FCC spectrum auction bidding ends at $19.6B

http://www.reuters.com/article/us-usa-wireless-auction-idUSKBN15P2QF

by prostoalex • 9 years ago

52 61 9 years ago

reuters.com

NateyJay• 9 years ago

Does auctioning channels off to the highest bidder result in the best use of the spectrum?

tptacek3• 9 years ago

http://marginalrevolution.com/marginalrevolution/2013/09/coa...

Spectrum auctions are one of the more famous results of economics theory, and the first thing that people think of when they think of Ronald Coase (who won a Nobel and is up there in the pantheon of 20th century economists).

baddox• 9 years ago

Depends what "best" means and what you think about markets and regulations.

upofadown2• 9 years ago

Not really. It tends to lead to a situation where in a particular area you can only use the spectrum that is owned by a service you subscribe to. So if you are on Big Bobs Phonz when it is busy (or you would just like more bandwidth) you can't pay to use Medium Sally's Wavz spectrum without a separate subscription. In rural areas things can get fairly weird, where every major company has to provide coverage (and redundant equipment) to ensure any sort of continuity of service.

So the problems are non-optimal spectrum utilization and pointlessly redundant cell sites.

You could extend the idea of municipal owned last mile broadband to wireless as it is more or less the same problem. But then there would be no point in having spectrum auctions. Governments have gotten used to the money they get for awarding spectrum monopolies so I don't see the municipal wireless idea going anywhere anytime soon.

revelation3• 9 years ago

An extra $20B in income for the Government that the carriers will then spend the better part of the next 10 years recouping through their usual business practices like maintaining quasi-monopolies, ridiculous usage limits, massive over-subscription, anti-net-neutrality practices like "most favored streaming service" and other regressive, growth-inhibiting moves.

There is this "pure capitalist" ring to allocating spectrum through auction but the practical effects have been devastating. It's trading $20B in income now for stifling the growth that dumb, unrestricted, fast mobile pipes would offer to the remainder of the economy.

tptacek3• 9 years ago

That's what the regulators told Coase when he proposed auctions.

The problem with this argument is that it presumes spectrum would be allocated productively (or "fairly") in the absence of an auction. But that historically wasn't the case, and isn't the case with any number of other scarce resources doled out by governments.

Even among good-faith claimants, there is competition, obstinacy, incompetence, and waste; those things are fundamental to all of enterprise. That's true of auction winners as well, of course, but at least we're (a) getting revenue for the resource, and (b) forcing people to put their money where their mouth is: you don't write a 9-10-figure check without having at least some earthly clue of how you'll put the thing you bought to use.

revelation3• 9 years ago

Yet we've put a bunch of 2.4 GHz spectrum out there with essentially "here you go, please channel hop, use up to those dBm" and it certainly has been a vastly, vastly more productive use than any single one of those carrier spectrum auctions.

And why did that happen? They probably figured it was worthless to auction given the attenuation. So if something nets minus dollars in your auction scheme but trillions of economic value, hey, I think we're still waiting for some data to come in on this thesis.

heisenbit• 9 years ago

Yes, this is $20B invested into virtual claims that could be invested into networking assets.

I still remember the exact place I stood in the locker room in 2000 when my manager remarked similar about the €50B auction in Germany in the wake of similar ones across Europe. It struck me odd. Over the next decade he was proven right. The debt load forced a consolidation of carriers and then suppliers. The effects are still visible in balance sheets.

The problem is that the amount bid is not so much a function of reasonable expected profits but more a question of how much money can be raised. Medium to long term profitability risks are discounted by managers as not bidding has an immediate impact on themselves.

DannyBee4• 9 years ago

So, basically, this was a complete and total bust:

  In June, the FCC said sellers had initially sought $86.4 
  billion for 126 megahertz of television airwaves taken from 
  broadcasters to be sold for wireless use.

  Many analysts had expected broadcasters to earn 
  substantially more in the auction, with some forecasting in 
  2016 $30 billion in proceeds.

This is the spectrum that would have been used for the "tv whitespace" wireless (except now you could do it amazingly better with clear spectrum)

I guess the analysts don't realize that a lot of these guys don't need tons more spectrum, they just want to prevent others from using it.

Don't worry though, our FCC chief is on it: "FCC Chairman Ajit Pai said the closing of bidding is a "major milestone," adding the spectrum will boost wireless service."

No idea how, since even with the fcc rules around use, they'll do pretty much nothing.

