 My name is Michael Calabrese from the New America Foundation. I direct our Waterless Future Project, which is part of the Open Technology Institute. And we're here to talk about spectrum auctions, the design, the conditions, the rules, and whether and how they can promote more mobile market competition. And we have a really great lineup. We'll begin with a bipartisan conversation between Reed and Chip in just one moment. And then we have a panel of both economists and analysts looking at this primarily from an economic perspective. And then Tom Power from the White House will be speaking. We have lunch coming, and a final panel of carrier and consumer advocates. In fact, both panels have both sides of the equation. So it should be quite interesting. As our invitation said, there has long been a tension between the broader public interest in conducting spectrum auctions as a means of promoting competition, innovation, and consumer welfare, and the lure of lucre, the lure of billions of dollars in one-time auction revenue. And probably no more so than when some of that revenue is earmarked for an important purpose like a nationwide interoperable public safety network. And so for the TV-band incentive auctions, the first $7 billion in net proceeds is earmarked. Although not just from the TV incentive auctions, but from a whole parcel of auctions that will occur over the next two years. So I think one thing you'll be hearing about is whether, in fact, for the incentive auctions at least, there will be any, you know, there will need to be, whether first net will need to rely on that auction, in particular for any of its revenue, because there should be at least, and well, certainly 50 megahertz of very valuable AWS-3 spectrum, likely to be auctioned ahead of it. At least that's a course that the FCC is on today. But one thing that I always, in fact, the folks at the FCC get tired of me pointing out, perhaps, is that if you look in the Communications Act itself in Section 309-J, which authorized auctions back, in fact, in the Reed-Hunt era, and Reed can talk a bit about this. But it said that, you know, the primary purpose, it directed the FCC to design auctions primarily to promote competition, innovation, and consumer welfare, and only secondarily to generate revenue. In fact, it explicitly prohibits, in a separate section, explicitly prohibits the FCC from making a public interest finding in the design of auctions based on the expectation of federal revenue. So that sort of adds further to this tension between, gee, can we get a quick fiscal fix in tight times versus the longer term view about the structure of the market, what's good for consumers, for competition, for innovation? And one final thought I'll add, since I think it's, at least in theme, a good part of what Congresswoman Eshew and Senator Moran, who also is trying to get here, he can't make it right at the beginning, but is going to try to stop in to make remarks. But with both of them, you know, I know one to emphasize the importance of competition, and it just so happens that our new chairman of the FCC, Tom Wheeler, when he had his first day on the job, I guess it was the beginning of last week, his speech to the, you know, he's assembled all the FCC staff, and in his speech to that, I mean, he emphasized competition. He said, today we are in the midst of the fourth great network revolution. He said the competition drives the benefits of these networks, and it's a really interesting speech I would commend it to you. He said that during my confirmation hearing, I describe myself as, quote, an unabashed supporter of competition because competitive markets produce better outcomes than regulated or uncompetitive markets. Yet we all know that, and he went on to say, yet we all know that competition does not always flourish by itself. It must be supported and protected if its benefits are to be enjoyed. This agency is a pro-competition agency. So what exactly that means? We have a chance right now since his days in office are early to, you know, try to read some substance into that. What does it mean to be a pro-competition agency when it comes to auctions in 2014, 2015? So with that, I don't know if Chip and Reid, if you wanna come up, we should have you in armchairs, but given the room, maybe you could just sit up here behind the table, we could pull the chairs out too. So we passed our bios, so I'm gonna go into detail on these two illustrious careers, but I think everybody knows, well, Reid Hunt is currently the CEO of the Coalition for Green Capital, a nonprofit here in Washington, D.C., and a principal of our EH advisors. And he served as chairman of the FCC from 1993 to 1997, and Chip Pickering served six terms in the House, representing Mississippi's third district, elected at the ripe old age of 33. Chip served as vice chairman of the House Energy and Commerce Committee from 2002 to 2006, and is a member of the Telecommunications Subcommittee. So I am going to ask some questions to get this going. So, I guess as I was saying in the opening remarks here, we, looking at the mobile market today, what role should the FCC play to ensure sufficient competition? That's kind of the issue. So Reid, just to start with you, you published a paper at Stanford recently distinguishing what you call the modern role for an FCC competition policy. From both laissez-faire and traditional regulation. Can you explain the difference between modern, the modern and classic approach to regulation? How were you seeing that? Because I found that when you're thinking structurally, quite an interesting distinction. Thanks, Mike. Thanks to all of you for being here today. The paper that you're talking about is posted on the website of the Stanford Foundation. It was posted on the website of the Stanford Institute for Economic Policy Research. It was written by Greg Rostin and me, and it will be in its paper version in the Federal Communications Law Journal in December. What Greg and I wanted to think through for the benefit of maybe having a little impact on the new chair and his staff was whether or not there are sort of large conceptual differences between different schools of thought. As opposed to saying that the FCC always follows one sort of stream of consciousness that flows through time. Is that true, or are there really big differences? And what we concluded right around you all being the judge is that there are basically three schools of thought. One school of thought is the historic or classical approach that is actually embodied in the 1934 Act. So to go back before the lifetime of anyone here, including me, the initial approach to the problem of the Great Depression by the Roosevelt administration was to reduce supply. The view was that there was too much capacity in the United States and so that's why prices had dropped and so what they needed to do was raise prices by constricting supply. And so industry after industry, they promoted merger consolidation monopoly and then the creation of regulatory agencies that would govern those monopolies so as to set prices and most importantly, output. This was in telecom completely consistent with the wishes of AT&T that were memorialized in the famous Kingsbury deal approximately 20 years earlier. That's the classical approach. At the risk of offending some people who are friends in this town, it was our view that the net neutrality regulation resembles the classical approach because it considers the broadband network as monopolized or duopolized and then says let's have regulations that may in fact reach the price but definitely concern the terms and conditions of access. Alternatively, there are two other schools of thought according to us that one is the modern approach. The modern approach is the one that's actually memorialized in the 1996 Telecom Act which Congressman Pickering worked on from this vantage point as a staffer to the Senate Commerce Committee and then he was very involved in defending me against many slings and arrows while I was the FCC chairman implementing it and he had just gotten elected to Congress and later he can tell you that defending me was an impossible job but he did the best he could. But that act fundamentally said the following. In every sector within the jurisdiction of the FCC, we Congress would prefer to see multiple firms competing and not to see you in the business of setting rate regulation or output regulation or terms and conditions of any kind at all. In the same time period of course, the FCC was holding the first auctions and as Peter and others know because they were doing some of the early academic work at that time, the big choice was whether or not to maximize revenue by selling hardly any licenses. If you sell a monopoly license, you're gonna get paid a lot of money. If you sell the license to compete, each person is gonna end up paying you less for their license. This is semi obvious, but actually was the not always voiced fundamental tension in auction design. We chose competition. We went around the world advocating for competition. We went around the world and in the United States, we fought for a long time to take the following point of view. If we have lots and lots of licenses and the price per license goes way, way, way down, everybody's better off even if the pile of money that's collected for the internal revenue service for the treasury, even if that pile of money is less than it would be if you were selling a monopoly license. That's the modern approach. And then there's the Lacy Fair approach. So here I'm criticizing a different set of friends. Our view is that Chairman Powell and his successor Chairman Martin made a fundamental error in the early zero zeros and that is they assumed that different networks automatically compete with each other. They assumed they said often cable competes with telco, telco competes with wireless. Everybody competes with satellite and that's not a well-grounded, factually sustainable, provable assertion under normal antitrust principles. It might be the case in the future. It might be the case, in fact, if the FCC under Chairman Wheeler is able to get lots of spectrum out into the hands of the major carriers, they may well be able to configure their networks with LTE so that they can provide competitive internet access as against cable, as against DSL. And that would be a good thing. But it's contingent, this is my conclusion, on maintaining the modern approach to competition in wireless. So let me say in conclusion one last thing, one and a half last things. Here's the half last thing. I think Chairman Wheeler's had the best first Fortnite of any FCC chair in memory. He's been extremely clear about his commitment to competition and he has assembled a OSTAR cast and it's very clear, I think, even though I don't know the plan, it's very clear that he has a plan to progress step by step through a agenda that is characterized by backlog. This is a really, really good thing. It's gonna be necessary for the lovers of competition and those firms that really want the chance to compete to be very, very supportive because there are major spectrum issues coming up, which I would line up as follows, and this is my real conclusion. First, there's the two auctions that you mentioned, Michael, the H Block and the AWS 3. To the credit of the FCC, they have figured out that if they conduct these auctions in advance of the incentive auction for broadcast, they'll be able to use some, maybe a lot of the money to be able to pay down the required payments that came with the legislation authorizing the broadcast incentive auction. It would be really good if they paid it all down to zero because what Congress did in molting the incentive auction of revenue was a big mistake, big mistake and risks the failure of the auction, but the FCC has thought of a very smart way to hope solve that problem. There's another auction that's not been noticed much in Washington. The Light-Squared Bankruptcy Court is holding a private auction in effect as we speak. That will commence in about a week and it will be resolved by not later than February 15. We know that because that's the back-end date of when Charlie Ergen's Stalking Horse bid expires. So somewhere between now and that date, it will be some firm that comes out of that auction with some extremely important assets. It will be necessary for the FCC to shave all the hair off those assets or to say it another way, make decisions that have been postponed about whether or not that spectrum can be used for terrestrial wireless broadband. But from a policy perspective, everybody should agree Samuel Gumpers, the head of the AFL in the late 19th century, was asked what his policy was. He said, my policy is more. That is the right policy with respect to the spectrum being converted into commercial use. And this FCC has the chance to cause more spectrum to go into commercial use in just the next 18 months. H Block, AWS-3, the Light-Squared Spectrum and the Broadcast Auction. It has a chance to have more spectrum to go into commercial use than any other FCC in history in that short of time period. And that would be really, really, really good. Thanks a lot. So I'm gonna, I think we're gonna come back again to the, to the auctions and revenue question, but Reed, if I could just a real quick follow up and then go on to something for Chip, which is, what's your response, just so the people are clear on the distinction between the modern approach and, I guess what people think of as command and control. In other words, some of your, even on this paper that you just released, you have some critics who contend that the modern approach is nothing more than a kind of a dressed up command and control regulation. So what actually distinguishes it and makes it more market oriented? Well, the best example is the approach to wireless starting in the 1990s. So in the 1990s, all the folks with me and then all the folks with Chairman Canard did the following with respect to wireless. We preempted all state price regulation of wireless. A lot of states did not like that. They took us to court, we went. We said that all wireless firms would never be subject to retail price regulation by the FCC, at least as long as the industry structure was competitive. That's the first telecom service in the history of the United States where the FCC said there won't be any price regulation. Not at the wholesale level, not at the retail level. The next thing we did is we established interconnection rules between the wireless industry and the wireless line industry so that the network effects of the wireless line industry could be shared at almost no cost by the wireless industry. That meant that if you were a wire line company like Verizon, you didn't have a special advantage for your wireless company that the network effects advantage would be shared by T-Mobular and Sprinter or anybody else. One thing we didn't satisfactorily address due to a failure of vision that I would have to say was mine was the problem of special access. And that remains a lingering problem to competition which is still another thing on the overflowing plate for chairman William. Which is backhaul, right? Backhaul of special access. Okay. Yeah, that's great. I think that makes it more clear it's an entirely different type of pro-market regulation. Chip, you were first elected, as Reid said earlier, the same year that the Telecom Act was enacted and during your tenure in the commerce committee and since you've been very clear, I guess to use your own words because I love this quote that functioning free competitive markets give us greater growth, greater investment, greater innovation, greater consumer benefits and cause our economy to grow much more than monopoly markets. So are we at risk of returning to a mobile market with too much market power or too much consolidation and or something that sort of gets away from that ideal that you envisioned and if so, what sort of your top line policies to get us even further along with competition? You know, we were reaching a point or a tipping point of where we could possibly see over concentration in wireless markets. The good news, excuse me, the good news is that two years or three years ago, I think the trends of greater concentration and less competition began to be reversed. And the quote that you mentioned is a good example of what happens when you increase competition versus concentration. And when your policy objective is functioning markets and functioning networks, what is the result? So when AT&T and T-Mobile proposed a merger which had been a continuation of what Reed Hunt would call the laissez faire policies of the Bush administration and where we had intense concentration and reduction of competitive policy. So what happened when the merger was rejected? You see now four national networks, Sprint, T-Mobile, AT&T and Verizon, all building out LTE, all increasing their investments, all maximizing their investments. You see much greater consumer benefit in the marketplace as new pricing, new devices, new packaging of services. So intense competition has resulted with the highest innovation and the highest investment and the best consumer benefits that return when you choose competition over concentration. The other major things that have helped in the marketplace is data roaming. If you're looking at a light touch regulatory versus a heavy-handed command and control, data roaming allows for functioning networks, functioning markets. And so under the Genekowski commission, data roaming, the rejection of the merger, and then most recently another positive development for competition and functioning markets, functioning networks was the industry-led agreement on interoperability in the lower 700. So if you have these principles that have existed through 80s, 90s and are being restored today of pro-competitive policies, you're seeing actually the benefits in the marketplace in real time of what's happening with the 4G and the fact that we have a strong spread, a strong T-Mobile, a strong AT&T and Verizon with regional players and rural players, fighting for an auction policy that continues the maximum participation, maximum competition. And what I believe read is actually that when you structure an auction correctly, that it's not a mutually exclusive between revenues to the government and competition in the marketplace. I think that if you look at the 700 auction, where you had the greatest participation, you had the greatest revenue to the treasury. So more competition can raise more revenue and it can help achieve other benefits like public safety and the things that have been laid out in the act. So Reed, I'd like to go back again to the origins of the modern cellular market that you were just talking about. When you chaired the FCC, the cellular market began its incredible growth period with at least four carriers instead of two in every market emerging and falling prices and huge increases in minutes, obviously shrinking devices and everything else. So you mentioned a few of the policies that comprise this conscious competition policy such as the interconnection requirements with wire line, the forbearance on retail wholesale price regulation and so on. But I wanted to ask you about the auction policy in particular. So some of the most successful spectrum options of all time happened on your watch, despite fairly stringent limits on how much spectrum anyone carrier could acquire. So I just wonder if you could explain that a little bit, a little bit more in terms of how you came to have a, essentially a spectrum cap and the role that played and what difference that made. You know, so we get this job and Congress has passed the Cable Act of 1992, which is definitely a classical act meaning we want you to regulate price, we want you to regulate content, we want you to regulate everything about cable. And then one year later, Congress passes in the context of OBRA, the spectrum auction provision. And we knew that the Cable Act regulation would be extremely difficult to execute on well and would be extremely difficult to have anyone in Congress approve of, even though the vast majority have voted for the act. So Blair and I sat down and Blair said, really the only chance you have of ever doing anything good before you run out of town is figuring out the right way to auction the spectrum. And I said, thank you Blair, and now what do we do? And so we ended up getting directed to Michael Porter, a very famous professor at the Harvard Business School, and we asked him to come down and we gave him a little bit of a briefing and then we said, how many licenses should we sell in any given market? This is a true story. He said, you should sell one more than the market will bear because what will happen is that's the way you'll find out the equilibrium that'll be sustained by the market. And that one extra will be bought by somebody who will go bankrupt or they will have to sell because they can't penetrate the market. But that's the only way you'll find out the equilibrium in any market. He said, the government can't pick the equilibrium number in advance. All the government could decide to do in advance is pick a number that's too small and therefore diminishes innovation, reduces entrepreneurship, extracts rents from consumers and generally speaking is a bad policy. So that's how we decided to structure the auction so that in the auction it would be possible for as many as seven firms to have a shot at building a business in an urban market. In fact, in most markets, not that many bought licenses and rural markets where there was less revenue, a smaller number went off to the competitive battle by buying licenses in the auction but that's how we set the policy. And we knew and Porter predicted that what would happen over time is that that seven would consolidate as the market reached a saturation and maturity and the seven would be six and the six would be five. And then we knew also because Porter told us that in about 20 years, in other words, exactly more or less on schedule, it would be necessary for real political and thought-based courage to be shown. And that is there would be a point in which government would have to say the consolidation can't go on any further. So actually, from our perspective, this being a clear boom market with something like 25% penetration in the launch of digital for the very first time, it was absolutely clear that as many as seven firms would in fact compete in urban areas for a number of years and it would seem, it would be a boom era when prices would drop and firms would grow and revenue would grow and more people would get hired and what do you know, that decade was in fact the only decade since the 1960s in American history when income went up for every quintile of the American economic ladder and unemployment dropped to the lowest rate that we've seen in the last 40 years and the principal catalyst of all this growth was in fact the information communications technology revolution. I don't mean just the FCC obviously, but I mean the great takeoff of technology into competitive markets was the principal catalyst but everybody knew that the day would come when government would have to step in and say no mass to consolidation. That's what as Chip just said, the FCC and the DOJ did with respect to the ATTT mobile merger and that's why the decisions about the acquisition of spectrum, especially the below one gigahertz spectrum, that's why those decisions that are up to Chairman Wheeler are absolutely critical, absolutely critical. Here's what we know, we know that he has the courage to make the right decision and we know that he himself and his staff are amply informed about the right decision. So we really couldn't have better people there in those jobs. The decision still happened to be made. Reed, let me just clarify one thing about what you're saying about the seven licenses in each market that were part of the PCS auctions back in the 90s because I think many people aren't familiar with the whole history. So coming into those early auctions, you had certain companies, so the Baby Bells, for example, I guess what may be largely today's Verizon AT&T, they did have spectrum already in the 800 megahertz band, which was this very formerly TV spectrum actually that was initially reallocated for what was then analog cell phone service. And those were legacy grants of spectrum that in fact they received free and remain a cornerstone of their quality of service because they have that low band spectrum. So actually maybe we should, okay. We're all right. There are some seats. There's a couple reserve seats and yeah. So rooms getting crowded. I think folks can, there's a few seats along the walls here too if you wanna cross over. So in any event, so they had this legacy spectrum going in. So just to clarify, could those companies, they were limited then to just one of those licenses in each market? What were the legacy companies initially? The technique was to set a cap on the amount of spectrum that any one firm could have in the market. But the cap was a number derived from adopting the approach that Michael Porter described. And in the auction itself by the bidding firms would bid up to the cap if they wanted to and they could pay the price if they wanted to have that much spectrum. But here's the thing. So almost every business in the United States you don't have to get a license from the government to enter the business. You don't have to get a license to be in the semiconductor industry. You don't have to get a license to write applications for the iPad. You don't have to get a license for really almost every single business. A wireless is extremely unusual. The spectrum license grant is your ticket to be in the business. There is no other way to be in the business unless you're gonna follow an unlicensed technique. And in that era for the kind of service that was provided, nobody had the technological capacity to use unlicensed. So the way we thought about it was, it was about freedom, right? Meaning if you want to give as many people as possible a chance to start businesses you have to give them a chance to get licenses in a competitive process. But where, yes the aggregate number might be maximized but the individual license price would be minimized. And that was a decision about trying to support the hopes and aspirations of companies that didn't even exist. The biggest example of a company that didn't exist then but was born by the auction process is Sprint. So Sprint was a long distance company with a few local telephone companies. It reached an agreement with the cable industry to buy wireless licenses and build a whole new business. And time has passed, the cable guy's backed out, Sprint spun off the local telephone companies and now Sprint is a pure play wireless company principally owned by SoftBank. This is a fantastic story of business transformation. It's also a story of how if government sits the right framework it doesn't have to pick any winners. If it allows the spectrum below one gigahertz to go to competitive companies today as well as accommodating the needs of the two major companies it doesn't have to pick any winners in that story. It doesn't have to engage in any more strenuous regulation to promote competition. Just making it possible to get the spectrum should suffice. Chip, do you have any quick thoughts on? Yeah, or do you agree on what, you know, that the FCC really has a role in making sure that the public resource that's essential for this industry is not all in. You know, the couple hands. You know, the remarkable success of the wireless industry goes back to a decision this committee with two World War II generation members Senator Inouye and Senator Stevens on a bipartisan basis created and called for the competitive auction which then re-implemented. And if you look back over the last 20 years it probably has or is the most significant domestic economic policy that we've adopted over the last two decades. Probably you could say it is probably one of the most significant ever adopted in the history of the United States. Competitive policy drove the wireless networks that have been built, all of the mobile applications, all of the economy that has derived and all of the direct and indirect services and infrastructure and the culture and the way of life that is developed because of a choice to promote competition in wireless networks and to use the competitive auction process. And that only did Reed Hunt but then Bill Conard, Michael Powell, and Kevin Martin. We've had competitive auctions every since and in every one of those auctions at least on a bipartisan basis you can argue over whether each part of the auction over the last two decades was completely the best. But primarily they were all competitive maximizing participation of as many firms as possible and that is whether it is small, new entrant, rural, regional, national, everyone participated. And that is a true success story if you combine it with the other information age policies or modern era policies of the breakup of AT&T in 1983 which then led to the internet backbone infrastructure. And then if you look at the 1996 act combined those three big decisions have been the greatest catalyst for the economy that we now know and the culture of the way of life that we know. And that's what we need. There are some enduring principles that we should maintain both in telecom policy and auction policy. And at the heart of that is the successful principle we're gonna promote competition. And the good thing is that Chairman Wheeler and his team are committed to that, have more experience with that. And what I hope in this era that we will restore the bipartisan consensus that we've known for the last really three decades which is that you can promote competition, reduce regulation and increase consumer benefit and innovation and around those principles there's an American character trade that we can all support. Of course there's always a question, even if we all agree on that, how best to do it? So what I wanna ask next is, even the country's two dominant carriers concede the FCC has some role in ensuring that no carrier should be able to buy up all the spectrum at auction or otherwise. But AT&T and Verizon apparently would prefer that the FCC perform its review after the fact rather than through ex ante upfront regulation. In other words, just let it free for all in the auction and then you can come back afterwards and kinda look at how after the dust settled, do a review and say, okay, well, you have too much in this market and that market and you're gonna have to divest and let them choose how to make the vestiture. So Chip, from your point of view, as a conservative is an upfront rule, better and more efficient for business than after the fact enforcement? Well, which way would you go on that? If you look at, well, let's take for an example, a too big to fail. Okay, what is the mess been of trying to clean up too big to fail after the fact? So if you adopted a demonstrable harm, which is an after the fact test, we're just now digging out from the rubble of the collapse of too big to fail, which was a policy of intense concentration, reducing competition, consolidating all the risk. And it was a, as a Republican, we had a failed market cease to function and the cost and the consequence to the size and the scope of government, not only to mention the confidence in the market and the institutions. That standard is a horrible disastrous failure. If you do clear rules that create clear certainty, then the outcomes over the last two decades of what we've done in telecom policy show what a successful policy is. Why would we ever choose a failed policy versus one that's been demonstrated to be extremely effective and successful? Read clear upfront limits or after the fact, the adjudication and divestiture. So I think that this is a incredibly important point because it's essential that everyone understand that the after the fact ruling is a horrible, insane idea, not a close question. It's just, it has no positive attributes of any kind at all. Why is that? Because here's, and talk to this next panel about it because they're all auction method experts. So now you'll get the simple version. Pretend that Peter is ATT, Peter Crampton, the auction, brilliant auction designer right here and pretend that I'm a poor 14% market share competitive firm that really needs spectrum. And then we say there's, the DOJ will decide later whether or not the winner in the auction can have the spectrum. But just go ahead and bid like crazy. Okay, so Peter has much more money than I have. I just have a 14% market share. He's got three times that. He has this tremendous backhaul network. He's got this great brand. He's subsidizing his phones. He's killing me in the market. So we go into the auction, he outbids me. I can't possibly compete economically with him. He outbids me. He reads the DOJ's rules and it's extremely unlikely they're gonna let him keep the spectrum. What does he care? He gets it and he goes off to litigate with the Department of Justice about their rules. He takes them all the way to court. He spends two years in this litigation. Those are years in which I didn't have the spectrum that I needed to compete with him. That's all across to the country. It's all across to the model of competition. If the DOJ doesn't change administrations and sticks with its rules, the inevitable will finally occur two or three years later, which is he will be told that he has to divest the spectrum that he tried to buy in a method that will be deemed to be illegal. Then what? We go back and do the auction all over again or the second round bitter wins or what's the new rule? It's a complete mess. Or Peter's betting that there's a change in presidential administration and a change in DOJ policy and somehow he gets away with using the auction to cement monopoly forever. There's nothing about this story that holds any water whatsoever. Everybody knows if you just have a simple, easily applicable rule, totally predictable in advance, that's why we need the FCC to have a competition policy. Then the person who will legally combine the spectrum and is willing to pay the highest price is the one who gets it. Okay, amen. Since we're, that's a concise answer. Sorry, Peter, but I need to compete. Since we're almost out of time for the session, I just wanna bring this back to one last topic where we started a bit on this tension between revenue raising for the rest of the government versus other things like competition and innovation. And Reid, you once wrote that, and I think it might have been in your memoir about the FCC, you once wrote that a downside of auctions was the potential capital investment that gets taken from the sector. As necessary as the market forces of the bidding are, it does suck billions of dollars out of the sector. So how do you see the role of auctions today and what should be the role? I mean, you answered this a little bit before, but, and a little bit more on that tradeoff between raising money for useful things, like reducing the deficit or a first net and these longer term, the longer term structure of the market and its impact on the economy and consumers. So the reason we use money to decide who wins the auction is because that is our proxy for the firm that is going to be able to use the spectrum to create the most value. If we had some other proxy beads, beauty contests that seem to be better than money, we