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The $10 Billion Poker Game Begins
Hugh Pickens writes "Monday was the deadline for potential bidders to file with the Federal Communications Commission over the auction of the 700-megahertz band, a useful swath of the electromagnetic spectrum that is being freed up by the move to digital television. Once bidders file they become subject to strict 'anticollusion' rules that in effect prohibit participants from discussing any aspect of their bidding until the auction is over. The next official word will be late December or mid-January, when the FCC announces who has been approved to bid. The auction will start on January 24. Participants will use an Internet system to enter bids on any of 1,099 separate licenses that are being offered (pdf). Most coveted seems to be the C block, 12 regional licenses that can be combined to create a national wireless network. This is the spectrum Google is presumed to be most interested in. The bidding will be conducted in a series of rounds (pdf)."
I'm excited!!! Hopefully we'll actually see some genuine competition between these giants.
all in
Once bidders file they become subject to strict 'anticollusion' rules that in effect prohibit participants from discussing any aspect of their bidding until the auction is over.
It's very hard to prove that you did not collude with someone. If AT&T wins, and a year later it turns out they had a secret deal with Verizon, what happens? Will the license be revoked? Or will AT&T successfully argue about the need to "put the past behind us"?
Apology to Ubuntu forum.
I'm betting google will come out with everything it intended to.
- Aetheral Research -
This whole "bidding" process on the spectrum doesn't create compeition, it makes the government money. If it were truly competitive there would be no fee for spectrum use. Instead we are left with a new spectrum with someone spending billions of dollars to "own" it.
Lame.
I'm also skeptical that this can become a useful resouce in a reasonable amount of time. It's great that Google et al buys up spectrum, but what about build out? How long is that going to take? What about radios? It's probably not that much of a change from current technology but it takes time.
Also, can the radios that use this network roam gloablly?
What would be cool is if Google bought it and let everyone "use" it.
Can someone explain to me why a company has to pay the FCC huge gobs of money in order to use a frequency in the air? What keeps someone from using whatever the heck frequency that they want to? How can someone, in this case the FCC, take control of all frequencies and then 'sell' them to the highest bidder? To me it seems like saying you can't breathe the air around my house unless you pay me, which is dumb of course because nobody owns the atmosphere. I just don't get it, I don't understand this aspect of our economy.
I have a hard time with the government taking in money for something they don't own. Sure regulate the airwaves, charge a fee for the administration, but to auction off frequencies? Also this is due to forcing the TV stations to move to digital.
We will make the cost of operating a television station go up, for those that do not have cable or satellite it will cost more for the digital equipment. This only serves the government, it does not serve the people.
Sniping, anyone?
First rule of holes; When in one, stop digging.
Did we ever pass an ammendment that granted the federal government the right to regulate the electromagnetic spectrum? I don't speak legalese but I'm pretty sure that it wasn't put in there when the Constitution was written.
wavelengths (full 1/1) Wifi = 12cm Cell = 16cm 700Mhz = 42cm its like its back to the CB days with rubberducks and magmount car antennas
For a moment there, when I read the headline, I thought they found a table full of players with both huge money and a gaming habit like Guy Laliberté.
Bids are exclusively via the internet, and Google probably has enough smart people and resources to intercept a few packets from other bidders....
Why don't they allocate the space to a certain communication technology with established rules for non-interference and then open it up any company to compete? (think wifi) Why should one company have a monopoly on a wavelength? (think broadcast TV/radio) With sophisticated and (relatively) inexpensive packetization and multiplexing available, is there any real need for single-operator wavelength allocation any more? This seems so... early 20th century.
because the same people who don't support regulation such as this will be clamouring for protection by using the Fairness Doctrine to clamp down on speech they don't like
the modoratores are abusing my guadrant of subliminol lavender
how much for the color "blue"?
seriously, i dont understand how this entire process can even take place. they are essentially bidding on exclusive rights to a color. why does the government even own the rights to it, to begin with?
I read just the PDF presentation with the rules, and it was absolutely crazy with minimum required bids, rounds, waivers, and everything else. What an extraordinarily complex procedure! Now I understand why Google hired some game theory experts on this!
