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AT&T Verizon The Almighty Buck Wireless Networking

Study: Limiting Bidding On Spectrum Could Cost Billions 140

Posted by Soulskill from the competition-isn't-cheap dept.
itwbennett writes "According to a study (PDF) by the Georgetown Center for Business and Public Policy, restricting the ability of Verizon Wireless and AT&T to bid in upcoming spectrum auctions would drive down the bidding during the auction, and could cost the U.S. treasury as much as $12 billion. Even a partial restriction of bids by Verizon and AT&T could have a significant impact on auction revenues, said Douglas Holtz-Eakin, a co-author of the Georgetown study. Matt Wood, policy director at digital rights group Free Press, fired back, saying 'No one is talking about completely barring AT&T and Verizon from the incentive auction. Sensible people are talking about making sure that more than two companies have a chance at obtaining spectrum. The fact that these duopolists hired economists to parrot the companies' own talking points isn't really that newsworthy.'"
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Study: Limiting Bidding On Spectrum Could Cost Billions More

Study: Limiting Bidding On Spectrum Could Cost Billions

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  • Those who would trade a bit of freedom... (Score:5, Insightful)

    by Anonymous Coward on Tuesday April 30, 2013 @10:27PM (#43597243)

    For a bit of money, will soon have little of either.

    Letting the cash-rich companies have their way is surely a bad idea.

    • Re:Those who would trade a bit of freedom... (Score:5, Insightful)

      by goombah99 ( 560566 ) on Tuesday April 30, 2013 @10:36PM (#43597305)

      If it's worth billions more to verizon then you can be sure versizon is going to extract many ties that from the citizenry. So in the end the govt would get more revnue but the people would have less money. I'd rather have the reverse. Moreover the competition may be good.

      • Re:Those who would trade a bit of freedom... (Score:5, Insightful)

        by fuzzyfuzzyfungus ( 1223518 ) on Wednesday May 01, 2013 @01:26AM (#43598041) Journal

        If it's worth billions more to verizon then you can be sure versizon is going to extract many ties that from the citizenry. So in the end the govt would get more revnue but the people would have less money. I'd rather have the reverse. Moreover the competition may be good.

        Honestly, the fact that spectrum auctioning is even being talked about in terms of its revenue value(I can see arguments being made that the 'auction' mechanism is a good one for identifying users most willing to pay, and ensuring that spectrum doesn't go unused, though such arguments need to face up to the empirical reality of examples like "Tons of crazy-useful stuff that we do in the shitty ISM band, not because it's good; but because it's available") suggests a level of conceptual failure that makes my head hurt.

        If the government just wants to raise money, 'tax farming' by selling off public assets to the entities most capable of extracting monopoly rents in exchange for a slight premium over what they would otherwise sell for is pitifully inefficient. If they need money, suck it up and acknowledge that it's a tax. Accepting years of substandard and undercompetitive spectrum use in exchange for a bit of cash upfront is just nuts.

      • With enough money you can incent the populace to harm themselves. This is not new. It predates Caesar.

    • Re:Those who would trade a bit of freedom... (Score:4, Insightful)

      by Drakonblayde ( 871676 ) on Tuesday April 30, 2013 @10:41PM (#43597329)

      I am by no means a fan of AT&T or Verizon, but the concept of preventing a company from bidding on something in the name of competition strikes me as... anti-competitive. I'm a firm believer in a free market economy and this reeks of giving all the kids a trophy just for playing.

      • Re:Those who would trade a bit of freedom... (Score:5, Insightful)

        by goombah99 ( 560566 ) on Tuesday April 30, 2013 @10:48PM (#43597383)

        I am by no means a fan of AT&T or Verizon, but the concept of preventing a company from bidding on something in the name of competition strikes me as... anti-competitive. I'm a firm believer in a free market economy and this reeks of giving all the kids a trophy just for playing.

        Your assumption is that the sole criteria is return in dollars, and not say some other public good. When we sold land to homesteaders in the wild west we did not maximize the return but had settlement in mind. We do this with lots of resources. The public gets a greater benefit, the govt gets less revenue. We often handicap research grant scores to favor young investigators or classes of institutions. This is a case of maximizing future returns and diversifying risk rather than getting immediate return of maximum research output per dollar spent.

        Not having a monopoly may be a better use of the spectrum than simply more of the same from an existing large company.

        • Re:Those who would trade a bit of freedom... (Score:4, Interesting)

          by sanosuke001 ( 640243 ) on Wednesday May 01, 2013 @12:03AM (#43597713)
          That was my first thought; maybe the better thing to do is create more competition in the market instead of allowing Verizon and AT&T to fuck us even harder. Like someone else said; the consumer is going to pay for the spectrum in the long run anyway; why not lower the cost of it (or lease it as another suggested) and lower everyone's phone bills. The less money we have to spend for cell service the more that goes to other businesses (ie. taxes; which would probably make up that made-up $12 billion figure eventually).

