Max Media’s Call to Halt Auction a “Ridiculous Stall Tactic,” CCA Says

Competitive Carriers Association President and CEO Steven Berry blasted Max Media’s request to pause the incentive auction for a review of procedures, calling it a “ridiculous stall tactic” meant to distract policymakers.

In a Thursday filing with the FCC, Max Media CEO Gene Loving petitioned FCC Commissioners Ajit Pai and Michael O’Rielly to halt the ongoing auction and initiate a review of the chosen auction process. Loving said the request stemmed from what he said was the increasingly apparent possibility that the auction would fail altogether thanks to “a serious flaw in the design of the auction.”

According to Loving, the primary cause for concern is the design of the forward auction, in which wireless bidders have been informed “over and over that if they don’t like the price, the auction will be rerun again and again and again.” This, he said, has driven prices in Stage 3 of the auction down to 84 cents per megahertz-pop, a decline of almost two-thirds from the $2.53 per megahertz-pop seen in the AWS-3 auction.

“Demand for broadband is not down two-thirds. It’s up,” he wrote. “The only reasonable conclusion that can be drawn is that the design of the auction is flawed.”

Instead of disclosing the clearing costs to forward auction bidders, Loving said the FCC should have kept those to themselves and “wireless bidders should have been told only how much spectrum would be made available, to see what was offered, while not knowing for sure that there would be second, third, fourth, or more stages.”

If the auction continues under the current design, Loving predicted, the prices paid for spectrum at the close of the proceedings will retrospectively be “judged to have been one of the government’s greatest mistakes.”

“Taking a cue from President-elect Trump’s efforts to reevaluate all government programs, I urge you to consider whether this auction, which was started under the previous administration, will likely end up as “failed” just as the new commission takes over, leaving the new administration holding the proverbial bag,” Loving advised. “I suggest the entire process of allocating spectrum needs to be re-thought. Instead of licensing spectrum for a one-time fee, perhaps we should consider a model similar to leasing, whereby the government and the taxpayers continue to benefit from the shift of our economy and infrastructure towards broadband communications.”

Loving predicted the wireless industry would “vehemently disagree” with his assertions, and he was right.

In a Friday statement, Berry shot back, calling on the FCC to dismiss Loving’s letter out of hand.

“The FCC should take Gene Loving’s request for what it truly is – a ridiculous stall tactic in an attempt to distract policymakers from getting more mobile broadband services to consumer, and as such, the FCC should reject the request without hesitation,” Berry said. “Any delay will violate the law, counter congressional intent, and negatively impact auction participants who have spent countless hours and resources planning auction strategies.”

Berry and Loving’s comments came just ahead of the end of the Stage 4 reverse auction, which was expected to end Friday afternoon.