STATEMENT
of the
Honorable Nydia M. Velázquez, Chair
Committee on Small Business
    Hearing on the Impact of the 700 MHz Wireless Spectrum Auction on Small Business
Wednesday, October 10, 2007

This morning the Committee will examine the impact of the 700 megahertz wireless spectrum auction on small businesses. 

Access to the newest technologies is a key ingredient for all companies to innovate and compete in a global economy.  For smaller firms, however, it is critical for their success that they have access to cutting-edge equipment and infrastructure.  This much-anticipated spectrum auction provides a unique opportunity for entrepreneurs to acquire these tools. 

Small firms that win the right to purchase spectrum licenses will be able to deploy high speed Internet access services.  This will spur greater innovation and lead to lower communications costs and improvements in service quality.  Entrepreneurs operating in underserved areas will also benefit as new technology is brought to remote parts of the country.  As a result, rural businesses will be better able compete and advance local economic revitalization efforts.

I am pleased that the FCC has included in the auction rules a number of elements that should benefit small companies.  In order to assist them, the rules provide certain advantages for small firms – mainly in the form of credits toward their bids.  In addition, the FCC’s decision to offer licenses that cover smaller geographic areas may allow these companies to compete and win – despite having more limited resources than a large national carrier.   Together, these rules will allow them to start or expand wireless business operations. 

Entrepreneurs also have the potential to benefit from the FCC’s “open platform” requirements.  These requirements – which will allow any device to be used on the spectrum – will help level the playing field and permit for the widespread use of handsets.  This will create new markets and spur entrepreneurial activity in a wide-range of industries.

With all this potential, a downside does exist. Some small communications companies have raised concerns about whether the auction rules are fair and whether the benefits of the auction will in fact extend to them.  For example, rural wireless companies contend that the FCC’s decision to assign population-based benchmarks to build out requirements will hurt underserved regions.  The smallest wireless companies also argue that the new rules governing bidding credits make it difficult for them to raise money and pursue a sustainable endeavor. 

Fortunately, we have two panels here today that will help us consider both sides of this issue.  The witnesses will share with the Committee how they expect the auction to benefit small entities and concerns they may have about certain aspects of the auction rules. 

For entrepreneurs that use technology to make their firms more efficient and competitive, this auction offers great promise. It provides a unique opportunity to secure the so-called “beachfront real estate” of the spectrum.  This can be used to launch a new endeavor or strengthen an existing firm’s operations.  Small businesses – both service providers and communications consumers – stand to benefit greatly.