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Bidding At FCC TV Spectrum Auction May Be Restricted For Large Carriers 91

Posted by samzenpus
from the helping-the-little-guy dept.
An anonymous reader writes "Rumors have surfaced that the Federal Communications Commission (FCC) will restrict bidding at their TV spectrum auction in 2015 to effectively favor smaller carriers. Specifically, when 'auction bidding hits an as-of-yet unknown threshold in a given market, the FCC would set aside up to 30MHz of spectrum in that market. Companies that hold at least one-third of the low-band spectrum in that market then wouldn't be allowed to bid on the 30MHz of spectrum that has been set aside.' Therefore, 'in all band plans less than 70MHz, restricted bidders—specifically AT&T and Verizon (and in a small number of markets, potentially US Cellular or CSpire)—would be limited to bidding for only three blocks.' The rumors may be true since AT&T on Wednesday threatened to not participate in the auction at all as a protest against what it sees as unfair treatment."
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Bidding At FCC TV Spectrum Auction May Be Restricted For Large Carriers

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  • by Anonymous Coward

    I'm sure this will end well. Somehow I'm sure that the only loser will be the U.S. taxpayer.

    • by lgw (121541) on Wednesday April 16, 2014 @11:52PM (#46776641) Journal

      Well, to begin with, if the big players want that bandwidth they'll just buy whoever buys it. Problem solved. If some of the bidders are shell companies created for just such a contingency, so much the better.

      • by schnell (163007)

        Well, to begin with, if the big players want that bandwidth they'll just buy whoever buys it. Problem solved.

        What if Sprint or T-Mobile buy that spectrum? AT&T already tried to buy T-Mobile and was shot down by the DOJ, so it's silly to think that the big two could buy either T-Mo or Sprint in order to get that spectrum. With set-asides, T-Mobile and Sprint are in effect having their cost of doing business being subsidized by taxpayers, which - depending on your view of competition in cellular - may or may not be worth your taxpayer dollar.

        • by lgw (121541)

          Well, I use T-Mobile. I love T-Mobile. It would be awesome if they could get some actual high-speed wireless coverage that was worth a damn. Thus I conclude they won't end up with any new bandwidth - fate is just taunting me.

          • by sconeu (64226)

            I would switch to T-Mobile in an instant.... IF they could somehow manage to get signal coverage where I live.

            Note: I live within the city limits of Los Angeles.

            • by lgw (121541)

              Yep - they really suck at coverage. I respect their quality-over-quantity decision, but it's useless to most people. Still, they've been the lead at no-contract phones, practical pay-as-you-go, and so on.

      • Aren't mergers and buyouts of that kind monitored and regulated?
        • by rnturn (11092)

          Not since the Reagan administration. What actually makes the big news story is when an acquisition/merger is actually denied.

          Not that AT&T will sit back and let this happen. It would be surprising if they weren't already hard at work lobbying their bought-and-paid-for Congresscritters to cut funding to any and all government agencies that would enforce this auction decision.

      • by geekmux (1040042)

        Well, to begin with, if the big players want that bandwidth they'll just buy whoever buys it. Problem solved. If some of the bidders are shell companies created for just such a contingency, so much the better.

        Ah good! So glad the problem is "solved" here. I wouldn't want to think we even remotely acknowledge that thing we used to call a monopoly. Apparently it's lost all meaning beyond a fucking board game these days.

        • by lgw (121541)

          Well, monopoly is the wrong word. The problem is barrier to entry. Established large companies just suck in general, never seem to move technology forward even when it's in their best interests. Most progress comes from small companies who embrace every cool new advance just to stay alive, and succeed in changing customer expectations. If the big guy then buys the small guy for that tech, and moves to meet those raised expectations, everyone wins. That happens often in, say, software, but big telcos ha

      • The bigs just squeezed the little guys, all legally, until they started to fail. Then they bought them and got the frequencies.
        • Yup... Public mobile had everything unlimited for 35$/month, were bought by Telus, and guess what? no more unlimited and a pathetic data quota for 45$...

