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Wireless Networking The Almighty Buck The Internet

US Wireless Spectrum Auction Raises $44.9 Billion 91

An anonymous reader writes: The FCC's recent wireless spectrum auction closed on Thursday, and the agency has raked in far more money than anyone expected. Sales totaled $44.89 billion, demonstrating that demand for wireless spectrum is higher than ever. The winners have not yet been disclosed, but the FCC will soon make all bidding activity public. "The money will be used to fund FirstNet, the government agency tasked with creating the nation's first interoperable broadband network for first responders, to finance technological upgrades to our 911 emergency systems, and to contribute over $20 billion to deficit reduction. In addition, the auction brought 65 Megahertz of spectrum to market to fuel our nation's mobile broadband networks. The wireless industry estimates that for every 10 Megahertz of spectrum licensed for wireless broadband, 7,000 American jobs are created and U.S. gross domestic product increases by $1.7 billion."
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US Wireless Spectrum Auction Raises $44.9 Billion

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  • by Virtucon ( 127420 ) on Friday January 30, 2015 @09:45AM (#48939591)

    Who decides where the proceeds go for public airwave auctions? I would have thought it would go to the treasury to contribute paying all the bills of the government, not just an isolated project?

    • by Anonymous Coward on Friday January 30, 2015 @10:07AM (#48939785)

      As spectrum is a finite resource, why sell it, instead of rent it? It goes up in value each year, so the stuff we sold years ago is now worth MUCH more than we sold it for.
      And, since the frequencies are owned by the general public, why the transfer to private corporations, who then hide income offshore? Heck, if the feds put up cell towers and little buildings to house the radios, they could easily earn enough money to fund the government's basic needs for MANY years to come.

      • Now that is an interesting idea. Create a marketplace for leasing spectrum to commercial market on bandwidth range,duration and Locality.

        Far better than mass block allocation in perpituaty.

      • why sell it, instead of rent it?

        Same reason people don't renovate leased buildings. Why invest in something when it isn't yours. I certainly would be thinking twice about providing 100% coverage anywhere if there was a risk that in a few years time my investment would be for nothing. The only solution then is really long term leases, but at that point what is the difference between the lease and the sale?

    • Just like Alaska does with its "Permanent fund"?

      • Because the Alaska Permanent Fund [wikipedia.org] takes a small amount of revenue from the oil recovery fees and puts it in a managed fund whose interest is dispersed to the couple of hundred thousand humans left in this mosquito infested swamp. It has a total capitalization of about 45 billion dollars, roughly the same as the spectrum sales.

        However, Alaska's population is roughly 735,000, the US 316,000,000. Assuming the same long term returns, the average US citizen would get about $1.80 per year. On a good year.

        Disbu

        • There is another way to look at it. Using your figures, the total amount per US person is about US$142. That is for a ten year lease of the spectrum if I recall correctly, so we can expect a similar amount again in another decade. So, that is about US$14 per person per year during that time (well, a little more, with interest as the money if the money is received up front). For a family of four, that is about US$56 per family per year ignoring interest. That could be a month or two of cell phone service on

    • by jratcliffe ( 208809 ) on Friday January 30, 2015 @11:48AM (#48940565)

      Broadly, it is general revenue to the treasury. In this case, a chunk of it was allocated ahead of time. Congress passed (and the President signed) the "Middle Class Tax Relief and Job Creation Act of 2012." That legislation instructed the FCC to find spectrum in this set of bands to auction off, and allocated a portion of the proceeds to (a) defray the cost of moving the existing users of the spectrum and (b) building a public safety wireless network.

      So, the FCC, while it conducts the auction, does so at the request of, and on the behalf of, Congress.

      • by dj245 ( 732906 )

        Broadly, it is general revenue to the treasury. In this case, a chunk of it was allocated ahead of time. Congress passed (and the President signed) the "Middle Class Tax Relief and Job Creation Act of 2012." That legislation instructed the FCC to find spectrum in this set of bands to auction off, and allocated a portion of the proceeds to (a) defray the cost of moving the existing users of the spectrum and (b) building a public safety wireless network.