          • Re: (Score:2)

            by AK Marc ( 707885 )
            The most "efficient" method is to have spectrum owned under a monopoly owned by the government. Lease it out per-tower, not per massive geographic area. That's how most of the world built phone and mobile, until the governments realized they could sell them (the companies or the spectrum) off for billions and leave their successors left cleaning up the mess of the monopolies abusing the system later.

            Socialism works where the tragedy of the commons steps in. The farmer who gets a short-term bonus from ov

        • Re: (Score:2, Insightful)

          by DNS-and-BIND ( 461968 )

          Yes, but in those days the government did not spend like it does today. Today the government desperately needs money, and lots of it. This $12 billion is badly needed and will enable the government to operate for almost thirty hours. Not to mention the additional revenue available by borrowing against future revenue of this sort.

          Mention something like "public good" to anyone who works in Washington DC and watch the smiles and guffaws start. You just mark yourself as a redneck and an idiot with talk li

        • Oh my. The rational hand of disciplined governance ought to guide the invisible hand of markets? You're going to get a lot of hate. You are also right.

          Where you missed: "the gov't gets less revenue." You needed to put a "for now" at the end of that. As we know from Seward's Folly and the Louisiana Purchase, sometimes the people don't know the right course. Those investments are ripe now and paying huge dividends.

          Sometimes the public good is not having to waste the blood of patriots for stuff that ca

        • Re:Those who would trade a bit of freedom... (Score:4, Informative)

          by Drakonblayde ( 871676 ) on Wednesday May 01, 2013 @12:18AM (#43597789)

          No, my assumption is that someone other than AT&T/Verizon/T-Mobile being awarded the spectrum does not automatically equal public good.

          It still takes a fortune to build the infrastructure to support a wireless network. The argument being made here is that if one of the big providers were to acquire the spectrum, they'd take the cost out on their customers.

          Surely y'all aren't naive enough to believe that whomever acquires the spectrum *isn't* going to do the same. They still need to be competitive, which means they still need to make money, and so they're still going to charge rates that are within the ballpark of AT&T and Verizon. If they're significantly lower, then yes, it may force AT&T and Verizon to adjust their prices downward, at least in certain markets (I seriously doubt that any other likely purchasers are going to become players on a national level).

          Or, more likely, AT&T and Verizon adjust their prices to actually be lower, stealing the competitors customers, strangling their revenue, and eventually putting them out of business. AT&T and Verizon can afford to absorb a short term loss to deal with a competitor. Once said competitor is no longer an issue, prices go up again.

          You don't think this happens? You've never witnessed what happens when a Wal-Mart moves into an area that previously had none.

          In order to actually compete with AT&T and Verizon, you need to offer a superior product and superior service, at a better price. Good luck.

          • I think given our experience with AT&T/Verizon/T-Mobile that spectrum, licenses, real-estate or oxygen were better let to somebody else, and that would make a public good because these have become a burden on the people. Somebody else might make a lesser or equal burden, but not a greater one.

            • So, basically, we should give it to someone else because they might suck less.

              I'm not real fond of that choice either.

              • Re:Those who would trade a bit of freedom... (Score:4, Insightful)

                by TheEyes ( 1686556 ) on Wednesday May 01, 2013 @02:39AM (#43598257)

                So, basically, we should give it to someone else because they might suck less.

                I'm not real fond of that choice either.

                No, we give it to someone else because then that someone else would have to compete with the incumbents, and the resulting competition will force prices down, as opposed to our current system of two enormous rent-seekers sitting on vast piles of spectrum, doing nothing with it, and forcing us to pay extorionate amounts for terrible service.

              • Considering how much the current oligopoly sucks, I'm quite OK with you (alt A: retraining them for useful work) (their own Option B) lining them all against a wall and executing them by firing squad.

                The people who choose option B aren't worth saving anyway.

          • Re: (Score:2)

            by DrProton ( 79239 )

            Surely y'all aren't naive enough to believe that whomever acquires the spectrum *isn't* going to do the same. They still need to be competitive, which means they still need to make money, and so they're still going to charge rates that are within the ballpark of AT&T and Verizon.

            Have you heard of Ting mobile? I have a plan in Illinois with two smartphones on it. My last monthly bill, with voice, text, and data, totaled $34.97. I'm not a heavy data user (only 79 megabytes), but still. You think AT&T or Verizon can beat that? I don't.

            • I'm a heavy data user - on MetroPCS of course. $100 a month for two phones. Fairly reasonable in my opinion and I find Metro is actually still building out their 4G network. And of course I'll be a T-Mobile customer next year since they absorbed Metro and I'll be paying $150 a month for the SAME FUCKING THING.

        • Basically, I am refining what you are saying – but focusing on market structure and how to maximize the value to society.

