The U.S. House Energy and Commerce Committee is hold a hearing on Friday to deal with spectrum and public safety problems. Key Republican lawmakers have released a draft of spectrum auction and public safety band rules. Among the proposals, the draft sets up an auction system for the allocation of spectrum for unlicensed use, such as WiFi. The Federal Communications Commission (FCC) would conduct auctions in which bidders would declare their intention to buy spectrum for licensed or unlicensed purposes.
There is a catch, however. "The Commission may only exercise its authority under this Act to allocate a portion of the spectrum for unlicensed use if—the bids for unlicensed use, in the aggregate, exceed the highest bid for such license." In other words, the FCC would be forbidden to impose any rules on the sale winner that "limits the ability of a licensee to manage the use of its network." The bill bars the FCC from imposing any wholesale reselling requirement on the license buyers or limit participation. This means that AT&T and Verizon could buy as much spectrum as they want.
According to the law"s authors, AT&T and company are L-type firms who prefer licensed spectrum. Google, Microsoft, and Yahoo are U-Type firms who prefer unlicensed spectrum. To deal with this "free-riding," the writers experimented with auctions equipped with "a simple set of rules [that] enables the auctioneer to assess the value bidders place on having one or more blocks of spectrum designated to licensed versus unlicensed operations." In addition, companies that own spectrum can also file for waivers to modify the FCC rules if they sell spectrum.