The 700 MHz Spectrum Auction: An Opportunity to Protect Competition In a Consolidating Industry

Peter Cramton, University of Maryland
Andrzej Skrzypacz, Stanford University
Robert Wilson, Stanford University

Abstract

This paper is provided in connection with the 2007 Telecommunications Symposium – Voice, Video and Broadband: The Changing Competitive Landscape and Its Impact on Consumers, sponsored by the Antitrust Division of the U.S. Department of Justice (“the Division”). Our focus is on the state of competition in the wireless sector. Maintaining a competitive wireless sector is particularly critical if, as the Division’s agenda indicates, wireless services are to function as a competitive alternative to wireline technologies. Strengthening competition is especially important now after recent mergers that consolidated the wireless industry into a few dominant firms (two to four depending on metric) with wide coverage and vertically integrated networks; moreover, the major firms’ leverage is magnified by their dominant positions in the markets for wireline telephony and broadband. These developments circumvent the Division’s (and the FCC’s) longstanding efforts to sustain competitive pressures in the market for wireless services. We urge the Division to continue its proactive record of enforcement in the wireless sector and ensure that the significant amount of low frequency spectrum that will soon become available is not absorbed by the dominant wireless providers, thereby frustrating the opportunity for new entry.