Hey, you know what also would have boosted it? Having the people who actually gave a crap, and were trying to make wireless available to everyone by using this, do it. Or worse, we'll see wonderful devices that only work with specific carriers.

To be fair though, congress literally forced them to auction it after massive lobbying from telcos and isps. I'm sure though, that those same congressman will not remember to ask why the hell the auction did so badly if they needed the spectrum so much.

This spectrum all would have been better off in the hands of people trying to actually boost our economy, and it would have been worth a lot more in 20b to help free people from the iron grip of broadband non-competition.

tptacek3• 9 years ago

I believe you in this specific case, but how do you devise a rule for this that works in the general case, or a rule that determines when we should switch to the "let Google or companies it blesses" special case from that general case?

mjw1007• 9 years ago

It would be more interesting if the article had reported the median analyst forecast.

Given that it doesn't go as far as to say "most analysts had expected substantially more", it seems plausible that this the result is in fact in line with expectations.

DannyBee4• 9 years ago

"Given that it doesn't go as far as to say "most analysts had expected substantially more", it seems plausible that this the result is in fact in line with expectations. "

I'm a bit lazy ATM, but when this boondoggle was sold to congress, the median forecast was done and was much higher. The broadcasters also were forecasting, as part of their earnings, much higher numbers.

rayiner2• 9 years ago

It would be really visionary to take a big chunk of spectrum like this and set it aside as a next gen unlicensed band: http://www.comlab.hut.fi/studies/4210/papers/8_2.pdf.

leereeves• 9 years ago

Having the people who actually gave a crap, and were trying to make wireless available to everyone by using this, do it.

Who are these people, who might "help free people from the iron grip of broadband non-competition"?

kogepathic• 9 years ago

Who are these people, who might "help free people from the iron grip of broadband non-competition"?

Ideally, the FCC. By licensing the spectrum to smaller providers with guarantees for service (e.g. we connect X customers in Y years or forfeit the license) and at very affordable rates (or free).

Except the new management at the FCC doesn't seem to be at all concerned with making things better for the average citizen...

DannyBee4• 9 years ago

The whitespaces project the FCC was involved in doing, for example, was open, and involved a very large number of non-telcos who wanted to produce devices, and in fact, produced working prototypes. It was open. Anyone could do it as long as they could produce a device that met specs.

I get your sarcasm in that you clearly seem to think that everyone just wants to lock everyone else in differently, but at least, the other envisioned use for this spectrum was, in fact, similar to WiFi today. Unlicensed use by spec compliant devices.

I don't think you can reasonably argue that 2.4ghz/5ghz wifi would have been better off being auctioned off.

In fact, wifi would be even better had it had more spectrum to work with.

tw04• 9 years ago

I've got a small local ISP by me that runs fiber to the home in rural areas and wifi as well. Them for a start. I would imagine Google and Elon musk if the price were right.

wtf_is_up• 9 years ago

I love how you managed to shoehorn a dig at Ajit in there. Very creative, 8/10.

DannyBee4• 9 years ago

Uh, he's the one claiming success out of failure? Even his fellow republican commissioners all but called it the same.

IBM• 9 years ago

I don't understand, if it would be worth a lot more than $20 billion to someone why aren't they bidding for it? I find it hard to believe that anyone is going to sink $20 billion to "prevent others from using it".

joecool10297• 9 years ago

The major players already have enough low-band spectrum. Capacity issues will be solved by densification and securing mid-band spectrum for 4G and high-band spectrum for 5G deploys.

The smaller players were the ones primarily interested in this auction, allowing them to roll more coverage to rural areas with less towers.

Most of the spectrum has some build-out requirement, so no.. it wouldn't make much sense for a company to sink $20billion into it to prevent others from using it.

There's other ways to screw over owners of spectrum. Follow the history of the 700A spectrum in the US. AT&T owned most of the lower 700mhz licenses (B and C but not A: that was T-Mobile and other rural carriers). Someone got someone to issue a report saying 700A might interfere with channel 51 television broadcasters. AT&T and the vendors created a subset band called band 17 that was wholly incompatible. This essentially screwed over the other carriers and caused a multi-year delay in band 12 deployment in the US.

