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CONTACT: Patrick Ross
July 29, 2003
(202) 289-8928
Hill Shouldn't Overrule FCC on Spectrum
May Fears Lobbying Campaign May Set Back Market Flexibility

WASHINGTON D.C. - If it succeeds, one company's "furious lobbying campaign" to have Congress override the Federal Communications Commission's decision to require an auction of spectrum it wants would "deal an unfortunate blow to the FCC's efforts to move toward a more market-oriented and flexible spectrum regime that benefits the public at large." That is the view of Progress & Freedom Foundation Senior Fellow and Director of Communications Policy Studies Randolph J. May, who believes Congress should not overrule the agency.

"If Northpoint convinces Congress to intervene, the movement toward a more market-oriented approach - one less dependent on the skills of politically connected lawyers and lobbyists - will be set back considerably," May writes on CNET "Even though spectrum auctions may not always be appropriate.they are useful in moving in a free market direction. The prime reason: They are ways to place spectrum in the hands of those entities that value it most highly."

May suggests that part of the problem rests with Congress' 1927 decision to bar private ownership. It remains "an open invitation to rent-seeking and political maneuvering par excellence," he writes. "As long as government takes the position that it owns the spectrum and private parties use it only at its sufferance through limited licenses, spectrum allocation and assignment decision will be subject to a certain degree of political maneuvering."

Northpoint's desire to obtain the spectrum based on the so-called pioneer exemption ignores the fact that Congress abolished it because of "interminable litigation" and the difficulty of "making licensing decisions turn on bureaucratic judgments concerning innovativeness." Moreover, the company's argument that it could intensify competition is fine, except for the fact that its competitors have already paid for their spectrum. Finally, citing the FCC, May argues it called for an auction because "assigning licenses 'through competitive bidding also promotes efficient and intensive use of the spectrum.because (the winning) bidders are more likely to rapidly introduce new and valuable services and deploy those services quickly." According to May, Northpoint's arguments may be "superficially appealing" but are "not ultimately persuasive."

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