A Rigged Auction Derailed


Using government power to help the powerful is a bipartisan tradition, as we've learned watching the brawl over a Federal Communications Commission wireless auction. The good news is that Republican Chairman Kevin Martin's recent attempt to rig the auction was derailed at the last minute, but the same political forces will be back in the Obama Administration.

We say this with confidence because we've learned that one of the politicians lobbying Mr. Martin was none other than Barack Obama's nominee for Labor Secretary, Congresswoman Hilda Solis of California. In an October 3 letter, she urged Mr. Martin to move ahead quickly with an auction with rules that would have benefited a single company, telecom start-up M2Z, at the expense of other bidders.

She did so by playing the race and class cards, suggesting that the auction would make Internet broadband more affordable for poor Hispanics. "As the first Latina to serve on the House Committee on Energy and Commerce, and a Member of the Subcommittee on Telecommunications and the Internet, I am very concerned about our country's stark broadband divide," she wrote.

You have to give her credit for nerve. The way to increase Internet access and affordability is to promote competition to spur investment and keep prices falling. Experience shows that a rigged spectrum auction slows the process of getting licenses into the hands of those companies best able to put the airwaves to use. It would also cheat the Treasury out of the higher revenues that a clean auction would garner.

Far from aiding the Hispanic working class, Ms. Solis's letter was designed to help M2Z, which is backed by John Doerr, a Silicon Valley venture capitalist and donor to Democratic politicians. In a December 9 letter to the FCC's general counsel, M2Z vice president for regulatory affairs Uzoma Onyeije explicitly cited a letter from Ms. Solis to the FCC endorsing the auction.

We're happy to say Mr. Martin scrapped the proceeding following intervention by others in the Bush Administration. Commerce Secretary Carlos Gutierrez sent a pointed letter to Mr. Martin urging the agency to auction off the spectrum to the highest bidder without conditions that favor a single company. But this fight isn't over. Although Mr. Martin canceled this month's meeting, he's left open the option of holding an FCC vote on his proposals before leaving his post next month. And if he fails, Ms. Solis will soon have even more power inside the Obama Administration to assist the rich and well connected at the expense of all Americans.


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