    • by sir-gold (949031) on Thursday April 17, 2014 @12:05AM (#46776681)

      They aren't picking favorites, they are setting limits on greed.

      There is nothing wrong with kicking fatty out the door when he goes back for his 10th plate at the buffet line, especially when you find out he was saving some of it for "later"
      (In reference to Verizon's purchase of the 700mhz block A spectrum that they never got around to using)

      • by fuzzyfuzzyfungus (1223518) on Thursday April 17, 2014 @01:30AM (#46776971) Journal
        Don't forget market power: something that no sane individual trusts a telco to exercise benignly, and which even ardent free-marketeers recognize as pernicious if abused.

        If fatty were benevolent, well liked, and known for fairness and decency, there'd be no reason to kick him out just for being the fat guy. However 'benevolent', 'well liked' and 'known for fairness and decency' are not concepts you associate with the phone company. Terms like 'smirking, sociopathic fuckweasels' more usually come to mind. You don't want any of them getting their hands on more market power than absolutely cannot be avoided.
      • (In reference to Verizon's purchase of the 700mhz block A spectrum that they never got around to using)

        They sold it to T-Mobile for $2.365 billion in January 2014.

        • by sir-gold (949031)

          Only because the FCC forced them to do it. As part of the original spectrum auction, Verizon was required to put that spectrum to use by a certain date. That date came and went, so the FCC told them that they had to either use it or sell it.

    • Re: (Score:2, Interesting)

      by squiggleslash (241428)

      Saying "Those with money can run amok" is also picking favorites. This is about trying to get some fair criteria in for ensuring a large group of telecommunications companies will have enough spectrum, a publicly managed and limited resource.

      I'm not always a fan of the way the FCC does things. The insanity of making spectrum geographic, for example, simply because that would maximize revenues when auctioning them, cost the US a decade or more of high prices and abysmal service. But this rule seems entire

    • Why do you hate the Coase Theorem?

  • by sir-gold (949031) on Wednesday April 16, 2014 @11:56PM (#46776659)

    "AT&T on Wednesday threatened to not participate in the auction at all"

    Good, that leaves more spectrum for the companies that actually need it, instead of wannabe monopolists that have spectrum to spare.

    • by schnell (163007)

      instead of wannabe monopolists that have spectrum to spare

      Here's the problem: the more customers you have, the more spectrum you need. If you have lots of spectrum today and continue to grow, then you will need more tomorrow. If Verizon and AT&T had more and enough to spare, do you think they would be lining up to shell out $X billions of dollars for this instead of improving next quarter's profits? Given Slashdot's consensus that all corporations are obsessed with short term returns, why would the mega-carriers be shelling out huge sums of cash that could oth

      • by non0score (890022) on Thursday April 17, 2014 @01:40AM (#46777003)
        No, there's no "fascinating question that makes this debate interesting". The government should prevent any market condition where a hostile monopoly may manifest. Full stop.

        AT&T and Verizon has proven that they can and will abuse their oligopoly position and not compete. This will not change in any foreseeable circumstance short of being forced into a competitive landscape. The duty of government then is to lower the barrier to entry, which, in this case, the barrier is the amazing amount of cash AT&T and Verizon has to outbid everyone else.

        And if you object to taxpayers subsidizing, then I can simply point you at the cost of running any government agency that (ostensibly?) promotes fair competition: e.g. SEC. The cost to hire lawyers, set up offices, conduct audits, litigate -- none of that is free. Do I see you label "preventing and punishing insider trading" as an "interesting debate since it has no objectively correct answer" in a cost analysis? No, of course not, because it's desirable and everything has an associated cost to begin with.
      • by squiggleslash (241428) on Thursday April 17, 2014 @06:10AM (#46777733) Homepage Journal

        You're assuming that the taxpayer getting as much money directly from a sale as possible is in some way legitimate government policy.

        The government is not a business and the "taxpayer" has more interests than simply short term reduction of their taxes. In particular a lower cost of living, something we'll get if there's better competition and if we don't force businesses in general to have absurd unnecessary costs, is likely to benefit us more.

