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Government United States Wireless Networking

Bidding In Government Auction of Airwaves Reaches $34 Billion 85

Posted by samzenpus from the more-money-more-spectrums dept.
An anonymous reader sends word that the 2014 wireless spectrum license auction has surpassed $34 billion. "A government auction of airwaves for use in mobile broadband has blown through presale estimates, becoming the biggest auction in the Federal Communications Commission's history and signaling that wireless companies expect demand for Internet access by smartphones to continue to soar. And it's not over yet. Companies bid more than $34 billion as of Friday afternoon for six blocks of airwaves, totaling 65 megahertz of the electromagnetic spectrum, being sold by the F.C.C. That total is more than three times the $10.5 billion reserve price that the commission put on the sale, the first offering of previously unavailable airwaves in six years."
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Bidding In Government Auction of Airwaves Reaches $34 Billion More

Bidding In Government Auction of Airwaves Reaches $34 Billion

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  • If company A bids 15 million, and company B bids 14.5 billion and company C bids 6 billion, then all the Govt gets is the 15 billion from the top bidder, not the sum total of the bids

    • Re: (Score:1)

      by Anonymous Coward

      I would presume that this is the sum of the current top bids for each block, not the sum of all bids for all blocks...

      Don't worry, the costs for the companies will be passed onto the consumer.

      • why? your total would be far less that the GP's total? and it is way more impressive to report the much larger number, even knowing you will get far less.

    • Re:Not sure if it adds up (Score:4, Interesting)

      by vivian ( 156520 ) on Monday November 24, 2014 @06:11AM (#48447953)

      Either way you cut it, it's just another tax that gets paid by the end consumer, a big fat windfall for consolidated revenue.

      I think a much better way would be for companies to bid based on the value they bring to the end consumer public, with the company that promises the best value winning.
      If that company fails to deliver within some reasonable time frame, the spectrum should be passed on to the next best offer.
      Value wound be measured based on dollars per GBit that they agree to offer the end service for. (voice calls really should be priced this way too, these days - now everything is digital)

      if it really isn't practicable to implement something like the above, lt'd be nice to at least see the money spent on a fibre roll-out or other physical media based infrastructure.

      • Either way you cut it, it's just another tax that gets paid by the end consumer

        Exactly. Basically the headline could say "mobile internet tax much higher than estimated: $34 billion dollars".

      • Re: (Score:2)

        by pehrs ( 690959 )

        We tried that. It's called "beauty contests". There have been plenty of those, specially with the spectrum allocations in Europe the 1990ths.

        They tend not to give very good outcomes. It is much easier to hold companies to paying a certain sum than it is to hold them to promises, especially after a few years of restructuring and consolidation in the market. In many cases companies have been sitting on huge chunks of spectrum without doing anything, sometimes just paying the fines for returning the spectrum a

      • Re: (Score:2)

        by rtaylor ( 70602 )

        [b]I think a much better way would be for companies to bid based on the value they bring to the end consumer public, with the company that promises the best value winning.[/b]

        I believe Russia did something like this with their last spectrum auction. Companies received the spectrum for free (20 year lease or something) and made promises of certain quality of service and network capabilities in exchange.

      • Re: (Score:2)

        by jbolden ( 176878 )

        Well it isn't a broad tax. It is a fee paid by people who consume lots of bandwidth to people who consume government services. Those aren't necessarily (or likely) the same people. Using price as a mechanism to determine the best possible public use make sense in a capitalist society.

        As far as fibre rollout. That's an entirely different function and involves (with some overlap) different companies and different consumers.

      • Re: (Score:2)

        by khallow ( 566160 )

        Either way you cut it, it's just another tax that gets paid by the end consumer, a big fat windfall for consolidated revenue.

        Except that it isn't a tax.

        I think a much better way would be for companies to bid based on the value they bring to the end consumer public

        Which the current method provides. After all, why would the company or its end consumers pay this "tax", if a valuable service isn't being provided?

      • Good work! I'm getting my Ph.D. in economics, and mechanism design is one of my focuses. Not sure who's behind this, but what's the goals of the auction? There's no terribly good reason raising revenue should be one of the goals since it can be raised with other forms of taxation with less distortion; as you pointed out, a good bit of the incidence of this tax is going to be pushed onto mobile internet users in the form of higher prices, which is ultimately just another regressive tax most of us can't aff

      • Agreed. New Zealand auctioned off frequency and the result was expensive services few could use as frequency holders tried to recover the cost of the frequency. Auctions are stupid. Just allocate the frequency, then tax the resulting business.

    • True, but in this case, the top bids, combined, are $34B. In other words, if the auction ended today, the government would receive $34 billion.

  • When is the government going to auction off the fucking air we breath to the highest bidder?

    • Re: (Score:1)

      by jazzis ( 612421 )
      Real Soon!

    • Re: (Score:2, Informative)

      by N1AK ( 864906 )
      What do you suggest? That we leave the spectrum unregulated and whomever can put out the most powerful signal in an area gets, degraded by competiting transmissions, control of it? That sounds great, we're all looking for solutions that generate no money for citizens and are virtually unworkable right ;)

      • Re:what about air? (Score:4, Interesting)

        by Muad'Dave ( 255648 ) on Monday November 24, 2014 @08:13AM (#48448257) Homepage

        I suggest we regulate it like most power/water/sewage companies are regulated - there's a single (very profit- and performance-regulated) company that is responsible for the infrastructure - towers, transceivers, and backhaul in this case. Carriers would then be able to lease access to spectrum from that company with little/no barrier to entry.