          Take a look at countries across the world. The top 2 providers make all of the profits, the rest are left with the scraps. Do you want a cozy duopoly or something more competitive? If you want something more competitive, you are going to need to give the underdogs a leg up.

          Now, you can overpay for competition, and I have not read the details, but at first glance I am in favor.

          Take a

      • Re:Those who would trade a bit of freedom... (Score:5, Interesting)

        by msauve ( 701917 ) on Tuesday April 30, 2013 @11:01PM (#43597447)
        Managed spectrum is in no way "free market." It is a public resource, administered by the government, and naturally constrained. There is only flexibility in demand - supply is firmly fixed.

        As such, the value is not only what an entity is willing to pay, but also in what benefit the public will gain for allowing their resource to be used.

        A true free market attitude would be to support a spectrum commons [wikipedia.org].

        • Re:Those who would trade a bit of freedom... (Score:4, Insightful)

          by Drakonblayde ( 871676 ) on Wednesday May 01, 2013 @12:57AM (#43597953)

          That's the way it should work. Unfortunately, reality is quite a bit different.

          You're absolutely correct in that supply is fixed. You're also absolutely correct that there's flexibility in demand (which is presently going up and shows no signs of going the other way).

          Your flaw is that entire public good thing.

          Either the resource is to be allocated and managed for the public good, or it isn't. Given that AT&T and Verizon own such a large portion of spectrum already, the question becomes are they managing it for the public good or not. The sentiment seems to be that they're not, and as such, shouldn't be allowed to acquire more.

          If that is true, then we're not getting good value from allowing them to use our resource. So why do we continue to allow them to use it? If we have no choice but to continue to allow them to use it, then the resource is not really a public one to be used for the public good.

          If we are getting good value from allowing them to use our resource, then why is it a bad thing to allow them more?

          It truly sticks in my craw to have to have to play advocate for Verizon and AT&T, I loathe them as corporate entities, and they're some of our best customers (I work for a company that provides a very large amount of cell backhaul for Verizon, AT&T, and Sprint).

          But this entire public good argument is horseshit. The reality, whether you care to admit it or not, is that wireless spectrum is a commodity like any other. The only thing the fixed supply does is drive prices up when demand increases. Whether or not it should be that way is an entirely separate argument.

          • But this entire public good argument is horseshit.

            So how is it good for the public to let Verizon and/or AT&T bid on this spectrum considering they already own quite a bit of the spectrum? The more spectrum that they own, the less spectrum available for competitors. Hell, they could buy up spectrum they have no intention of using just to prevent competitors from offering comparable services and risk losing customers. And since Verizon and AT&T have more assets than most of their existing competi

        • If you made me king of American radio spectra and gave me let to do it I could put 50Mbps broadband in 94% of US homes in under five years - and make a profit at it. It is not that hard. Latency would suck except for the wired folk, but that's the nature of wifi.

          • But could you do it as a private company?

            If not, could you do it while making enough profit to demonstrate fiduciary responsibility and keep your shareholders from rioting?

            • With government permits in hand you bet your ass I could raise the money to make it so. That is a slam dunk.
            • Nope - not as a private company. What everyone has to realize is this, a private company is under no delusion that they have to even bother to look at the curves to figure out pricing. They just charge what the traffic will bear and maximize profit.

              We need to do TWO things to get this under control again. First, modify the 14th amendment and insert an exception that excludes a corporate entity from rights granted an animate entity.

              Then change the FCC - take out the corporate insiders who make up it's

      • This has to be one of the dumbest comments you can make in regards to wireless spectrum. You do realize that a "completely free" market would not have spectrum to government auction in the first place right? The whole point of allocating spectrum blocks is to maximize their use without unnecessary interference for the greatest benefit to the public. The government and corporate interests are only necessary where they contribute to that goal. If an institution is going to just grab the spectrum almost solely

        • Are you not paying attention to what I said? I understand completely that this can't be a situation where you just open the floodgates and whomever can bring you the most cash wins.

          I have a problem with restricting the bidders in the name of 'competition'. Excluding viable competitors just to let other folks have a shot has absolutely nothing to do with the public good.

          If AT&T and Verizon are capable of managing additional spectrum in a responsible manner that is consistent with the public good, they sh

      • Re:Those who would trade a bit of freedom... (Score:5, Insightful)

        by jensend ( 71114 ) on Tuesday April 30, 2013 @11:23PM (#43597545)

        Ah, but what they're bidding on is not merchandise but a government-enforced monopoly. Normal free-market rules are already out the window; you may call what you propose a free market solution but really it's a mercantilist solution. Selling letters of patent to whoever brings the most into the Crown treasury is precisely the kind of thing Adam Smith was writing to oppose in the first place.

        Normally the solution is to get rid of the government-granted monopoly. But that doesn't work out so well here. We license spectrum because leaving it to the free market to figure it out would result in horrible interference and transmit power arms races -- a classical tragedy of the commons market failure.

