FCC report could help clarify reverse auction plans

The Federal Communications Commission on Friday took another step toward its goal of awarding Universal Service funding based on a reverse auction. The commission issued a technical paper recommending several reverse auction requirements based on the experiences of Chilean and Indian regulators who have used reverse auctions to award funding for telecom projects.

Recommendations include minimum technical requirements

Among other things, the report authors recommend that the government should establish a method for calculating the maximum subsidy available per project and specify minimum technical and financial requirements for bids. Such recommendations appear to be aimed at calming the fears of reverse auction opponents who have argued that a reverse auction would result in a “race to the bottom” in terms of service quality.

RCA unconvinced

But one industry association that has opposed the reverse auction process immediately said it was unconvinced by the new report. “This race to the bottom mechanism only encourages anti-competitive conduct, including blocking support to competitors or off-setting contributions,” said Steven K. Berry, president and CEO of the Rural Cellular Association.

Although several small telco organizations have voiced opposition to reverse auctions, RCA members are the ones that will be most immediately impacted, as the initial place reverse auctions are likely to be used is in selecting recipients of funding from the FCC’s proposed broadband mobility fund.

“As an alternative, we recommend using a properly structured cost model to target support to continue the success story of the rural wireless community,” said Berry.