AT&T, T-Mobile at Odds on Wisdom of Proposed 'No Excess Supply' Rule
T-Mobile submitted a white paper to the FCC supporting the agency’s proposal to not allow bidders in the forward part of the TV incentive auction to reduce expressed demand to a point where aggregate demand in a market would fall…
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below aggregate supply. T-Mobile said this “no excess supply” rule would mean a more efficient auction. The proposal “offers a common-sense limitation on bidding activity that helps ensure bidding satisfies the Final Stage Rule while providing a meaningful safeguard against anticompetitive or predatory auction behavior,” T-Mobile said. “Allowing bidders the unrestricted ability to withdraw bids would encourage disingenuous bidding, impede price discovery in the auction, create the opportunity to ‘bid up’ other bidders to raise competitors’ prices and threaten the success of the auction.” In a May paper, AT&T argued against the rule. The proposed rule “would interfere with the normal functioning of a multi-good auction process, under which bidders can freely adjust the quantities they demand as prices rise,” said a paper written on AT&T’s behalf by Philip Haile, professor of economics at Yale University. “This rule would directly block efficient reallocation of demand during the auction. In doing so, it would also create substantial exposure risk for bidders who, when hoping to acquire a pair of complementary licenses, may find themselves instead forced to buy a single license at a price exceeding its standalone value.”