        In many market failures government won't actually manage to improve the situation. But the spectrum really is a clear case where intervention can improve social welfare-- as long as we don't get confused about the purpose of spectrum regulation and start treating it like it's a free market designed for increasing government revenue.

        • Re: (Score:2)

          by devman ( 1163205 )
          Totally agree. Since this is a "for the common good" resource. The government should have bidders propose development plans and award the spectrum to the bidder who proposes developing services at the lowest cost for the consumer. If the winner violates the terms then the spectrum is reclaimed and rebid. If the government want to make revenue from the spectrum they can just add a tax to devices/plans that use it. That would ensure that whoever gets the spectrum is doing it at the lowest cost to the taxpayer
        • Thing is, most of the innovation in radio we saw happened BEFORE the FCC was created. The FCC has done everything it can to stifle innovation.

          Look at the old Ma Bell - when she was a fully integrate and heavily regulated entity she made tons of money and innovated like all hell. Granted, a lot of the innovation was to maximize profit but it was the research done by them that kind of kicked off all we have today.

          Now the game is extracting maximum REVENUE. Not cute.

          • Look at the old Ma Bell - when she was a fully integrate and heavily regulated entity she made tons of money and innovated like all hell. Granted, a lot of the innovation was to maximize profit but it was the research done by them that kind of kicked off all we have today.

            One little detail you left out. "Ma Bell" may have innovated but had no reason to pass the innovations to their customers (eg. ISDN was very very slow to roll out and was prohibitively expensive). Deregulation and the subsequent breakup o

            • You really need to read up on Ma Bell. She innovated one thing used in everything we have today - the transistor. They perfected the laser, and in case you're wondering, most technological wonders take about 20 years from discover to deployment. The same is true of the tech we use today.

              • You really need to read up on Ma Bell. She innovated one thing used in everything we have today - the transistor. They perfected the laser, and in case you're wondering, most technological wonders take about 20 years from discover to deployment. The same is true of the tech we use today.

                I don't see how ATT's monopoly position influenced the creation of the transistor. In fact let me piece together a bunch of google searches (admittedly dominated by wikipedia) to create a "Connections (I miss that show) type

      • I am by no means a fan of AT&T or Verizon, but the concept of preventing a company from bidding on something in the name of competition strikes me as... anti-competitive. I'm a firm believer in a free market economy and this reeks of giving all the kids a trophy just for playing.

        Were you sick the day they discussed 'market power' and 'rent seeking' in EC101?

      • Re: (Score:2)

        by afidel ( 530433 )

        If you think a duopoly propped up by government restrictions on spectrum is a free market then you obviously should have failed econ 101/high school civics. Because the government has created the current situation and it can be demonstrated that it is causing harm (significantly higher prices than the rest of the world) a statesman would say that the government has a responsibility to use reasonable remedies to correct the situation. Keeping the abusive duopolists from gaining further market advantage by no

    • Restricting AT&T/Verizon from bidding on it reduces freedom and reduces the free market more than letting all interested firms bid on it. We need a truly free market to reduce abuses, not more regulation.

      • Restricting AT&T/Verizon from bidding on it reduces freedom and reduces the free market more than letting all interested firms bid on it. We need a truly free market to reduce abuses, not more regulation.

        Freedom to make money is at odds with public good.

        • Re: (Score:2, Interesting)

          by AlphaWolf_HK ( 692722 )

          That is a very stupidly naive statement.

          You know all groups who have formed movements off of that premise have ultimately fallen, without even any outside interference from those ideologically opposed. Take the Icarians for example, who literally had an entire city pre-built just handed to them for basically nothing (Nauvoo, IL.) Even with those nice things just handed to you, in order to keep them nice you have to work. When there is no freedom to make money, people get lazy and shit falls apart, just like

        • Re: (Score:2)

          by LocalH ( 28506 )

          Not always.

      • Re:Those who would trade a bit of freedom... (Score:4, Insightful)

        by fredprado ( 2569351 ) on Tuesday April 30, 2013 @11:06PM (#43597473)
        The natural progression of a truly free market is money agglutination, monopolies and the collapse of the economy because of speculation. That is why there never was a real world implementation of laissez-faire capitalism and there will never be.

        Free market is a concept that resides in the realm of fantasy, together with communism.
        • I fully agree. The concepts of free markets and communism are both ideological extremes that are only viable in fantasy worlds. The difference is that most Americans realize communism is a fantasy while many Americans feel that a completely free market is not only sustainable, but the best option given all of the options within the spectrum between communism and free-market capitalism.

      • Re:Those who would trade a bit of freedom... (Score:4, Insightful)

        by ebno-10db ( 1459097 ) on Tuesday April 30, 2013 @11:23PM (#43597543)

        We need a truly free market to reduce abuses

        A truly free market (more importantly, a truly competitive market) is one where new suppliers can enter the market. Unfortunately spectrum is a strictly limited resource. Therefore allowing currently entrenched companies to buy big chunks of spectrum and block future entrants into the market is highly anti-competitive.

