The commission's two Republican members criticized several parts of the auction design, including the spectrum reserve. The spectrum rules will carve out the reserve from the spectrum least likely to be affected by interference by neighboring TV stations, leaving Verizon and AT&T to bid largely on spectrum with interference concerns, said Republican Ajit Pai.
Pai and fellow Republican Commissioner Michael O'Rielly opposed any spectrum reserve. "The commission shouldn't pick winners and losers," Pai said. "Rather, we should give all participants an equal opportunity to bid on what spectrum they want."
Not placing limitations on bidding would increase spectrum revenues and ensure that spectrum "flows to its highest value use," Pai added.
Pai also raised concerns about the FCC's plans to put relocated TV channels next to mobile spectrum to be auctioned. The FCC's band plan could lead to signal interference and could drive down prices paid, he said.
The Democratic majority rejected proposals from the commission's two Republicans as well as several U.S. lawmakers, trade groups and advocacy groups in designing the auction rules, Pai said. The commission's majority "has been absolutely convinced that it has all the right answers," he said. "As a result, there's been a stunning unwillingness to listen to what anyone else ... has to say."
FCC Chairman Tom Wheeler defended the auction rules, saying they are a series of compromises in a complicated auction.
"This is like a very complex jigsaw puzzle, except that nobody's ever put the puzzle together before," Wheeler said. "You don't have the advantage of the picture on the top of the box to say this is what it should look like in the end."
Critics of the auction design are arguing against it "in terms of the worst possible case," he added. The plan is a "good, balanced, logical solution to an incredibly complex, never-tried situation."
In addition to the spectrum reserve, the FCC established a 20MHz cap that any spectrum reserve bidder can win in small U.S. markets. That cap should encourage bidding by small, regional carriers, agency officials said.
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