FCC Puts 4.6 Billion Minimum Bid on Spectrum Auction

ChainedFei writes "Wired News notes that the Spectrum auction is moving forward, with the FCC placing a minimum bid for the C-block spectrum being offered at $4.6 billion. That, coincidentally, was the amount that Google fronted as a minimum bid to endorse certain open standards for the spectrum being sold. This is essentially a move to shut out smaller possible competitors while also maximizing the money the auction will generate for the grade-A areas of the spectrum. In addition, any single bidder wishing to purchase the entirety of the spectrum must front a minimum of $10 billion. 'According to the FCC, nearly all of that C block aggregate reserve price will go toward a package of U.S. national licenses. This portion of the spectrum also happens to be the one with two open access conditions attached to its sale mandating that all devices be allowed to access the band and that all applications can be able to run across the network. If the reserve price isn't met, the auction will be rerun without these two conditions in place, according to the FCC.'"

Comments

Not really shutting out smaller competitors

[Anonymous Coward]

I.e., if you wouldn't have the money to bid up and up, then you wouldn't be in the same competition anyway.

Although, to be fair, it might force the bidding war to be shorter -- but knocking out the competition right from the start because they can't afford it doesn't really affect the final outcome. It just forces the bids to be realistic from the start.

So much political agenda on ./ these days

Re:Not really shutting out smaller competitors

[Stormx2]

Well, this is a political issue. From my understanding, the government is selling rights to use certain frequencies of electromagnetic waves - a hugely important part of physics and the universe we live in. A bunch of people object to this, that the US government has some kind of automatic ownership of anything that can generate a profit unless it sells it.

The jist is that a physics fundamental isn't something we can buy and sell.

Do correct me if I'm wrong :)

Re:Not really shutting out smaller competitors

[Embedded2004]

Yeah, land is just a physical matter to think the US government wants to buy and sell land. pfft.

The jist is that a physics fundamental isn't something we can buy and sell.

Great

[j.sanchez1]

This portion of the spectrum also happens to be the one with two open access conditions attached to its sale mandating that all devices be allowed to access the band and that all applications can be able to run across the network. If the reserve price isn't met, the auction will be rerun without these two conditions in place, according to the FCC.

Great. So if AT&T outbids everyone, and comes in under the reserve, then we can all kiss the open spectrum goodbye. I wonder how much the FCC charged AT&T for that guideline.

Re:Great

[Anonymous Coward]

If Google puts its money where its PR Department is, then either it'll win the auction, or someone will outbid them at a higher-than-reserve price, since the FCC set the reserve price to the amount Google had suggested it would pay for the spectrum.

Does "starting price" == "reserve" here?

[Kadin2048]

Wait -- can someone clarify this for me:

Is the FCC using "reserve" and "starting price" interchangeably? Or are they two separate things (similar to an eBay auction), where there's a starting price for the bidding, and a much higher, secret reserve price?

It sounds like the FCC did what Google wanted, and are running the auction with the interoperability and open-access mandates in place. And they're starting the price out at a level ($4.6B) that Google said they would pay, given those conditions. So that seems like a good thing. In fact, if that's the case, it seems like the auction would be almost guaranteed to go through with the conditions in place.

But is there a separate, higher reserve price somewhere? Some much higher amount that would let Google bid $4.6B, but still fail to meet the reserve, and let the FCC re-run the auction without the interoperability/open-access conditions?

Backwards

[WPIDalamar]

If they can't get 4.6B for the spectrum, they'll remove the two open access restrictions? WTF?

It should be the other way around... if they can't get 4.6B for the spectrum, then they'll ADD the two open-access restrictions that they didn't include. Then at least, they know Google would bid 4.6B and maximize their profits while also having a more open network.

Re:Backwards

[Tacvek]

If goggle buys this, I can be almost certain that it will be used to create a nationwide Wireless network, probably a "broadband" network.
The problem with the current systems are that only the existing cell companies can get into the business. There is no real way for a competitor to enter the market. Further, in general only approved devices can be used on the network (although the GSM networks are the exception). The companies can dictate what the network can be used for. As a result, Cellular internet prices are outrageous, and unfair.

So what Google would do is but the spectrum. They would standardize on a protocol. They would let companies provide services (most likely internet services) on that band. The companies offering services on that band would be required to let any devices that support the protocol to be used (likely a SIM-card like system would be used). The companies could not restrict the applications or services used on the network. Smaller companies would have a much better chance to get in on the action, as the major requirements would be an antenna on a cell tower, and a large internet connection. They would only need to provide the end users with a SIM, as the modems could be gotten anywhere. The total overhead of providing 700 MHz internet access would be far less than the traditional cell system, and thus there would be significant competition, and low prices.

The key here is that the spectrum owner has no interest in providing the service themselves, and has no reason to sell out to the large companies. So they would have no problem allowing multiple companies to provide the service in the same area. That is not heard of for most utilities. Also, unlike cell phones, the companies competing in the local area would not conspire to fix prices, as the cost of entrance would be low enough that a new player could easily join in.

If I am correct about that, that would be the sort of thing the government should do. That sort of regulation would level the playing field, and thus allow capitalism to work well both for businesses and for consumers. That would be the sort of regulation that is ideal. Unfortunately all too often, government regulation works to make the playing field less even, in the favor of the entrenched large companies that are already working in that sector.

