Why The White House and CTIA Don't Agree On Incentive Auction Revenue, And Why I Think Both May Be Wrong.

[Commentary] The White House budget proposed last week contains an estimate of about $28 billion from auctioning federal spectrum and giving the FCC authority to conduct incentive auctions. By contrast, the CTIA – The Wireless industry Association — and the Consumer Electronic Association (CEA) have published a study showing that the FCC could raise $33 billion from an incentive auction of the broadcast bands alone. So what gives?

The short answer is that spectrum auctions are extremely hard to predict, and incentive auctions are even harder to predict because we've never done one before. The longer answer is that because the White House is banking on the revenue as part of the budget process with real world consequences, they have therefore hedged against uncertainty by including an easier to estimate spectrum auction. CTIA/CEA doesn't have to worry about what happens if things don't work out, so they have basically put together an infomercial. Yes, CTIA/CEA claim they make “conservative” estimates, and some of their estimates are (relatively) conservative. But CTIA/CEA glosses over the much harder to predict questions and makes what I (and others) consider unreasonably optimistic assumptions on the points. Notably, neither CTIA nor the White House can answer the critical question: will enough broadcasters participate in a voluntary auction to make it happen at all. It is on this last point in particular that I remain profoundly skeptical.


Why The White House and CTIA Don't Agree On Incentive Auction Revenue, And Why I Think Both May Be Wrong.