I think Google will end up purchasing spectrum, but then sublicensing it out to others. Requires no additional build-out. I also have to think that Google is going to be the smartest about how they approach this auction. I'd love to see a post-mortem on the action!
Actually, I'd hate to see any of the incumbent telcos/wireless companies get their hands on this. I want a new competitor here.
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
What does this have to do with poker? You can't swing a dead cat without hitting a poker analogy these days. You can't even turn on TV or go to the movies without seeing your favorite sitcom characters or James Bond on a bluff. Whatever happened to good ol' baccarat?
The future of the internet is in mobile technology. Except for corporate, mission-critical operations, I think that the majority of internet/TV usage will be done from a mobile device. Even residential internet/TV access will probably be delivered wirelessly (to the premises). The high-speed internet Television market is already a ridiculously profitable area to be in and it will only grow larger. I already consider my internet connection to be almost as important as my other utilities, so I can only foresee the demand increasing.
However, entry into the high-speed ISP business is pretty much impossible. There's all that legal business over who actually owns the lines, regulated monopolies, etc. So what if all of the sudden a wireless medium became available that could reach anybody in any place? You no longer have to worry about laying your own fiber and other infrastructure. No longer do you have the expensive barriers to the ISP market. This is where I think Google wants to be. They already have ton's of content, now they'd have their own means to deliver it (and make you pay -- probably). They essentially want to be the one-stop shop for anything internet and probably TV (the line between the two is starting to blur). I'd switch to their service... although I wonder if they'd throttle the connections to Comcast's sites ;).
How many times does this need to be asked?
The government owns the airwaves.
Whether or not you like it, it's true.
You SHOULD like it, though, because it ensures things WORK.
It keeps people from stepping on each other's toes, and it keeps our communications working.
But hey - lets open up the spectrum. Information wants to be free. It's working great for the internet.
Can you imagine what would happen if airwaves were open?
People would set up towers in their yards and rent the bandwidth to advertisers.
You'll be getting spam on every tv channel, radio station, and phone call.
Your existing devices will cease to function.
Air traffic control will be screwed.
Fire and Police departments will essentially be DOSd.
The military will have HUGE problems.
Legally, it tends to fall under interstate commerce.
Practically, it tends to fall under really freaking important.
People who say we should open it up and just use multiplexing / packeting / encryption really don't understand what they're talking about. If you allow people to openly use these frequencies, they will openly compete by cranking up the power. No amount of tricky signal manipulation will save you from some jerk with a bigger tower than you. If you want to send something from A to B, and someone builds a tower right in the middle, you're screwed.
And worse than that is the fact that, when they're money involved, people will crack encryption and circumvent other controls. Just imagine being able to hijack a TV broadcast during the commercials. You can replace the ads broadcast by the tv station with ads you broadcast, supplied by the same sleazy scum sending spam.
What are the government's plans for all of that money? Is that online somewhere?
it's not like you will just be listening to your favorite radio stat- V1AGRA HERBAL ENHANCEMENT!-ion and all of a sudden you will get th-I AM MFUNE NIFONGO AND I HAVE 2 MILLION DO-is sort of random interruption fr-BARELY LEGAL TEENS DO-om random broadcasters who ju-EARN 10,000 DOLLARS A DAY FROM HOME SELL-st want to turn a buck without any consideration for decorum or common sense. most people are reasonable, and just a little shame is all it takes to prevent asocial activ-GOATSE.CX GOATSE.CX GOATSE.CX-ity
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
Not counting public access and whatever local church network(s) you can pick up, exactly how many broadcast tv channels do you get with a pair of rabbit ears?
Don't worry if you're a kleptomaniac, you can always take something for it.
http://www.mises.org/story/1662
I did a bunch of experimental mock auctions as part of a college experimental economics lab. The rules for the auction aren't too difficult or different from many of the auctions that I participated in.
Here's my opinion on some of the rules and their effects:
1) Package bidding (where someone can bid on a group of licenses and wins or loses all the licenses) -- this helps the large, national bidders that see synergy from owning a number of regional licenses. As the minimum required bid for individual licenses fluctuates due to other individual and package bids, a package spreads the cost over the whole set and makes individual breakthrough bids more expensive / challenging. Size and structure of packages allowed can change the dynamics of the bidding process quite dramatically.
