Speaking at a spectrum management conference, FCC Commissioner Jonathan Adelstein had strong words for the FCC's recent attempts to reform the Agency's system for auctioning off wireless broadband spectrum.

"I worked hard to put in place policies and rules that would promote opportunities for all carriers in the auction, such as a more diverse group of license blocks," Adelstein told an audience at the National Spectrum Managers Association, held in Arlington, Virginia. "But I'm afraid that recent decisions made by the Commission may substantially undercut that effort."

Adelstein's May 16th remarks were not his first public criticism of recent reforms of the upcoming Advanced Wireless Services (AWS) auction, scheduled for June 29th.

On April 24th, the FCC announced that if a small business, or "Designated Entity" (DE), leases or resells 50 percent of their new bought spectrum to another company, they will lose their special small business discount and be required to make "unjust enrichment payments" to the FCC, depending on the number of licenses involved.

A day later Adelstein noted that the Commission did nothing about DEs that critics say are financially backed by big wireless companies or venture capital firms. On May 12th, a consortium of ISPs and telecom consultants filed a complaint with the FCC charging that AT&T, Verizon, and T-Mobile create "false fronts" during auctions to win spectrum discounts (see LL-FCC, May 12, 2006).

At the Spectrum conference, Adelstein repeated his concerns.

"It truly was stunning that my colleagues did not take action to specifically address the single biggest issue facing the DE program given the overwhelming support in the record to do so," he said. "We missed a real opportunity to shut down what almost everyone recognizes has the potential for the largest abuse of our DE program."

The Commissioner also questioned an earlier FCC auction change. Consumer groups and some telecom firms complain that Wireless bidders in open information auctions sometimes offer bids that are really signals to other companies.

They do so "to coordinate bids," in the FCC's own words, or to "retaliate against bidders that do not cooperate, or engage in other undesirable strategic behavior."

On April 12th, the Commission ruled that if not enough firms participate in the auction, the FCC will conduct a "blind bidding" sale, that is, the auctioneers will not release the identities of the players until the auction is concluded (see LL-FCC, April 12, 2006).

Adelstein questioned this reform as well.

"I was originally told by our staff that small companies would benefit from our blind bidding proposal because it would protect them from becoming victims of larger carrier bidding strategies," he said on May 16th. "In an interesting twist, it was the smallest carriers who spoke the loudest against the proposal. They raised legitimate concerns about access to real time auction information that significantly informs their auction bidding strategy. They pointed out to us that this is a completely new spectrum block with uncertain business models and equipment opportunities."