        Short term "maximizing direct revenues from auctions" thinking is what got us into the stupid situation where spectrum auctions are geographic, resulting in decades of overpriced, poor quality, cellular service. It's also part of a mentality that's undermining every attempt to have the private sector provide quality infrastructure in the first place, usually at great social and economic cost to the rest of us. The same idiocy, practiced through property taxes, is in part why the entire railroad system in the US collapsed in the 1960s and 1970s.

        We need to get away from that kind of thinking, and start looking at cost of living issues rather than what tax rate we can get away with.

        • by TubeSteak (669689)

          It's also part of a mentality that's undermining every attempt to have the private sector provide quality infrastructure in the first place, usually at great social and economic cost to the rest of us. The same idiocy, practiced through property taxes, is in part why the entire railroad system in the US collapsed in the 1960s and 1970s.

          If you honestly believe this, it makes me suspect everything else you said.
          Railroads were "growing," but their growth in tonnage was significantly less than the overall growth in product being moved.
          As roads got better, the balance was was accruing to the trucking industry.

          The real game changer for rail was the Dwight D. Eisenhower National System of Interstate and Defense Highways.
          Private industry sure as shit wasn't going to build a coast-to-coast highway system,
          so if you want to talk about "undermining e

          • If you honestly believe this, it makes me suspect everything else you said.

            Well, tough, because it's true. Railroads were suffering from ever increasing property taxes, and the only way they could deal with them was by getting rid of as much property as possible, undermining their network effects. And like I said, it's in part one of the reasons, not the whole reason.

            Interestingly most of the reasons you give are not real reasons - the Interstate system being a partial exception (though if that had been

      • by Rich0 (548339) on Thursday April 17, 2014 @07:12AM (#46777963) Homepage

        It's an interesting quandary for the FCC. AT&T and Verizon can and will pay more for the spectrum to be auctioned. That means US taxpayers get more money, which is what is supposed to happen when the government is selling public airwaves.

        Only if you look at the sales of the spectrum. Subtract all the monthly cell phone plan payments those taxpayers are making and AT&T/Verizon don't look like such a great deal any longer.

        Too big to fail is a recipe for disaster. When a market gets dominated by one or two players, they should be handicapped until their customers have incentive to flee elsewhere and the market share drops to a moderate level. This should be done whether they're doing anything wrong or not - it is just good for the economy. Nothing personal - just business.

      • The flip side, however, is that spectrum is required to compete with these companies. The big telcos might not be too keen on shelling out $X billion at the expense of next quarter's profits, but if buying that means that Rival Startup Inc. can't get any spectrum at all? They just cemented their profits for the forseeable future at very little relative cost.

        Given that there his established historical precedent for companies buying up spectrum and letting it languish (see: Verizon's purchase of the 700mhz bl

      • by suutar (1860506)

        Do you as a taxpayer want to in effect provide free profits to Sprint or T-Mobile's shareholders - even if you don't use those carriers - because you think it's good that they are around to provide more competition?

        Yes. Absolutely yes. I am pretty confident that in the long run that costs me less per year than if ATT owned all the spectrum.

      • by sir-gold (949031)

        Just because a company is buying spectrum doesn't mean it has a use for it.
        Spectrum is a very limited resource, so one way to fight your competition is to buy the spectrum they need, simply to keep them from having it. This is especially true for Verizon, which has a vested interest in keeping it's competitors coverage area as small as possible, because coverage is their ONLY advantage right now.

  • Just fight it out with paintball guns or a poker match. Or run through the Wipeout tracks. Or Super Smash brothers. Or Dance Dance Revolution best of 3 dance-off. All this behind the scenes, cloak and dagger, pretend-fair bullshit is getting old. If there's a cap or randomization, some dreamy idiot with some dumb invention wins and doesn't make good use of it. If it's unlimited, the customers end up paying AT&T or whatever for 10 years the 1 trillion dollars or whatever the hell they bid. It's al
  • by Anonymous Coward

    All of it. Exclusive access. Corps don't need more spectrum.