2) Activity requirements -- makes sure everyone is bidding or dropping out. The amount you can bid in one round depends on the amount you bid (or were winning) in the previous round. Google can't snipe the whole auction with a $10 bln bid after not making a single bid beforehand. Activity can strongly favor the big players as they can push around smaller players with large package bids while the small bidders are only making very high single or small package bids. Nobody should stop bidding on anything until it becomes clearly unprofitable to do so--activity crucial to securing winning package bids. There was a 100% use-it-or-lose-it activity requirement in the auctions I participated in, but these rules are similar and gross bid oriented vs. license oriented.
3) Bid retraction -- creates a strange second phase of the auction where some bidders pull bids to get packages to shuffle in their favor. There was a penalty for doing so on winning bids, and I remember some people losing money on this or not making much at all due to it. No professional will make that mistake, but the FCC isn't being generous here.
4) Bid incrementing -- nobody can open or continue the bidding with a massive bid compared to the current minimum required bid. This is important as it prevents someone from throwing out a profitable but discouragingly large bid. I started doing this, particularly when I was a national or powerful regional bidder. There's a name to this strategy that I discovered after the fact.
My prediction on who wins:
The big players -- AT&T, Verizon, maybe Google
A few regional powerhouses might crop of here or there, particularly in more rural regions of the country -- Alltel
The FCC / US Government -- pulls in billions of dollars.
Who loses:
Smaller national players -- Sprint, T-Mobile (unless the Germans want to go for broke)
Cable companies -- their dreams of breaking into wireless data and telephony will die, unless they cut a deal with Google or one of the smaller and more desperate wireless carriers (above). I'm not sure if there's any way that syndicates can form to bid, but that or an after-the-fact deal with Google may be their only hope. If Sprint pulls a coup and wins a major bid, it'll be desperately strapped for cash that Cox, Comcast, et. al. has to offer, but Sprint's going to have trouble winning much spectrum.
Ken Martin's a telco lobbyist, looking to exact revenge on the cable companies for their success in stealing phone and broadband customers from his patrons. I don't claim that it's why the auction is structured this way, but it's clear that nobody went out of the way to encourage diversity in the ownership of different regional licenses.
Unknown:
American wireless consumers? Somebody has to pay for these astronomical bids, and the auctions operate like a tax in some senses. You can see the difference between a spectrum-tax free environment and a taxed environment by comparing 2.4 ghz with 1.9 ghz cell phone service. A little of this range could allow some exceptional innovation to come about.
The EM spectrum in this country is the property of the general public, not the FCC, regardless of how the FCC behaves.
> Participants will use an Internet system to enter bids
Clueless Government Employee: "Wow! Bidding is up to 39 trillion dollars! It's a real battle between 'kcusu' and 'asdfjlsdf' !"
(-1: Post disagrees with my already-settled worldview) is not a valid mod option.
that they have no authority to control the air???
The FCC is an illegal immoral cabal.
or you respond without reading
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
Online bidding...
Billions of dollars...
The chance to mess with some powerful organizations of a very public stage...
Who else smells a warm wind blowing?
We tend to forget that collusion, like any other business model, is subject to cost-benefit analysis. It's likely the cost of this spectrum will be high enough that the incentives will be aligned toward exploiting the resource for value, rather than choking it off to obtain collusive side-benefits.
I don't see the point of libertarian extrapolation of "free" markets. When you model the interactions of independent agents in game theory, the concept of "freedom" is nowhere to be found in the bare equations. Everyone makes their own choices and suffers the benefits and consequences accordingly.
What you can do is set up some rules of the game (cue sound of freedom pissing down the drain) so that the game is less likely to degenerate into fixed collusive alliances. Collusion is a fact of life in any multiparty competitive system. In much the same way that we attempt to prevent petty crime from amalgamating into organized crime, we also attempt to prevent petty (implicit) collusion for amalgamating into organized, institutional collusion. Certain small freedoms are sacrificed in the transmutation. The main freedom one gains in the exchange is the freedom to disassociate (aka "bugger off"). If two parties become entangled in an exploitative relationship which greatly benefits one party at the expense of the other party, the abused party can elect to disassociate, and enter into fresh relations that function on a more equitable footing.
