The FCC suggested keeping secret until the
sale is over which licenses bidders want and who has made
the highest bid for each license after some studies
suggested this would stop bidders from colluding and
signaling each other during an auction.
The FCC has not used anonymous bidding in about 12 years.
The auctions are electronic and usually last several weeks.
Normally, after each round of an auction the FCC reveals the
bidders' identity and the amount offered for each license.
In a February proposal, the FCC cited economists as saying
that a potential drawback to disclosing information is that
it could be used by bidders to signal each other or to
retaliate against each other.
FCC commissioners are due to vote on the proposal at an open
meeting on Wednesday, where they will also set rules on
smaller bidders partnering with bigger carriers. Typically
such rules are set by the FCC's wireless bureau.
Verizon Wireless, the No. 2 U.S. wireless carrier, and
public interest groups support blind bidding while the
largest U.S. provider, Cingular Wireless, other national
carriers and investors oppose it.
Verizon Wireless is a joint venture of Verizon
Communications and Vodafone Group. Cingular Wireless is a
joint venture of AT&T and BellSouth.
Rudy Baca, a partner at the Rini Coran law firm who has
followed FCC auctions, said collusion is not a major problem
and keeping information secret could be challenging. He said
the FCC tried this in the past with mixed success.
"Enforcement is just too difficult," Baca said.
Some carriers opposed to blind bidding, like T-Mobile USA,
have offered compromises such as providing results if
competition thresholds are met or at random intervals.
T-Mobile is a unit of Deutsche Telekom.
Private equity firms, which back many telecommunications
companies, have warned they would be less willing to back
bidders if data is withheld.
"In the absence of a solid basis for evaluation, financial
investors will either withdraw or reduce the amount of their
investments because they have been forced to factor in
additional elements of uncertainty and risk," Madison
Dearborn Partners and TA Associates told the FCC in
February.
Madison Dearborn managing partner Jim Perry met with FCC
Chairman Kevin Martin on April 4 in Chicago and reiterated
the company's preference for a "fully transparent auction
process," the firm said in an FCC filing on Monday.
But a group of consumer advocates last week urged the FCC to
approve anonymous bidding and limit partnerships between
smaller entrepreneurial bidders and big wireless carriers.
"Companies use well-understood bids and 'dummies' to buy
licenses cheaply in the same way bridge players use bidding
signals to 'bid' for 'game contracts' or 'pre-empt' the
other team," said the group, which included the Media Access
Project, Consumer Federation of America and the National
Hispanic Media Coalition. .
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