Translation

[Anonymous Coward]

Regulation and selling of otherwise "free" bandwith is little more then another hidden tax.

Re:Use of this frequency

[tgatliff]

700mhz is an almost ideal frequency. Its is low enough to penetration buildings (Unlike Ghz), but is still high enough that shadowing would not be a problem like with the lower frequencies...

To me, the company that is really missing the boat on this is M$. Their cash holdings trump anything Google can come up with and could easily buy the entire frequency map. The uses for this are endless... Iridium v2 I think are the best idea from a longtimer standpoint. They could sell low cost packages where you put a small dish on your house and get basic services for free. Then have an access point built directly into the unit... Instant national WiFi coverage!! :-)

Re:Use of this frequency

[skoaldipper]

A great article explaining the reasoning.

Effective range:

its broadcast-attractive physics (like its ability to penetrate walls)

Out with the old UHF, in with the new:

analog television broadcasters to clear the 700 MHz airwaves on Feb. 17, 2009.

And, cost:

building a nationwide wireless network over the 700 MHz spectrum is around $2 billion versus a nationwide 1900MHz PCS that costs approximately $4 Billion.

Re:Bad Move

[Anonymous Coward]

Placing blame on the auction rather than the bidders seems odd. If they want a reasonable return, that's incentive for them not to overbid.

Other way around.

[chaboud]

I don't think Google needs to own this space. As long as it goes for more than the reserve, Google is flying high on whoever buys this space.

Google's requirements just made sure that Google can step into the game in this juicy section of spectrum even when they don't win the bidding (I don't think that they're going to try very hard).

Either way, I highly doubt that we'll see a completely free wireless mesh that only costs the initial investment of the device crop up any time soon. Your tax dollars hard at taxing you...

(Yes, I know that it would take a lot of hops to cross the country...)

Hey! How many slashdot readers are there.. if we each chipped in... oh... we're all comparatively poor.

Re:What they are selling

[fyngyrz]

What you have to understand is that the purpose of the FCC is to take complete and absolute control as possible of the natural resource of the EM spectrum, and make that resource available to corporations to resell to the citizens at a profit, as well as carve off a few chunks for the government to use any way they like.

The citizens are only allowed the tiniest possible token portions of the resource, with usage of those portions additionally limited in many critical ways. They do all this under the guise of "protecting" the resource.

Once you wrap your head around this, everything the FCC does makes sense.

The FCC probably qualifies as one of the most corrupt agencies of the US government in the sense that what it does is extremely disjoint from the actual interests and needs of the public, and intentionally so. The US government is supposed to serve the interests of the people, not the corporations.

Re:Need to take them to court. Airwave freedom

[CodeBuster]

Belongs to the public. The public needs to fight to regain the airwaves.

The public never lost its property rights to those airwaves, we simply elected to rent them out to the highest bidder so that the proceeds of that auction could be used to fund the purchase other goods and services that we the public wish to conusme rather than attempting to operate them directly ourselves with all of the risks and costs that that entails. The government, acting on behalf of and in the interest of the people, is our agent in that sale. Now, you might argue that the government is squandering the proceeds or not getting the best possible price, but really we never lost control of the airwaves.

Spectrum shouldn't be held hostage for filling government coffers.

The government coffers are really *our* coffers in that the government uses this money to provide us with public goods that we like to consume. If the government did not receive this money from the auctions then it would have to raise the cash necessary to provide these public goods in other less desirable ways, such as raising taxes.

We could have very cheap phones for everyone. Not with ATT guy running the FCC.

Selling the right to use the spectrum at auction and then allowing the market with competition to decide the outcome yields the best and most fair result for everyone. You will have your cheap phone for everyone much faster, and at a much better price, from the market than you would from government control and central planning. Remember here that wireless spectrum is not entangled in "natural monopoly" scenarios with last mile physical infrastructure problems so the market is much more able to reach the optimal result more quickly than might be the case in fiber optic or cables and other utilities.

Re:Need to take them to court. Airwave freedom

[zymano]

The public doesn't own the airwaves. It's owned by corporate america because they are the only ones that can afford the ridiculous auction prices. What would happen to the average citizen if they broadcast something on unused piece of spectrum owned by the private sector? If you guessed thrown to jail, you would be right.

The government coffers are really *our* coffers in that the government uses this money to provide us with public goods that we like to consume. If the government did not receive this money from the auctions then it would have to raise the cash necessary to provide these public goods in other less desirable ways, such as raising taxes.

You may find it shocking but maybe our government spends money excessively just to buy votes. Some political experts do suggest this as happening. And if the government is so good with our money then lets give them 'all' of our money. That would surely solve all of our problems.

Selling the right to use the spectrum at auction and then allowing the market with competition to decide the outcome yields the best and most fair result for everyone. You will have your cheap phone for everyone much faster, and at a much better price, from the market than you would from government control and central planning. Remember here that wireless spectrum is not entangled in "natural monopoly" scenarios with last mile physical infrastructure problems so the market is much more able to reach the optimal result more quickly than might be the case in fiber optic or cables and other utilities.

Creating a monopoly for just 'ONE COMPANY' to horde spectrum does not equal the free market. The gov makes makes a buck and that doesn't always filter down to average Joe citizen

A better idea is to free and democrotize our spectrum much like the internet or even better than the internet.