The Economic Implications of Restricting Spectrum Purchases in the Incentive Auctions

47 Pages Posted: 29 Dec 2014

See all articles by Robert J. Shapiro

Robert J. Shapiro

Georgetown University - Robert Emmett McDonough School of Business

Douglas Holtz-Eakin

Independent

Coleman Bazelon

The Brattle Group

Date Written: April 30, 2013

Abstract

This paper contains two chapters on the economic impact of proposed FCC restrictions on participation in the 2015 spectrum auction, which would limit access to additional spectrum by large incumbent Internet Service providers (ISPs). The first chapter by Holtz-Eakin and Bazelon reports that such restrictions could reduce FCC auction revenues by as much as $12 billion or 40 percent, which in turn could mean that the FCC would be unable to purchase the full amount of spectrum being made available by broadcasters. They further report that this large shortfall could lead to a series of declining revenues and fewer frequencies allocated, and jeopardize funding for the new national network, FirstNet, planned for the exclusive use of public safety personnel. The second chapter by Shapiro reports that restricting auction participation by large, relatively-efficient incumbent ISPs would shift spectrum resources towards less efficient mobile carriers. This shift also would force the large incumbent carriers to deploy more costly responses to fast-rising consumer and business demand for bandwidth, raising prices and thereby slowing the transition to 4G technologies. Further, the slower transition to 4G would dampen the employment growth that should otherwise follow from the adoption of more advanced Internet technologies. Shapiro estimates that those effects could more than 118,000 jobs by 2017.

Keywords: spectrum auction, FCC, ISP, Internet, bandwidth

JEL Classification: H23, L51, L86, L96

Suggested Citation

Shapiro, Robert J. and Holtz-Eakin, Douglas and Bazelon, Coleman, The Economic Implications of Restricting Spectrum Purchases in the Incentive Auctions (April 30, 2013). Available at SSRN: https://ssrn.com/abstract=2541812 or http://dx.doi.org/10.2139/ssrn.2541812

Robert J. Shapiro (Contact Author)

Georgetown University - Robert Emmett McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States

Douglas Holtz-Eakin

Independent ( email )

Coleman Bazelon

The Brattle Group ( email )

44 Brattle Street
3rd Floor
Cambridge, MA 02138-3736
United States
202-955-5050 (Phone)

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