        Just because you can't see most of the infrastructure it doesn't mean that you shouldn't manage it wisely like any other infrastructure, be it water/sewer pipes or power distribution lines.

        I'd love to see this model applied to telephone/fiber/CATV and cellular towers - imagine being able to actually select an internet provider from a wide array of competing companies instead of being locked in to the one that your municipality made the best $$$ deal with.

        • Re: (Score:2)

          by N1AK ( 864906 )

          Just because you can't see most of the infrastructure it doesn't mean that you shouldn't manage it wisely like any other infrastructure, be it water/sewer pipes or power distribution lines

          Gettings tens of billions of dollars for it may be the best way to manage it ;) It's not like setting up a new, or negotiating a deal with an established, company in a contract that encourages them to invest while stopping them making 'unreasonable' profits is either easy or guaranteed to work as intended. The auction proc

  • I understand the whole tragedy of the commons thing, but isnt' there a more equitable way to do the whole airwaves thing?

    I have a feeling this is only to fill government coffers a bit, but it screws out poor people. The service and competition in American wireless is really atrocious and it's reflected in the high and stagnant prices.

    • Re: (Score:2)

      by jbolden ( 176878 )

      Speed is poor in America because of low density mostly. The American system is much more expensive to build than the east Asian or European system. That is one of the many many costs due to our housing / transportation policies. As for the poor, the poor mostly do use some cellular data. This does benefit them. Plus the $34b is very likely to benefit them.

  • Scarce limited resource being sold off to the highest bidder and all that money will be spent in 3-4 days.

  • Who ends up paying for this in the end? You do! $100 a month for 1GB of data and you still pay to receive text messages! Ha-ha! Dumbasses.

    • Re: (Score:2)

      by pehrs ( 690959 )

      What makes you think that it would be any cheaper if the teleco's got spectrum worth billions for free?

    • Re: (Score:2)

      by jo7hs2 ( 884069 )
      Um... I pay around $70 for 1gb with unlimited texting and calls with one of the two major telcos. Your math is off.

  • Ts and Cs (Score:3)

    by JeffOwl ( 2858633 ) on Monday November 24, 2014 @07:12AM (#48448079)

    I wonder what provisions the government put on the license. Perhaps something about infrastructure to aid in surveillance?

    /Tinfoil?

  • I, for one, welcome our new E-Mag spectrum overlords.

  • Would it have hurt to mention which government ?

  • I don't believe for a moment that $34 Billion is being bid for 65 megahertz of spectrum; I suspect there is an error somewhere here. Could it be somewhere closer to 65 Gigahertz?

    • Just because you can't believe it, doesn't mean it's not true. 65MHz, covering 315 million people. Spectrum's usually priced per MHz-POP (i.e. 10MHz of spectrum covering 1 million people is 10 million MHz-POPs).

      There's a huge amount of variation in pricing, though. The most expensive license right now (on a MHz-POP basis) is for 10MHz covering the Chicago area (8.3M people) - $5.50 per MHz-POP. The most expensive license on an absolute basis is for 20MHz covering the NY Metro Area (27M people): $2 billi

    • 65MHz is TON of spectrum. Most LTE is operating on a couple of 10MHz chunks. 65MHz, nationwide is enough to start multiple *new* wireless companies. If it wasn't so impossible to actually build a competent telecom that can compete, we'd see a lot more interesting things happening here. Look at the continual T-Mobile and Sprint acquisition/merger talks to see that it would be a huge risk of $50B+ to try to start up a whole new carrier in the US. It would be amazing, but incredibly risky capital investme

  • Part of the problem with the FCC is that they are not following their guideline to promote competition. If you sell a small amount of bandwidth at auction and Verizon and AT&T buy it all up for a crazy amount of money then all the FCC has done is allowed the duopoly to limit competition.

    They should put a price tag on the spectrum, provision it out and offer it in turn like a draft. Then the companies can buy positions from one another for other terms that are agreed upon before the draft begins. Much be

    • Re: (Score:2)

      by jbolden ( 176878 )

      The FCC's means of allowing competition is having a vibrant MVNO industry. See what Sprint, AT&T and T-mobile are doing with their spectrum on the wholesale side. Lots of non-compatible towers doesn't help anything it just makes America's system worse.

  • Another consumer rip off (Score:4, Insightful)

    by troll -1 ( 956834 ) on Monday November 24, 2014 @01:59PM (#48450935)
    This is a free zero cost medium. The spectrum should be opnened up to everyone with power being the only limitation. We are told over and over the spectrum needs to be regulated because of interference yet for all intents and purposes there is nothing in physics that limits information density until you get to the quantum level. Wireless carriers have zero incentive to combat interference when they have a monopoly on the spectrum. They just charge more. It's also obvious to many engineers that mesh networks are more efficient. But mesh networks decentralize authority and therefore affect revenue so meshing is not likely to be popular with incumbent carriers. All those billions will ultimately be paid for be the consumer while the incumbents have zero incentive to innovate. We should take the spectrum away from business people and give it to engineers who can actually do something with it.
  • These frequencies were taken from the military by threat of a financial gun. The bands are important for national defense, which to me is more important than allowing teenagers to text each other.

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