow the winning bidders to opt-out of their spectrum rights, receive refunds on the down payments still retained by the Government, and be relieved from any further obligations to pay,” Eisenach writes. “It should do so.” He urges the FCC to focus on “the importance of IT investment spending in the current downturn, and the scarcity of financing available to telecommunications companies to engage in such investment.”

Eisenach maintains that releasing bidders from the $16 billion in obligations “would give a substantial boost to the telecommunications and IT sectors in particular, and the economy as a whole.” In the wireless sector, that money would provide substantial funds to upgrade and expand existing networks, begin building a 3G infrastructure and explore new technologies, he says. Overall, he concurs with fellow economist J. Gregory Sidak that releasing the firms from the obligations would increase economic activity by between $19 and $52 billion.

The FCC has refunded the bulk of the payments made by the winners of the second auction, but has retained significant down payments and refused to release the companies from obligations to pay for the spectrum if the agency is successful in reclaiming it from NextWave in court proceedings.

According to Eisenach, the integrity of the auction process requires that parties live up to their obligations. “When one party, in this case the Commission, fails to do so, the effect is to harm the market’s ability to function by undermining the trust that is an essential component of the free enterprise system,” he writes, urging the agency to reach “a swift and honorable conclusion.”

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation