Last week I stacked the Federal Communication Commission (FCC) alongside such descriptors as ‘curmudgeon,’ while analyzing the need for regulatory reform at the agency primarily responsible for overseeing digital and telecommunications in the United States. In a radical shift of the narrative, internet news outlets were a buzz this week with the surprise claim that the FCC was departing from its cautionary demeanor to pursue a plan to provide the nation with an all-encompassing network of ‘super Wi-Fi.’ In the days since this initial blitz of coverage it has become clear that many of these initial reports were over-stated. Regardless, this demonstrates that the FCC must recognize that it is standing on the pulse of America’s digital future and should understand the greater context of its mandate.

The kindling wood for Monday’s media fire was a report from the Washington Post that suggested a lobbying battle taking shape between internet (and perhaps world) powerhouse Google, and telecomm service providers such as AT&T and Verizon. The report touches on FCC Chairman Julius Genachowski’s stated preference for buying back unused spectrum from television providers and making that spectrum available for the expansion of wireless network infrastructure in the United States.

Spectrum, a word many beltway commentators are itching to try out, is the term for radio airwaves that are managed and licensed for use by the FCC. The pivotal piece of most reform proposals is the upcoming spectrum auction, tentatively scheduled for 2014. The FCC is seeking to buy back extraneous spectrum that has been licensed out to television providers, and re-purpose these allotments for wireless access. A traditional auction would allow for telecomm providers to bid on these new licenses.

Despite the debate about how this process should progress, the need for this reallocation is certain. The traffic jam on current systems will only grow, likely increasing over 30 percent by 2015. Television providers, for their part, appear happy to part ways with their unused licenses for the right price. This presents the FCC with an opportunity, but how should this new digital framework be assembled?

Google and Microsoft aver that free bandwidth will lead to a boom for technological innovation. This effort is undoubtedly spurred on by the lucrative revenue to be generated from increased advertising spending on their sites accruing from the spike in traffic. These mega-tech providers offer the garage door opener as an example of the invention made possible by the FCC’s 1985 granting of spectrum access while Google touts its recent experiment in Kansas City as evidence of the possibilities for growth when greater broadband access is provided.

AT&T and Verizon, as pioneers of the 4G LTE frontier and contrary to Monday’s popular sentiment that they are trying to kill the internet, believe in the importance of this proposal. These potential participants argue, however, that the spectrum should be redistributed via auction to telecomm bidders willing to invest in the infrastructure and services necessary to take Wi-Fi into the future, rather than left to stagnate without private management.

The stakes are high for the FCC; previous auctions have netted nearly $50 billion, with estimates for the 2014 auction nearing $25 billion in revenue for the treasury. With economists’ excitement palpable, this discussion has not even scratched the surface of potential private sector investment in the development of digital infrastructure.

Ultimately, it appears that AT&T may win the battle but lose the war. The spectrum auction is on the agenda, but so is a growing movement to bar these large telecomm corporations from taking part. Put simply, this is a mistake.

The goal of this upcoming auction cannot be the blogosphere pipe dream of free ‘super Wi-Fi’. Instead the FCC has the opportunity to shift much needed resources into the hands of experienced development mainstays capable of fueling the 21^st century innovation that has highlighted this week’s discussion. The ‘free Wi-Fi’ reporting may have been exaggerated, but the FCC’s mission of reform is not. If the FCC bars AT&T and Verizon from participation in its spectrum auction, the agency will have used both hands to arbitrarily cap potential government revenue, while also denying American consumers the possibility of a well-maintained and developed digital infrastructure.