Spectrum Auction Could Be A Game of Chicken 193
Ardvark writes "Google promised some time ago to bid at least the reserve price for the C block of 700Mhz spectrum if the FCC accepted its demand for an open access rule for devices using the band, which the FCC did over Verizon's objections. If the reserve price is not met the rule will be dropped and the block re-auctioned. It appears now that bidding has stalled just short of the reserve price. It's assumed that Google has no interest in becoming a cell phone company and with a recession looming the 700MHz spectrum now seems worth a whole lot less. If Google's strategy was to force the bidding above the reserve but still lose the auction, Verizon could be calling their bluff, threatening them to live up to their word and buy what to Google could be the equivalent of a $4.6 billion 'doohickey.'" Update: 01/31 16:01 GMT by Z : And just like that, the plot thickens: the C block has hit the reserve price during bidding.
UK 3G (Score:5, Interesting)
Take a look at what happened in the UK when the 3G air was up for sale - they threw money at it and ended up with next to no customers.
With the way things are economically at the moment, people are not looking to up their monthly spend on their mobile phone bill. Companies will have a hard time recouping a huge outlay.
Clever (Score:5, Interesting)
They can't, however, be accused of not doing what will profit them the most in the short term.
In this case, they've collectively called Google's bluff. I don't see Google having $4.6B in spare cash, to purchase the spectrum they have no idea how to make money on. This is a tough spot for Google, because not only do they stand to lose their coveted "shared spectrum" rule, but they also stand to lose much of their perceived invulnerability on the market.
too bad (Score:2, Interesting)
Virtually all middle-class job fields are either stalled, or firing... and as far as the real estate market goes, here's a story.
In 1995, about 50% of Nassau county (Long Island, NYC metro area) residents could afford to purchase the homes they were living in, given market price. In 2005, that number was down to about 5%. Yes, we have had spectacular success in destroying the middle class. At least they're scared of being poor, so they keep on working.
As George Carlin noted (albeit a hyperbole): "The middle class pays all the taxes, and does all the work. And the poor are just there to scare the shit out of the middle class".
Game Theory? (Score:3, Interesting)
Re:FIOS (Score:5, Interesting)
Re:too bad (Score:3, Interesting)
Layne
Did! Did Not! (Score:5, Interesting)
The article summary is garbage, or should I say simply wrong?
Google set 4 conditions it wanted to see. The FCC agreed with 2 of them, so Google is faced with half a glass. (Yes I know the Engineer's view of half a glass.) I don't recall them saying they'd bid reserve to ensure only half of their wishes.
Re:FIOS (Score:5, Interesting)
Everyone on ebay knows... (Score:4, Interesting)
This auction will go on for months, and we're at the one week mark now?
Anyone who says Google is "bluffing", or the price won't go up is full of it. Google may not bid as much as they say, they may, someone else might bid more, or who knows? It's just way to early to be saying much of anything about the auction, what the different strategies are, and who will win.
Re:Nah . . . (Score:3, Interesting)
Re:Check out the FCC auction yourself! (Score:3, Interesting)
Why is Verizon so against the concept of a 700MHz open network when they've stated that they're going to open up their own network [arstechnica.com] some time this year?
Re:too bad (Score:5, Interesting)
Yeah. People throw their hands in the air over this incoming recession, and sure the stock market is having some problems, but so many areas of this country are still doing well. The company I'm working for is hiring like mad (any aerospace engineers looking for work? let me know). Within my house, which used to be out in the country surrounded by fields, there are no less than five new housing developments that sprung up in the last year
(and "recessions" aren't all bad
Re:when the usa purchased alaska from russia (Score:5, Interesting)
i can't see why a monopoly on a prime band of communication spectrum can't be anything but pure gold. there's only so much spectrum, but more and more people and more need for communication tech every day
The auction is a gigantic tax and nothing more. If the markets are efficient, the winning company will be rewarded only related to the risks it is taking. Everything else will be going to the government, and out of the pockets of consumers.
It's laughable how the auctions are being sold as a good way to raise funds for the government without impacting the taxpayer. Who doesn't use communications technology if not the taxpayer? This is the perfect way to cripple a single industry, because a) the winning company will have less immediate funding available for infrastructure b) consumer prices will be much higher, lowering the adoption rate significantly.
Just look at what happened in Europe. A lot of countries did the smart thing and gave the spectrum to the companies that were willing to guarantee the best service levels for the cheapest consumer prices, but then a few large countries ruined it for everyone by suckering companies into auctions. (To be viewed as a serious competitor, you had to take part in the largest markets.) The end result was what I described above, and we are only now starting to recover.
If you think that the beauty contest model will result in excessive profits for the winner, keep in mind the guarantees, and the fact that one winner wasn't awarded all the spectrum.
Google doesn't need to build out C-block. (Score:5, Interesting)
there's an idea that should have "it's MY network, and all these guys behind me will beat you if you disagree" shivering.
yes, bring your BT, NTT, Korean phone over here with you. it will work. every time you hit send, two cents to Google for use of the C block airwaves. one cent if the home phoneco had built the network in that regional area.
profit per click. no investment in the backbone. that's something they know about.
it can work.
Re:too bad (Score:4, Interesting)
Also, I love how you complain that the top 1% ONLY pay 34% of income takes. I suppose you would think it's more fair is the top 1% paid something close to 50%? Where does it end? Heck, why not just cap all income at 100k, and say anything over that goes to the gov't? That'll stick it to 'em!
I'm still scratching my head over how the middle class pay more sales tax. The last time I went Walmart, the didn't ask me what my income level was and tax accordingly. Property tax is more malarkey.
Re:google's stock price holding steady (Score:3, Interesting)
Re:too bad (Score:3, Interesting)
1. It's a way to collect your savings into something (equity in your house builds over time, there is no equity in renting).
2. In most states, it is one of the few things most creditors can't touch should you go bankrupt (except of course people with leins).
3. Tax deductible interest helps defray some of the cost and in some years makes the house cheaper than renting.
4. Over time, the value of the house will actually surpass the amount you've paid for it (assuming 6% note, 2.5% appreciation, 95% borrowed, and a 30% tax rate, it looks like some time between year 20 and 25 of owning the house for most borrowers) [based it off of IPMT function in Excel to estimate interest paid annually]
Layne