        So, the FCC, while it conducts the auction, does so at the request of, and on the behalf of, Congress.

        Usually it is a troubling sign for a government if they are selling off assets and still running a deficit. We see it when small local governments sell off buildings and then rent the very same building back from the person they sold it to. So that leaves the question: "Selling off the spectrum- good thing or bad thing?"

    • Why not put it to paying off the $18 TRILLION debt before investors loose all confidence in our ability to repay our debts?
    • by nazsco ( 695026 )

      the people dumping the money into campaigns. In this case you can clearly see that the buyers for the spectrum are the ones deciding, since every item listed will result in the government buying services from them.

      "here is 40billion to buy this pipe. but you have to promises to use it to pay to deliver water via that pipe to those places where i plan to install said pipe"

  • by Anonymous Coward

    The wireless industry estimates that for every 10 Megahertz of spectrum licensed for wireless broadband, 7,000 American jobs are created and U.S. gross domestic product increases by $1.7 billion

    I estimate that for every million dollars I receive, I create 8,000 American jobs and increase gross domestic product by $3 billion. They should talk to me before spending all the money they got from this auction.

    • by thieh ( 3654731 )
      You are suggesting you can provide a fiscal multiplier effect of 3000 which is not consistent with current economic estimates.
      • no.. My question relates to who decides where the proceeds go. This is a public auction, licensing public airwaves. Who makes the determination where the proceeds go. The money should go to the Treasury and it's dispensation determined by congress.

        All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills.”
        — U.S. Constitution, Article I, section 7, clause 1

        “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.”
        — U.S. Constitution, Article I, section 9, clause 7

        So who in the government approved funding for this new national response network from these proceeds?

      • I think AC's point is that the "Wireless Industry" may be inflating or simply making up numbers to encourage Government cooperation.
  • by Anonymous Coward

    Are there any free bands in that mix for the rest of us? For the likes of 802.11a/b/g/n/ac? I would say those free bands has done more.

  • by Anonymous Coward

    A mobile phone is practically a necessity. The cost recovery on such massive "investment" is nothing more than a regressive tax. Well, actually, it's also a great barrier to entry.

    • by Kludge ( 13653 ) on Friday January 30, 2015 @10:11AM (#48939817)

      Yes, we should give that obviously highly valuable wireless spectrum to cell phone companies for free! Because they will pass those savings directly to us, and not horde the profits for themselves!

  • by gstoddart ( 321705 ) on Friday January 30, 2015 @09:57AM (#48939691) Homepage

    The wireless industry estimates that for every 10 Megahertz of spectrum licensed for wireless broadband, 7,000 American jobs are created and U.S. gross domestic product increases by $1.7 billion.

    And more importantly, this correlates to a 5% increase in executive compensation, and a 2% increase in the hookers and cocaine fund.

    This will also increase the pool for bribing politicians by an additional 1.5%, ensuring the best opportunities to purchase favorable legislation.

    CEOs are said to be pleased with the forecasted pillaging of the American public, and look forward to raising your rates and finding new and creative ways to give you less for your money, while optimizing long-term executive compensation.

    Suckers.

  • by JoeIsuzu83 ( 1005645 ) on Friday January 30, 2015 @10:02AM (#48939727)

    The wireless industry estimates that for every 10 Megahertz of spectrum licensed for wireless broadband, 7,000 American jobs are created and U.S. gross domestic product increases by $1.7 billion."
    Yes, of course they do. That's a nice press release for both the wireless industry, and the politicians they paid for.

    • Hey now! Press releases from the wireless industry and political bribery on the part of the wireless industry generates an additional forty thousand jobs a year! If you question these stats, that risks two hundred billion jobs!
  • by bradley13 ( 1118935 ) on Friday January 30, 2015 @10:03AM (#48939733) Homepage

    "The money will be used to fund FirstNet, the government agency tasked with creating the nation's first interoperable broadband network..."