would be happy to use those because it's not a positive to force firms to have an extra cost for buying spectrum. However, money works as a sorting mechanism. It's just that what you shouldn't do if Congress, I'm sorry you did it, what you shouldn't do is also impose a tax on the process by saying, we won't use general revenue to fund the things like first net. Instead, you've got to get the money out of the spectrum auction, but what's done is done and the FCC will find a way around it. I want to ask you all to indulge me because I want to say something completely different before we all leave. There's a lot of interesting internet dialogue right now led by Larry Summers who gave a speech at the IMF a couple of weeks ago that has shaken up thinking among economists on the right and on the left. And what's the dialogue about? It's about the following. Is the United States right now in what the macro economists call secular stagnation? Are we on a trend line where we just cannot get a growth economy where the new normal is seven to 8% unemployment and a persistent long-term unemployment for huge swaths of the demography, kids under 30, people over 60? That's what Larry said might be our condition. And the macro economists talk about it in terms of the natural interest rate being negative and if it's below the zero bound there's no way out of it. Here's what I want to ask you all to let me drag out of history on this topic. In the early 1990s, President Clinton, Vice President Gore asked me and others to go to Japan and talk about secular stagnation. Because when Larry was giving the speech two weeks ago he said, are we the new Japan? But we had these conversations with the Japan that was suffering this at the time. And I wasn't alone. Charlene Barshevsky, a whole bunch of people went and here's what we said to them. You're missing the golden age of digital. You are taking no structural measures in your economy that open your economy up to entrepreneurship and to competition and to capital investment in productive activities. They said, that's absolutely right. We have one monopoly tell come from we don't want to have a competition. That was called NTT, right? We don't want that competition thing. We're spending all our money on nonproductive public works products, huge dams and roads that in fact we don't really need. And this was the Japanese spending plan to get out of their slump and it did not work. About nine years later, Japan said, that isn't working. Now we're at the end of the 1990s. Why don't we unbundle the telephone network and we'll have competition and we'll start to have liftoff and that's the genesis of softening. All I'm saying is this, the FCC, a little old FCC has the ability to make a significant contribution to curing the problem of secular stagnation. It's a big thing. It's a big thing. Why do I believe that's the case? Because of what's happening in technology just outside this discussion. And here's what it is. All the rules of data is being gathered in the cloud. Everybody talks about the cloud. Here's the most important thing to know about the cloud. The amount of data in the cloud is doubling every two years. Doubling every two years. This is a prodigious amount of information and because of the invention of new software techniques known generally as Hadoop that allowed the very cheap manipulation of unprocessed and unstructured data. Because of all that, there are hundreds of firms eager to take all that information and to deliver services that are simply going to be fantastic. And they are trying to get the answers, the data from and the answers to client devices that are still following the Moore's Law Curve where price and performance doubles every 18 months. We got the data doubling every 24 months and the performance capabilities of the smartphones and the tablets doubling every 18 months and there's a bottleneck. There's a constriction because Shannon's Law tells us that spectrum cap capacity doesn't double every 18 months or every 24 months. So this role that the FCC has to play is so immense important because they have to take this constriction in the wireless access networks and make it go like this so that it can be big enough to accommodate all the data in the client and all the desire to have that data in the client devices and what will flow when this constriction is released is a suite of new products and services that range from entertainment to electronic healthcare and electronic education devices. It's gonna be absolutely fantastic. And we aren't gonna have this, you know, a violin playing about secular stagnation because this sector will have shown the way to have real growth. That's what I think. It's great. The stakes are as high as they were 20 years ago again. They're higher because this slump is worse. Chipping and closing thoughts because we need to move to our next panel. Now just to echo Redan's view that if we get our telecom technology policies right, it can be a great catalyst to economic growth. It can help us achieve multiple objectives as it relates to the budgets, to the deficits, to public safety. But most importantly, it can create in a comprehensive way and I believe that this chairman will view telecom policy, not just in the wireless space, but across all networks. How do we have what I call a light touch that gives us functioning markets and functioning networks, which in essence is that all networks interconnect. They interoperate and it creates the largest pro-market, pro-growth, capitalist expansion of economic efficiency and innovation and investment. And I think this chairman is uniquely situated having been part of the cable industry, and is it empathy? Part of the wireless industry as it came of age and was pro-competitive. He has a great team around him. And I think that we can recreate the bipartisan consensus that our country enjoyed around competitive principles and policies. Okay, well thank you.