Letter to FCC Chairman Powell Concerning Auction 35

3 Pages Posted: 6 Dec 2002  

Peter Cramton

University of Maryland - Department of Economics

Robert W. Crandall

Brookings Institution; AEI-Brookings Joint Center for Regulatory Studies

Robert W. Hahn

University of Oxford, Smith School; Georgetown University

Robert G. Harris

University of California, Berkeley - Business & Public Policy Group

Jerry A. Hausman

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Thomas W. Hazlett

Clemson University

Douglas Lichtman

University of California, Los Angeles (UCLA) - School of Law

Paul W. MacAvoy

Yale School of Management (Deceased); Yale University, Yale Graduates Energy Study Group (Deceased)

Paul R. Milgrom

Stanford University

J. Gregory Sidak

Criterion Economics, L.L.C.

Richard Schmalensee

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Hal J. Singer

Economists Incorporated

Vernon L. Smith

Chapman University - Economic Science Institute; Chapman University School of Law

William E. Taylor III

Marsh & McLennan Companies - Cambridge Office

David Teece

Institute for Business Innovation

Date Written: August 16, 2002

Abstract

Fifteen scholars on auctions and telecommunications regulation urge the FCC to cancel bids made in, or permit winning bidders to opt out of, the reauction of the NextWave licenses in Auction 35.

For auctions to function efficiently, buyers and sellers must follow basic rules, including the rule that a seller deliver in a timely manner what the winning bidder has purchased. This rule has not been applied in Auction 35. The FCC auctioned something that it did not have - immediate access to the spectrum for the winning bidders. Thus, if the FCC forces the winning bidders to pay, they will sue the agency for forcing them to pay for something that they did not receive. Alternatively, their shareholders will sue the companies. Meanwhile, wireless carriers have invested in less efficient technologies to meet capacity needs.

The FCC has said that its current policy toward Auction 35 seeks to "protect the integrity" of the spectrum auction process. The opposite is already occurring. The FCC increases uncertainty in the wireless market if it holds carriers accountable for winning bids for licenses that the agency cannot deliver. Bidders will discount their future bids accordingly, and auction revenues will fall. That outcome does not benefit consumers, taxpayers, workers, or shareholders.

JEL Classification: A1,E6,E61,H8,K2,K23,L5,L51,O3,O31,O38

Suggested Citation

Cramton, Peter and Crandall, Robert W. and Hahn, Robert W. and Harris, Robert G. and Hausman, Jerry A. and Hazlett, Thomas W. and Lichtman, Douglas and MacAvoy, Paul W. and Milgrom, Paul R. and Sidak, J. Gregory and Schmalensee, Richard and Singer, Hal J. and Smith, Vernon L. and Taylor, William E. and Teece, David, Letter to FCC Chairman Powell Concerning Auction 35 (August 16, 2002). Available at SSRN: https://ssrn.com/abstract=324903 or http://dx.doi.org/10.2139/ssrn.324903

Peter C. Cramton

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
301-405-6987 (Phone)
301-405-3542 (Fax)

Robert Crandall

Brookings Institution ( email )

1775 Massachusetts Ave. NW
Washington, DC 20036-2188
United States
202-797-6291 (Phone)
202-797-6181 (Fax)

AEI-Brookings Joint Center for Regulatory Studies

1150 17th Street, N.W.
Washington, DC 20036
United States

Robert W. Hahn

University of Oxford, Smith School ( email )

Oxford
United Kingdom

Georgetown University

Georgetown Center for Business and Public Policy
Washington, DC 20057
United States

Robert G. Harris

University of California, Berkeley - Business & Public Policy Group ( email )

545 Student Services Building
Berkeley, CA 94720
United States
510-450-6739 (Phone)

Jerry A. Hausman

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
Room E52-271a
Cambridge, MA 02142
United States
617-253-3644 (Phone)
617-253-1330 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Thomas W. Hazlett

Clemson University ( email )

Clemson, SC 29634
United States
8646563430 (Phone)
8646564192 (Fax)

HOME PAGE: http://hazlett.people.clemson.edu/

Douglas Gary Lichtman

University of California, Los Angeles (UCLA) - School of Law ( email )

385 Charles E. Young Dr. East
Room 1242
Los Angeles, CA 90095-1476
United States
310-267-4617 (Phone)

Paul W. MacAvoy

Yale School of Management (Deceased)

Yale University, Yale Graduates Energy Study Group (Deceased)

Paul R. Milgrom

Stanford University ( email )

Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States
+1-650-723-3397 (Phone)
+1-419-791-8545 (Fax)

HOME PAGE: www.milgrom.net

J. Gregory Sidak (Contact Author)

Criterion Economics, L.L.C. ( email )

1717 K Street, N.W.
Washington, DC 20006
United States
(202) 518-5121 (Phone)

HOME PAGE: http://www.criterioneconomics.com

Richard Schmalensee

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

Room E62-525
Cambridge, MA 02142
United States
617-253-2957 (Phone)
617-258-6617 (Fax)

Hal J. Singer

Economists Incorporated ( email )

2121 K Street N.W.
Suite 1100
Washington, DC 20037
United States
202-747-3520 (Phone)

HOME PAGE: http://www.ei.com/viewprofessional.php?id=71

Vernon L. Smith

Chapman University - Economic Science Institute ( email )

One University Dr.
Orange, CA 92866
United States
714-628-2830 (Phone)

Chapman University School of Law ( email )

One University Drive
Orange, CA 92866-1099
United States

William E. Taylor III

Marsh & McLennan Companies - Cambridge Office ( email )

One Main Street, 5th Floor
Cambridge, MA 02142
United States
617-621-2615 (Phone)

David J. Teece

Institute for Business Innovation ( email )

F402 Haas School of Business, #1930
Berkeley, CA 94720-1930
United States
(510) 642-4041 (Phone)

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