Good morning. I’d like to welcome the FCC commissioners back and thank them for testifying today on the results of the FCC's 700 MHz auction, and I want to welcome all of our witnesses on both panels.
By some measures, the 700 megahertz auction was a success, but by others we missed our mark and failed to live up to the full potential of this landmark spectrum sale.
From the beginning, I viewed the auction rules that the FCC put into place as an experiment. I believe that experiment shorted the taxpayers of billions of dollars in auction revenue, and left the public safety spectrum in an uncertain state. I have always been a staunch defender of the taxpayers – our folks back home deserved the most out of that auction. Taxpayers will receive almost $19 billion in auction proceeds – an impressive number, nearly double what CBO predicted – although industry experts and some of us on this Committee always believed the spectrum could fetch even MORE than $20 billion, if it had not been for the Commission's open access social engineering in the C Block. I feel we’ve been short changed.
The free market works best. And successful auctions work best without encumbrances. Google, by its own admission, was successful in gaming the system to achieve its goals -- without having to purchase a spectrum block or build-out a network. Google is one of the richest companies in the country, with a market cap of more than $140 billion. That’s $40 billion more than Verizon. Google was within striking distance of Verizon’s winning bid, yet Google never even made an attempt to top it. Without the open-access rules, Google would have had more incentive to win the auction and would have been free to operate the network as it proposed.
Clearly, the auction yielded a wide variety of winners. According to the Commission, a bidder other than a nationwide incumbent won a license in every market and 99 bidders, other than the nationwide wireless incumbents, won 754 licenses, representing about 70% of the 1090 licenses sold in the 700 MHz auction. In the B Block, there were 87 different license winners. In the E-Block, Echostar's Frontline Wireless won 168 licenses.
At the end of the day, I am confident that consumers all across the country will cheer the deployment of the 700 MHz spectrum, which will bring not only the benefits of increased access to broadband, but also the rollout of 4G services. This represents an exciting evolution in the wireless marketplace.
At past hearings and in a letter to the FCC, I expressed my skepticism with the proposal to combine the first responder network with a commercial broadband network to create a public-private, nationwide, interoperable broadband public safety network. I wish that I was wrong, but this experiment, in fact, was a failure at the expense of public safety. Auction participants were reluctant to bid on the 10MHz of D block spectrum. Given the investment needed, potential bidders avoided this block since they did not know in advance all the terms of the public-private partnership. As a result, that D-Block auction was a failure.
Lastly, I want to express my concern about the Commission’s allocation of resources at this critical moment. Public safety and a successful DTV transition should be the top priority for the Commission. I don’t see how the FCC can hope to be an effective proponent of the digital television transition if it gets side-tracked by contentious policy debates, such as proposed mandates on wholesale a la carte and price controls on television programming. I urge the Commission to stay focused on the task at hand and not move down this road.
I look forward to hearing from all of our witnesses about this critically important component of our nation’s telecommunications needs. Again, I think all the witnesses for their time today and I look forward to your testimony. I yield back.
