- - Monday, June 1, 2015

Verizon’s $4.4 billion purchase of AOL, which will do nothing to expand Verizon’s wireline or wireless services, certainly confirmed one thing: Content and video are king, especially when it comes to mobile communications. If Americans want to benefit from the potential of this wireless world, though, consumers better hope Uncle Sam can get its act together.

Whether Americans realize it or not, ongoing policy fights in Washington regarding the allocation and selling of electromagnetic spectrum held by the government and private companies hold great ramifications for the future of an information economy increasingly reliant on wireless communications.

As I wrote in April, the issue may seem arcane, but determining who owns the spectrum that allows people to use wireless devices is integral to this nation’s growth. With mobile technology expanding to connect daily appliances to the Internet, this scarce resource remains critical to keeping pace globally and continuing our positive enhancements in life.

One way the Federal Communications Commission (FCC), and to a certain extent Congress, can protect the Internet is to end the troubling trend of allowing corporate welfare to determine who owns the spectrum

The most recent auction, referred to as “AWS-3,” yielded $45 billion for the U.S. Treasury. But the auction was tarnished by the unsavory actions of satellite television provider Dish Network, who abused a flawed government policy intended to help small companies and minority-owned businesses, walked away with a $3.3 billion discount. Dish set up shell companies that qualified for the program to orchestrate bids and undercut the competition at a 25 percent discount. While effective, the strategy was a blatant case of taxpayer abuse.

What the FCC should do next is clear: Heed the bipartisan demands from organizations ranging from the NAACP to Americans for Tax Reform and deny Dish its ill-gotten taxpayer-funded discount. But more broadly, the FCC must closely evaluate programs built to favor various bidders.

Unless the FCC fixes its broken policies, the next auction – a pivotal process where broadcast television providers will auction top-grade spectrum to wireless bidders – could lead to taxpayer-subsidized sweetheart deals for major corporations. Such an outcome could cost the U.S. Treasury billions of dollars that could be used to reduce our nation’s massive debt or fund important programs.

Looking forward, T-Mobile, Sprint, Dish Network and others are asking the FCC to set aside a larger portion of spectrum than they already have – spectrum that companies like Verizon or AT&T could bid on. Adopting a set-aside in the first place was bad public policy, but increasing it would only add to the idea that the FCC players favorites and would further violate the public trust, robbing taxpayers of the value of the spectrum by allowing wealthy corporations to pay less for the spectrum than it’s actually worth.

These entities can afford to pay fair market value for spectrum and do not need government handouts.

Dish Network’s recent actions show how auction rules that favor certain companies harm the public. If the goal is to ensure that truly small or rural carriers gain access to valuable spectrum – such as those robbed by Dish – than the FCC should prohibit large companies from qualifying for the set-aside.

Spectrum may seem wonky, but a whole lot rides on its sale – including the future of the Internet in America. Something that important should not be left to shady behavior and corporate welfare handouts.

Drew Johnson is a senior fellow at the Taxpayers Protection Alliance, a nonpartisan, nonprofit organization committed to limited, responsible government.



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