        • All the data towers are doing the same shit. They could be standardized, funded by tax money directly (instead of a 100 billion handout that just disappears). If the spectrum belongs to the people then let us just have it completely. Dedicate a bandwidth for cellular use according to the people's demand, then saturate it with capability to provide service. The access could be leased to the carriers, and our devices could frequency hop to whatever chanel was noise free. New competitors could lease the

          • Re: (Score:2)

            by Grave ( 8234 )

            This is pretty much what I've been preaching now for years. Infrastructure that is vital to the public good and that requires the use of a physically limited resource, such as roads or power lines, is already expected to be government owned. Why is radio spectrum not treated the same way at this point?

    • Yeah, this is starting to look like the classical problem for which the solution is "torches and pitchforks".
    • It's not just a bad idea but a horrible idea. I do wish for once the politicians would stop putting attorneys and industry executives as head of the Federal Communications Commission. Instead, put the techies and engineers in charge. We'll sort things out very quickly. Number one move we would probably ALL make is to take all broadband services including cellular and move them into common carrier status.

      Then all the rules about sharing, etc. apply. It's why for example in France they pay about $40 a mont

  • Dear Reporters (Score:3, Insightful)

    by Anonymous Coward on Tuesday April 30, 2013 @10:27PM (#43597247)

    Every time the government doesn't get every penny and ounce of blood it can out of everyone doesn't mean it's "costing" the government anything.

    • Re:Dear Reporters (Score:5, Insightful)

      by hawguy ( 1600213 ) on Tuesday April 30, 2013 @10:46PM (#43597365)

      Every time the government doesn't get every penny and ounce of blood it can out of everyone doesn't mean it's "costing" the government anything.

      Exactly - sky high spectrum auctions amount to a tax on the consumers that are forced to pay back the billions that the company spent to buy the spectrum. Encouraging more competition from smaller carriers by banning the big boys will likely save consumers many more billions than the government would have "earned".

      From TFA:

      But a policy to restrict the ability of Verizon Wireless and AT&T to bid on the spectrum would drive down the bidding during the auction and leave less money for a nationwide public safety network and the U.S. treasury

      Why should spectrum auctions (i.e. my cell phone bill) pay for a public safety network?

      • Re: (Score:2, Troll)

        by penix1 ( 722987 )

        Why should spectrum auctions (i.e. my cell phone bill) pay for a public safety network?

        Because you are a member of that public. Go ahead and say that line the next time you need 911. Keep that line in your head the next severe weather outbreak happens and you need to take shelter. Keep that in mind after the disaster when you are trying to piece back together the remnants of your life....

        • Obviously we need a public safety network, but that does not mean it has to be paid for by what is essentially a cell phone tax. As you point out, everyone potentially needs the public safety network, therefore it's reasonable to pay for it out of general revenues.

          • Re: (Score:2)

            by penix1 ( 722987 )

            General revenue is also a tax. I fail to see the point of what pot of gold it is plucked from. It makes far more sense to me to have the users of that safety network support it.

            • I fail to see the point of what pot of gold it is plucked from.

              Fairness. I see no reason to impose a tax specifically on how much one uses a cell phone (this from someone who rarely uses his dumb phone). You're the one who pointed out everyone potentially needs the public safety network, and I don't think that potential need is proportional to how much you use your cell.

              • Re: (Score:2)

                by penix1 ( 722987 )

                Your point fails because even on hardwired lines there are charges for the safety network (911 fees they are generally called). If you want to talk fairness then what you are proposing is the landline users pay for it when you don't have to. Doesn't sound very fair to me. And taking it out of the general revenue means those who don't use it (for whatever reason) are subsidizing those that do. Again, it doesn't sound fair to me.

                The point is, there are inequities all over the topic of taxes. Whether it comes

                • Re: (Score:2)

                  by hawguy ( 1600213 )

                  Your point fails because even on hardwired lines there are charges for the safety network (911 fees they are generally called). If you want to talk fairness then what you are proposing is the landline users pay for it when you don't have to. Doesn't sound very fair to me. And taking it out of the general revenue means those who don't use it (for whatever reason) are subsidizing those that do.

                  Your argument fails because the Public Safety Network [wikipedia.org] has nothing to do with 911 service (other than the fact that when the 911 operator calls a firetruck, the firetuck will use the public safety network to say he's on the way). The public safety network is a tool used by EMS responders, just like a firetruck or police car, and I certainly don't see why a hidden fee buried in cell phone costs should pay for firetrucks.

                  If a nationwide coordinated public safety network is something that the federal governmen

            • Re: (Score:2)

              by hawguy ( 1600213 )

              General revenue is also a tax. I fail to see the point of what pot of gold it is plucked from. It makes far more sense to me to have the users of that safety network support it.