  • by Duhavid (677874) on Thursday April 17, 2014 @12:42AM (#46776809)

    What I want to know is why is this spectrum for sale?
    Why isnt it for lease? Why arent the carriers paying something per year for the use of the spectrum?

    • Re:Sale or lease? (Score:4, Informative)

      by mlyle (148697) on Thursday April 17, 2014 @12:55AM (#46776855)

      The argument against shorter-term leases is that you have to invest a lot in infrastructure to make use of the spectrum.

      Most of these licenses that are being bid for in the auction are for ten year terms, I believe.

    • Re:Sale or lease? (Score:5, Informative)

      by schnell (163007) <[me] [at] [schnell.net]> on Thursday April 17, 2014 @12:58AM (#46776869) Homepage

      Why isnt it for lease? Why arent the carriers paying something per year for the use of the spectrum?

      Technically, it is a more like a very long term lease rather than a perpetual sale. Ultimately, those frequencies are still under the discretion of the FCC to allocate or revoke subject to certain conditions.

      To answer your question about why carriers don't "rent" it annually, it's because there is an ecosystem around those frequencies that require huge multi-year investments. Let's say that you're carrier X and you just bought the rights to the LTE "C Block" frequencies. You need to buy hundreds of millions of dollars worth of LTE equipment that runs is the C Block, site your towers to match the RF propagation characteristics of that particular frequency band, have all your smartphone vendors that you commit to buy XXX millions of units from have their devices support that spectrum block, etc. etc. Every radio band that you add to a piece of tower equipment costs money, and adding additional bands to phones takes up motherboard space and adds extra costs, so on both sides there is a monetary cost to supporting additional spectrum bands.

      If you could lose that spectrum next year to another bidder - you have literally spent hundreds of millions of $$$ on equipment and devices that are worthless to you - or, worse - are only worthwhile to customers who will use the network of your competitor who just bought that spectrum. If carriers could not lock up spectrum blocks long term, the uncertainty would mean that they would pay far, far less for it, so the government would extract far less money from them for that spectrum. So "selling" the spectrum under long-term leases means more $$$ for the government vs. trying to "rent" it year-to-year.

  • The previous spectrum auction made sense.. Cut of channels 52-69 and sell them off. Broadcasters were required to have two channels during the DTV transition, so if one of them was on a terminated frequency, they'd just have to use the other on a permanent basis.

    But this one is psychotic... Everybody, everywhere, has to put their entire operation up for bids. The FCC gets to evaluate on a massive scale how to build a contiguous and nation-wide band out of the cheapest broadcasters on offer, with the rea

  • I can't but help think that there needs to be some way to share or combine spectrum between carriers. It seems grossly inefficient to have a geographic footprint served by multiple carriers over a wide spectrum but have phones that can only talk on part of it due to arbitrary division by the carriers.

    It also seems like it creates such ridiculous barriers to entry that competition is inherently limited because the requirements to being a carrier are so large -- you need radio spectrum and broad coverage.

    I t

  • by AndyKron (937105)
    AT&T is mad because it can't have all the cookies. Fuck AT&T!
  • by jeffb (2.718) (1189693) on Thursday April 17, 2014 @07:24AM (#46778045)

    "Winners should pick winners in markets."

    -Winners in markets

  • Don't do this to us, you will make us have to buy these smaller carriers, and that will make us sad pandas
  • Part of any future spectrum auctions should require that the company getting the new spectrum develop technology that allows the use of their new service with minimal guard bands and minimal interference to adjacent users.

    If this means Verizon, AT&T, et al have to develop newer better filter technology for the other users' equipment, so be it. Though I understand the necessity of guard bands right now, I hate seeing 1-7mhz chunks of supposedly valuable spectrum basically unused to mitigtate interferenc

    • Those guard bands are there because state of the art RF tech cannot create so called 'brick wall' filters that do not have serious, deleterious, in-band, cost, and/or component scale side effects. There is some aspects of RF physics that place some rather arbitrary limits on how we generate and detect wireless communications. The boffins keep chipping away at it... and it does get better over time... but bandwidth precision is one of those devils in the art that is hard to beat down.

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