[ Text Version | WordPerfect Version ]

May 21, 1998

Separate Statement
Commissioner Susan Ness

Re: Use of the 220-222 MHz Band, PR Docket No. 89-552

I write separately to repeat my long-held view that the Commission should not change its rules on the eve of a spectrum auction.

I strongly support the policy, embodied in the Omnibus Balanced Budget Act of 1993, of assigning radio spectrum through the use of auctions. But reliance on market mechanisms only works if one pays attention to the realities of the market. Business people don't just show up at an auction, ready to bid; first, they need to formulate business plans and secure financing.

Changing the rules for the service on the eve of the auction throws off business plans. While I understand how circumstances have changed and have no particular objection on the merits to eliminating, on our own initiative, the spectrum efficiency standard for 220 MHz services, I also see no compelling need to eliminate the efficiency standard at the eleventh hour or to further complicate the already tortured history of this band.

With or without a prescribed efficiency standard, as a result of the competitive bidding process, licensees will have an incentive to be efficient in their use of the spectrum. But this change in our rules will inevitably necessitate reevaluation of business plans by potential bidders. Some who planned to bid may no longer be interested. Some who planned not to bid may suddenly wish to, but lack the time to formulate a business plan and to secure financial backing.

The only thing worse than changing the rules of the game right before it is played is to change the rules after the fact, as has also occurred with distressing frequency. Of course, new facts or new thinking may justify adjustments, but at a minimum we need to think carefully about the effects of any changes on the operation of market mechanisms. In my view, we can and should do more to avoid auction-eve -- or post-auction -- changes in our rules.