Article on it: http://www.fiercewireless.com/special-report/will-fcc-requir... FCC report on the topic: https://ecfsapi.fcc.gov/file/7021920804.pdf

closeparen2• 9 years ago

Fun fact: TV whitespace is where the wireless microphones used in most live events operate. Very large, big-budget sound companies and venues can get licenses, run extremely expensive digital gear that manages to be reliable while making efficient use of bandwidth, and refresh their inventory every few years. They'll be fine. Your average high school or nonprofit theater will not.

jimrandomh• 9 years ago

Was any of this allocated to unlicensed/consumer usage? There's a serious shortage of uncrowded public spectrum in cities, and a few good channels for 802.11something would do a lot more good than giving the same spectrum to a cell phone carrier.

abpavel• 9 years ago

That's why carriers wanted this spectrum - so noone else can use it and pose a risk to status quo "Want wireless? Go to established carriers."

prostoalex4• 9 years ago

In the 2.4 GHz spectrum the frequencies immediately above WiFi are owned by a Bay Area satellite company GlobalStar. The current plan is to monetize that via a nationwide (planet-wide) satellite network

https://www.wirelessweek.com/news/2016/11/sprint-board-globa...

mdasen2• 9 years ago

Of the 84MHz that's going to be cleared, 14MHz of it is going to be for unlicensed use (https://www.fcc.gov/about-fcc/fcc-initiatives/incentive-auct...).

To be fair to the wireless carriers, they're paying for it. The broadcasters wouldn't give up their spectrum without getting paid to relocate or shut down. They wanted around $10B to clear the 84MHz (initially they wanted $86B to clear 126MHz). Without those billions, that spectrum would continue to be used for broadcast television. While wireless carriers might not be the best thing in society, I think they'll use that spectrum better than broadcasters who are heavily under-using that spectrum.

Personally, I wish that the FCC licenses were temporary and so they could re-evaluate every 20-50 years without having to do so much wrangling, but that also has problems in terms of corporate planning, consistency, device obsolescence, etc. and would get very political. Any holder of a temporary license would argue that their spectrum shouldn't be disrupted because they do such a great service to society.

wbl• 9 years ago

There is a secondary market. If you buy out a licensee and say "hey, I can offer newer more profitable service with similar emissions" the FCC will let you.

NelsonMinar• 9 years ago

This is the auction to consolidate television broadcasts, to free up some UHF space for other uses. Here's some background beyond what the article says. If anyone has a summary / picture of exactly what frequencies become available and what their bandwidth is, I'd love to see it.

The FCC's page for the auction. Includes a nifty dashboard view of the bidding. https://www.fcc.gov/about-fcc/fcc-initiatives/incentive-auct...

The Wikipedia article has some of the history: https://en.wikipedia.org/wiki/Spectrum_reallocation#Broadcas...

drmpeg• 9 years ago

http://www.tvtechnology.com/Portals/0/TVT_20141119-1515.jpg

revelation3• 9 years ago

It seems impossible to find what spectrum they have actually sold here, just meaningless bandwidth numbers (I'm happy to sell you 1 GHz of spectrum any time, I'll tell you the carrier).

Apparently it is UHF channel 30-51, or 566-692 MHz.

upofadown2• 9 years ago

Actually, UHF TV channels 38-51 (614-698). Channel 37 is the radio astronomy hole which now gets to be part of the guard band between TV and wireless. So in one sense the outcome is fairly optimal in that there is less spectrum wasted on the guard band.

amelius• 9 years ago

What happens to signals that are technically within the spectrum, but are being transmitted in a "directed-beam" between two locations?

boznz• 9 years ago

its like speeding.. it's fine so long as nobodies watching.

If your low power and nobodies inbetween or in the overspill region then keep calm and carry on, if not reconsider getting licensed modems

ericabiz• 9 years ago

Is there any plan for the FCC to address Wifi issues with spectrum auctions like this?

Right now, Wifi is becoming practically unusable in large apartment complexes or open spaces like conference centers due to the large number of devices competing for spectrum. I'd be interested to hear if there are any FCC plans or open standards that could resolve this.

tedunangst• 9 years ago

High frequency wifi like 60ghz that doesn't go through walls.

throwaway2048• 9 years ago

if only my apartment didnt have walls.

davidf18• 9 years ago

It is good news that the auction raised less than expected. It shouldn't be auctioned at all. The cell phone providers simply pass on the costs of spectrum to customers. The government should want to make cell phone use as low-cost as possible to encourage its use.

zackmorris• 9 years ago

I'm a little unclear about this. Is this a lease or a sale? As spectrum is part of the commons, then amortized over forever the price should be, well, infinite.

joecool10297• 9 years ago

It's a sale.

FCC spectrum auction bidding ends at $19.6B

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