Thursday, May 01, 2014

Conditioning the Incentive Auction Unlikely to Increase Mobile-Broadband Competition in Rural America

On May 1, the Georgetown Center for Business and Public Policy released a new economic policy study by Anna-Maria Kovacs titled, “Regulation in Financial Translation: Will the Incentive Auction Increase Mobile-Broadband Competition in Rural America.” Ms. Kovacs finds that even if the Federal Communications Commission imposes restrictions on large providers, namely AT&T and Verizon, rural communities will mostly likely not benefit from the incentive auction.

Chairman Wheeler has stated that because AT&T and Verizon control a majority of low-band spectrum, which can travel greater distances than high-band spectrum supposedly for less cost, limiting those large providers will induce smaller wireless competitors to bring service to and compete in rural areas. However, even if Sprint, T-Mobile and other smaller competitors are given access to low-band spectrum at below-market prices, the lack or revenue potential in those targeted rural markets will remain a great disincentive. And, neither provider has indicated a willingness or plan to serve rural areas. If limited in the incentive auctions, AT&T and Verizon, who often provide the only service available in rural areas, will lack the capacity to meet rural subscribers’ demands.

The full study is available here and is worth a read.