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Frontline wants competition through "zoning regulations?"

The Washington Post gave a lot of "free" ink to former FCC Chairman Reed Hundt today to push for his Frontline Wireless corporate welfare scheme. The article also provides a "bay window view" of Mr. Hundt's perverted view of "competition."

  • Mr. Hundt said: "We're asking the FCC to place conditions on the sale of the license, just like zoning on real estate."
  • Competition through zoning regulations!
  • This captures the essence of Mr Hundt's "market" views. He has always thought "competition" was much too important to be left to the marketplace.
    • Mr. Hundt's entire tenure as FCC Chairman was characterized with a deep distrust of free market forces and a fondness for writing very detailed regulations that heavily tilted the playing field to guarantee his desired outcomes.

Now that his company has $3b in capital and is prepared to raise up to $10b in the next five years, according to the Post, why is he so afraid to compete in the auction like everyone else?

  • Market auctions are the ultimate in competition. The company willing to take the most financial risk to earn a return wins the spectrum.
  • Mr. Hundt's Google gaggle of investors could easily bid what it takes to win the auction and then they could make a free market decision to offer net neutrality if they so wanted to -- no regulation required. If net neutrality is such a great and innovative business model why don't Mr. Hundt and Google put their money where their mouth is?
    • Could it be that their high-minded net neutrality talk is just a corporate welfare scheme to win the spectrum at a deep discount so they can win a big financial windfall at taxpayers expense?
  • What Mr Hundt really seeks from the FCC is special corporate welfare zoning regulations that would ensure that only Frontline Wireless would win the spectrum.
    • With Mr. Hundt's requested net neutrality regulation conditions, that part of the auction would be transformed into a subsidized government grant of spectrum at below market price.  

  I was glad to see that the Post at least included in its article that Mr. Hundt oversaw the NextWave debacle where the FCC flubbed to auction and allowed 30 MHz of prime spectrum to lay fallow for almost a decade because it screwed up auction regulatory conditions not too dissimilar to what Mr. Hundt is recommending again for Frontline Wireless.

  • The Post quoted Mr Hundt: "When you hold an auction that is an economic catastrophe, you spend the rest of your life apologizing for it."
  • The clear implication is: why should we trust Mr. Hundt this time when he obviously has not learned the lesson to let auction competition, not regulation determine the outcome?
  • We will soon see if the FCC learns from past mistakes.