              Right, general revenue is a tax, which is how infrastructure that benefits everyone should be paid (or through use taxes, like gas taxes). Not buried in a spectrum sale that will lead to higher cell phone prices for consumer with the revenue used for something that benefits everyone whether they use a cell phone or not. What if all agencies decided that they should earn revenue - maybe the FDA should charge meat packing plants $10M/annually for their required inspections and then use the revenue to pay for

            • Re: (Score:2)

              by AK Marc ( 707885 )
              So when the fire department shows up when your house is on fire, you should then, as a user of that safety network, pay them whatever it takes to get them to fight your house fire? It's not like there's shopping for price. My last US ambulance ride was about $1000. They didn't ask, they didn't bid for my business, there were no competing firms for my business. They just picked me up and transported me, then sent a bill for $1000.
    • This. It doesn't cost me tens of millions of dollars every time I don't win the lottery...

  • How is cellular allocation done elsewhere? (Score:4, Interesting)

    by ebno-10db ( 1459097 ) on Tuesday April 30, 2013 @10:28PM (#43597253)
    How is cellular spectrum allocation done in other countries, and how many carriers do they have? Knowledge of any other country is appreciated. I've long wondered how it would be in cellular with an old Ma Bell (AT&T pre-divestiture) style monopoly. Part of me likes the competition idea, but with spectrum so limited and cellular infrastructure so expensive to build, it seems awfully wasteful. It's not quite a natural monopoly, but it verges on it.

    • Re:How is cellular allocation done elsewhere? (Score:4, Interesting)

      by elbonia ( 2452474 ) on Tuesday April 30, 2013 @10:44PM (#43597355)
      In Europe it's pretty much Vodafone and T-Mobile which also makes the EU a duopoly. There was a recent auction [nytimes.com] in the Netherlands that turned into an all out bidding war which actually sent the stocks of the telcos there down sharply. The price of the auction is just passed down to consumers through prices increases, reduction of services, or added fees. So while the treasury may lose $12 billion that amount wont be passed on the consumer so it's a wash. It's probably better for everyone to limit AT&T and Verizon and make sure there's more competition.

      • Re: (Score:3)

        by zyzko ( 6739 )

        I would not say Orange [wikipedia.org] is insignificant and there are others [wikipedia.org], some national or operating in a small area [wikipedia.org] with a large market share and grand plans for expansion (the Sonera part of the last company I linked is the former Finnish national post & telecom office, which was split up as a several private companies in 1990s - the "Telecom" part then became Tele and further Sonera which spent billions of euros on auctions for an example in Germany for 3G licenses, which never did anything and both Sonera and T

    • Re: (Score:3)

      by zyzko ( 6739 )

      There are two basic models, auction and beauty contest. Those who favor auctions usually point out that for "common good" auction is better, because even if it yields huge sums of money to the government which may be seen as a tax prices are (when the money is a lump sum, not percent of revenue or profit) always going to be as high as the consumer is willing to pay for a service. The advocates of beauty contest say that it gives a better chance to newcomers and favors large scale adoption of new technologie

  • Not really interested in what it costs government. (Score:5, Insightful)

    by rolfwind ( 528248 ) on Tuesday April 30, 2013 @10:29PM (#43597257)

    What does it cost society?

    • Re:Not really interested in what it costs governme (Score:4, Insightful)

      by girlintraining ( 1395911 ) on Wednesday May 01, 2013 @01:50AM (#43598123)

      What does it cost society?

      Well... you know how our mobile phone networks are utter shit compared to the rest of the world? Plan on that continuing. You know the limited range and speed of wifi? Expect more of the same. In short, the cost to society is that the status quo remains.

      Now, what happens if we don't get more of the same? Well, there's a chance, mind you I don't know how much of one, that the above-referenced problems would get better, or go away entirely, and even do so affordably.

      But let's be honest; there's $12 billion here that the government can put in its coffers, and everyone who agrees with this gets a fat contribution to their re-election campaign. Who the fuck cares about the cost to society? It's just there to serve the rich anyway... Keep eating your dog food, Citizen.

  • can't really have it both ways... of course the deep pockets can pay more for more revenue-generating spectrum, what else is new?

  • Well, that makes it easy (Score:5, Insightful)

    by Qzukk ( 229616 ) on Tuesday April 30, 2013 @10:32PM (#43597275) Journal

    Is it worth 12 billion dollars to keep AT&T and Verizon from controlling the airwaves?

  • That $12 billion projected loss for the government is a double-edged sword. Presumably, it represents but a fraction of what the two companies would charge users for use of the spectrum in a pure duopoly market. Preserving competition may mean less revenue for government in this situation, but helps hold the duopolists' prices down. So the public benefit is there.