    You could just as well put the money in a pile and burn it. Heck, given the inevitable follow-on costs, burning it would be cheaper...

    "...contribute over $20 billion to deficit reduction". Meaning it's going into the general fund, where it will be promptly spent three or four times over, each time with the justification that the expenditure has already been paid for by the wireless auction.

  • Spectrum (Score:4, Funny)

    by wonkey_monkey ( 2592601 ) on Friday January 30, 2015 @10:04AM (#48939745) Homepage

    Yellow everybody. Let's hope those who lost out in this auction aren't feeling blue about it. It'd be understandable to be green with envy, sure, but I hope no-one's seeing red, because the last thing we want is for things to turn violet. Orange you glad this hasn't happened? Best just to heave a cy-an move on.

  • Comment removed based on user account deletion
  • by Trachman ( 3499895 ) on Friday January 30, 2015 @10:07AM (#48939777) Journal

    $45 Billion? True, this is the amount raised. All of it has been paid to Uncle Sam.

    The same amount of $45 Billion is also telecomunication companies' best estimate, a modelled amount, equal to the net present value of all their clients' prospective fees, less their expenses, to be collected in the future.

    If a customer would ever ask a question, why his wireless service bill is so high, he would be given an answer that the bill includes amortization of $45 Billion of previously capitalized expenses, which companies had to pay.

    The GDP increase by $1.7 B is merely an additional tax, that the parties will need to pay, and represents increase in prices that the customers will sooner or later pay.

    • So would you rather have no auction at all and the spectrum be given for free to the first company to ask for it?
      • by ImdatS ( 958642 )

        Couldn't the government lease it to the TelCos? For e.g., a limited-time lease (5-10) years with either a fixed amount (increasing on a yearly basis) or a certain percentage of revenues generated?

        Didn't think this through completely, but this might generate more cash to the government. Also, there could be some strings attached so that no actual monopolies arise...

        Just a thought.

    • If a customer would ever ask a question, why his wireless service bill is so high, he would be given an answer that the bill includes amortization of $45 Billion of previously capitalized expenses, which companies had to pay.

      And this would be a lie. The only reason cell bills are high is because that is the price people are willing to pay.

  • First, how do you square selling a public good to private parties? Second, it wouldn't be hard to demonstrate that the good to the economy of allocating it without charge intelligently would exceed the auction's proceeds. Third, the proceeds don't come out of thin air. That's money that we'll all be paying the "winners" in the future. So as usual, it's using resources from the future in the present.
    • by msauve ( 701917 )
      It's completely illegitimate. Nowhere does the US Constitution grant the federal government the power to sell public resources to private interests. The closest is the "takings clause," which is exactly the opposite, taking private property for public use.

      Furthermore, nowhere is spectrum mentioned (of course, it wasn't known about at the time), so it should be covered by the 10th Amendment, and left to the states. Before someone claims that the nature of spectrum demands federal oversight due to it's perv
    • by bws111 ( 1216812 )

      How do you square selling a piece of land to private parties?

  • > Sales totaled $44.89 billion

    Yey! We can put off borrowing for 14 days!

    > [of which] contribute $20 billion to deficit reduction

    Yey! I mean 6 days!

  • And us 99% get shit on. THX
  • ... my job is worth 1428.57 Hz?
    • by k6mfw ( 1182893 )

      ... my job is worth 1428.57 Hz?

      hertz or hurtz? sorry I couldn't pass this one up. I do what you did with the math, like what someone did in article about Apple app store of $10 billion created 627,000 jobs that results in one job of $15948.96.

      • by k6mfw ( 1182893 )
        I hit reply too soon, wanted to say I like what you did with the math. It is true one job is worth 1428.57 Hz but is meaningless like the App Store math (a few developers made much larger than $16K and most made only pennies). Also illustrates selling spectrum to reduce deficit is meaningless as well.

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