Using Auction Results to Forecast the Impact of Wireless Carterfone Regulation on Wireless Networks (Second Edition)

19 Pages Posted: 30 Apr 2008 Last revised: 29 Sep 2013

See all articles by George S. Ford

George S. Ford

Phoenix Center for Advanced Legal & Economic Public Policy Studies

Thomas Koutsky

USAID Global Development Lab

Lawrence J. Spiwak

Phoenix Center for Advanced Legal & Economic Public Policy Studies

Date Written: May 2008

Abstract

In the last year, many advocates have called for the imposition of Carterfone regulation on the wireless industry. The FCC partially heeded this call when it imposed open platform regulations on one substantial block of spectrum (the Upper C block) that was recently part of the record-setting 700 MHz auction. In the fourteen years that the FCC has performed spectrum auctions, never before has the FCC simultaneously auctioned similar spectrum licenses that are subject to two radically different regulatory regimes. In this Bulletin, we utilize the results of this unique auction to show that applying similar wireless Carterfone regulation to all commercial wireless spectrum could suppress wireless infrastructure investment by $50 billion over the next decade, sharply reduce the profitability of wireless network services by 32%, and harm consumers. Because there are significant fixed and sunk costs involved with building and operating a wireless network, the estimated change in profitability could limit consumer choice by creating more highly-concentrated market. Indeed, applying such regulation across the board is likely to cause particular harm to small or medium-sized wireless firms by enhancing the role of scale economies in determining industry structure.

Keywords: network neutrality, auctions, spectrum policy, open platforms, wireless Carterfone

JEL Classification: K23, L16, L22, L51, L52, L96, L98, O14, O33, O38

Suggested Citation

Ford, George S. and Koutsky, Thomas M. and Spiwak, Lawrence J., Using Auction Results to Forecast the Impact of Wireless Carterfone Regulation on Wireless Networks (Second Edition) (May 2008). Available at SSRN: https://ssrn.com/abstract=1126884 or http://dx.doi.org/10.2139/ssrn.1126884

George S. Ford

Phoenix Center for Advanced Legal & Economic Public Policy Studies ( email )

5335 Wisconsin Avenue, NW
Suite 440
Washington, DC 20015
United States

Thomas M. Koutsky

USAID Global Development Lab ( email )

1300 Pennsylvania Avenue NW
Washington, DC 20577
United States

Lawrence J. Spiwak (Contact Author)

Phoenix Center for Advanced Legal & Economic Public Policy Studies ( email )

5335 Wisconsin Avenue, NW
Suite 440
Washington, DC 20015
United States
202-274-0235 (Phone)
202-318-4909 (Fax)

HOME PAGE: http://www.phoenix-center.org

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