  • That's cheap (Score:3)

    by saleenS281 ( 859657 ) on Tuesday April 30, 2013 @10:38PM (#43597309) Homepage
    $12 billion up front is a HELL of a lot cheaper than the cost to taxpayers should we end up with even less competition in the wireless market than we currently have. Just look at Frontier communications for an example of what happens when a company is allowed to own a market (rural "broadband" in their case).

  • Is it just me (Score:3)

    by Miros ( 734652 ) on Tuesday April 30, 2013 @10:43PM (#43597343)
    Or does this story dismiss its own relevance at the end?

  • Does it build value? (Score:5, Insightful)

    by Okian Warrior ( 537106 ) on Tuesday April 30, 2013 @10:55PM (#43597413) Homepage Journal

    The question to ask is: which way will build value?

    If Verizon and AT&T will just sit on the spectrum doing nothing, then the government gets 12 billion extra and it will be wasted. The government doesn't do anything that's useful or valuable to the people any more - it only generates pointless bureaucracy and sweetheart deals. It's the aristocracy of "pull".

    If players other than Verizon and AT&T will use the spectrum for new and innovative products, generate intellectual property (ugh! that word...) and add value to the economy, then the government gets 12 billion less which will go unnoticed (a minor drop in the bucket), but it will enrich America and perhaps generate tax revenue over time.

    Let's give Verizon and AT&T a chance at the new spectrum. They kept the 200 billion [newnetworks.com] we gave them to bring broadband to 86 million homes in America and did nothing, but that was a long time ago.

    They wouldn't do that to us again, right?

    • Re: (Score:3)

      by schnell ( 163007 )

      They kept the 200 billion we gave them

      Are you sure it's 200 billion? The author you cite seems to have thought it was $30 billion [amazon.com]. Wait, no, it was $200 billion [isen.com]. Ah, sorry, now it's $300 billion [newnetworks.com]. Maybe it's inflation?

      Not saying that the American public wasn't shortchanged by the Baby Bells - back in the day when they actually existed, I never encountered a more anticompetitive group of oligarchists in all my career. But let's not necessarily keep repeating this "OMG telcos stole $200 billion" meme without a little more quantification and justif

  • First, I believe in a free market. However, the teleco industry is generally a creature of government created and sanctioned monopolies. To claim that the free market has any position in this (either allowing government supported monopolies to extend their influence and power by bidding on the spectrum or by denying them the ability to bid on the spectrum) is wishful thinking at best.

    • Re:Telecoms Have Little To Do With the Free Market (Score:5, Insightful)

      by Arker ( 91948 ) on Tuesday April 30, 2013 @11:17PM (#43597527) Homepage

      It's not just wishful thinking, it's a gambit in an assault against our ideas. Anything that is done based on the idea that the free market is involved here is done on false premises and bound to fail. For which the nonexistent free market will be blamed.

      The spectrum auction is a scam from beginning to end. The idea that anyone can own spectrum betrays a complete misunderstand of "own" and/or of "spectrum."

      The best one could do is establish a customary right of occupation. By using the spectrum in question for something of value. If they dont use it they should lose it. If we ignore spectrum which is reserved but unused, there is suddenly a considerably greater supply.

      The telecoms in this country are monopoly capitalists, not free marketeers, and this has been true longer than I have been alive. And I am a bit older than the average slashbot. This has only gotten worse over time. Their idea of competition is competing with other telecoms to see who can sway more congresscritters to their side. Just look at how many times the taxpayers (and ratepayers in monopolised/privileged districts, same thing) have paid for fibre coverage in the US. Enough to provide it border to border, sea to sea, several times over. What's the current percentage of us that have it? 10, 15%? And how many telecoms are still actively expanding coverage? Trick question, the answer appears to be 0.

  • I think they are absolutely right that limiting their ability to bid on this spectrum will cause the price to be lower. That only makes sense since you are limiting the 2 biggest and best funded companies from going all out for it. But in the long term, I think it will be better and bring in more money to have more than just 2 strong competitors in the cell phone business. Revenue comes from more than just the money from selling the spectrum. If we can help open up the market so there are more successful

  • Make leases non-permanent (Score:5, Interesting)

    by Mike_K ( 138858 ) on Tuesday April 30, 2013 @11:01PM (#43597451)

    Here is a simple way to make telecoms move on the spectrum they are sitting on: make the lease non-permanent.

    If each lease lasted, say, 15 years, and had to be rebid, say, 5 years before the lease expires, the incentive to sit on spectrum would diminish greatly. The prices that companies are willing to pay for spectrum might diminish somewhat, but not utilizing spectrum would start costing real money, and new competition would have a chance to enter the market every now and then.

    The problem with the current system is that obtaining a lease to spectrum gives companies a permanent monopoly on the spectrum forever, which decreases the incentive for competition. The spectrum is a sunk cost and delaying utilization of it is merely a loss of revenue, but not a direct cost.

    m

    • Re:Make leases non-permanent (Score:5, Interesting)

      by ebno-10db ( 1459097 ) on Tuesday April 30, 2013 @11:15PM (#43597519)
      It could even be done on a shorter term basis. There is no technical reason that spectrum couldn't be dynamically allocated amongst carriers. It's easy to build base stations that can operate over an entire band and then tell them to only use certain frequencies. Forget the bidding, or even charging for the spectrum (the customers just wind up paying for it anyway), and periodically adjust how much spectrum each carrier is given in a certain area to reflect the load on their system. If a competitor grabs some of an entrenched company's customers (perhaps by some nefarious technique like better service or lower prices) then just give some of the entrenched company's spectrum to the upstart. That would allow real competition.
      • I love this idea; the thought that something like EM spectrum can be bought seems ridiculous. I understand the need to limit its use since having everyone attempting to use the same chunk would make it useless for all but "selling" it is telling the purchasing company that they now don't EVER have to deal with competition because nobody else can ever use that chunk.

  • In the grand scheme of things... (Score:1)

    by Anonymous Coward

    $12 billion is a drop in the bucket. If it gives smaller competitors the ability to actually compete in the wireless space, then I'm all for it. The fact that VZW and AT&T have much fatter wallets and a bunch of spectrum (in fact, VZW specifically has more spectrum than they really likely need at this point) should be all reason needed to throw them out of the game.

  • Reserachers from MathLogic deparement of Land of ZoggyPoos discover that

    a COULD CAUSE b

    does not mean the same thing as

    a DOES CAUSE b

    despite much confusingness.

  • Duopoly Profitable, Says Expert (Score:5, Insightful)

    by Bob9113 ( 14996 ) on Tuesday April 30, 2013 @11:22PM (#43597533) Homepage

    could cost the U.S. treasury as much as $12 billion.

    It's all in how you spin it, isn't it?

    Flash: Duopolists willing to pay government $12 billion to extend duopoly. "Duopoly rents sure are nice!" says duopolist CEO, "We'd be happy to give the government a taste of the action." Film at eleven.

  • I don't get it. Sure if you think of spectrum as gold veins and you are selling mining rights.
    But it is artificial. The government pays these companies to develop something, then charges them for spectrum.
    It becomes a billions of dollars business for the government, and for the carriers who only have to pay a bit less than they receive.
    The point IIRC was to deliver low-cost, high quality applications. That has nothing to do with paying for spectrum and the phone companies have shown they don't put the money

  • If only cost/ fee savings moved out to the consumer.

    Given the way taxes play I have to earn $10 to pay about $6.

    The phone company has to pay taxes on their $6.....

    The result is a very retrograde tax on the almost poor where the fee gained from auction get paid for by a whole tax chain.

    This issue/ game has little impact on the proverbial 1% most of which have the company pay for their phones (all ten of them).

    Sadly the restrictions on tower location and handset radio technology further complicate

  • Why have an auction if they want a fixed amount of revenue? Just set the price to 20 gazillion and sell it to the first sucker.

  • I have no problem keeping Ma Bell Part A (Verizon and every baby bell they bought) and Ma Bell Part B (at&t and every baby bell that verizon didn't already own) from cheating the Sherman Anti-Trust Act by running a duopoly instead of their original monopoly

    • Re: (Score:2)

      by Shatrat ( 855151 )

      AT&T didn't buy up baby bells. SBC bought up other baby bells and then also bought what was left of AT&T and took the name over. AT&T itself was withering away after the breakup. Both Verizon and what is now AT&T have their origins in local carriers, not long distance. Anyway, they're not evil. They're just fat and lazy and that makes everything more expensive for them as well.

      • I never said at&t bought the baby bells, just that the company currently known as at&t consists of all the baby bells that don't already belong to Verizon.

        My point was that, despite the many changes in names over the years, both companies still posses the same "we own the network, we own the phones, we own you" mentality that people hated so much about the old AT&T.
        The kind of mentality where changing your plan (to a plan with more or less minutes) automatically extended your contract to a mini

        • Re: (Score:2)

          by Shatrat ( 855151 )

          the company currently known as at&t consists of all the baby bells that don't already belong to Verizon

          Ah, well that's also not really true. Centurylink, Frontier, TDS, Windstream, Sprint, and others I'm probably forgetting are all still out there running ILEC markets. Not that I disagree with your conclusion, from a wholesale perspective I can assure you AT&T is even more disfunctional and apathetic than they are at the retail level.

  • no, it saves billions (Score:3)

    by stenvar ( 2789879 ) on Wednesday May 01, 2013 @04:02AM (#43598521)

    AT&T and Verizon are operating as near monopolies right now. Not letting them bid may lose a bit of revenue to the government, but it saves people a lot more money in charges and contracts by making the market more competitive.

  • They're just going to pass along the amount they pay to their customers so I really don't care.

  • Come on. This headline reads like something that will save consumers billions - limiting the power of a duopoly- will actually COST them billions.

    I mean, nice try.

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