Historically, there have been many social impediments to disassociation: slavery, marriage, citizenship, conscription, and debt. An emotional list. No accident there.
Debt it one of the smoother plays. A tin pot dictator accepts $100 million in loans from the World Bank, squirrels half of it away in Swiss bank accounts, then the (captive) citizenry toils for decades to repay this loan in support of the high 1st world standard of living. Sweet. When the abused citizenry moves to disassociate themselves from this corruption (which was of no original benefit to them in the first place) we label it an insurrection and bring out the tanks (the other half of the $100 million was well spent).
I don't see how an ideological extrapolation of freedom has much to contribute to this debate.
Just free it. Get the Gov out.
Have independent oversight committee create an internet free network.
F-corporates who hoarde our resources.
The first thing I want to ask is WHAT IS THE EXPECTED BANDWIDTH OF A 700MHZ DEVICE? I'm not talking about theoretical bandwitdh here...I mean practical on-the-street bandwidth. Could someone tell me in bps? or Bps?
Secondly, I hope these dopes arguing about how it's wrong for the government to be licensing this spectrum and making billions off will stop and think about a few things:
1) Unlike the internet, which runs on wires between computers, wireless communications propagate through space. For this particular frequency range, there is currently no practical way to isolate one broadcast from another in a particular area except by limiting broadcasts to different frequencies within the spectrum. If you and I both broadcast from our personal antenna on 700.635MHZ, then we both get noise--or the guy with the more powerful antenna wins but with a really messy signal. In other words, the guy with the most money wins just like the case now--except the licensing rules prevent competing broadcasters on a given wavelength.
If we hope to use this spectrum as the valuable resource it really is, we need spectrum licensing. To say it should be 'free' is like saying there should be no traffic laws. It has a certain ideological panache but is really useless from a practical standpoint. The suggestion that we have 'established rules for non-interference' sounds interesting but I doubt it's feasible given the broadcast range of these frequencies. On the other hand, I'm no expert. Perhaps something akin to ethernet might work.
2) The 700 mhz range should permit several providers in a given area. I'm not sure how wide each block is but I believe the spectrum being auctioned would allow 2 or 3 new players to offer wireless services in a given area. There's a graph at arstechnica. More players means more competition means lower cost. Look at the cost of long distance since the breakup of AT&T in 1984.
3) The Internet as we know it is built on technologies created by the United States Defense Department, specifically DARPA. These are funded with tax dollars like the kind raised by this auction or the kind siphoned from your pocket. I'm under no illusions that this auction money will be well-spent, but I'm happy the government isn't asking me for money. On the other hand, if this spectrum belongs to all of us, I'd like to have my 1/300,000,000th of the money raised. At the very least, I'd like to see more discussion about how this money gets allocated.
A different model might be where the government uses tax dollars to build a publicly owned infrastructure and then service providers bid on its usage to provide services in a given area. Is that what the Japanese model is like? Personally I don't like that model because a) the gov't would have to raise taxes instead of the windfall they get from these bids, b) anybody who's been to the DMV knows that gov't offices are totally inefficient, c) the technology would NEVER get updated because of the slow-moving bureacracy.
4) Part of the reason this piece of spectrum is so valuable is because the buildout costs are expected to be quite low compared to other forms of digital communications. As you probably know from personal experience, wireless broadband like wifi doesn't travel through walls all that well. Relative to other frequencies, the 700Mhz spectrum is apparently prized for its ability to penetrate walls and vegetation. It was originally used for TV broadcast - a single tower might cover an entire metropolitan area or all of a small state.
5) The 'open access' rules that have been adopted are *supposed* to force spectrum purchasers to allow their users to use any device of their choosing with no preference or limitation on what types of traffic should be permitted. In practice, this might mean that you can send email freely with a device on the network rather than being charged for every single text message. Or perhaps you could use VOIP instead of having to buy minutes for calls. We'll see what really ha
We had some telecoms bidding for some stff here as well a few years ago. Some of them went almost bankrupt over it.
Don't fight for your country, if your country does not fight for you.
Excellent transaction, will do business again, Highly recommended ++++++++++++ A++++!!!!!!!!
ok, i learned this in mass media law and regulation class:
the electro-magnetic spectrum is part of nature. it exists naturally. man-made instruments use it, but the spectrum itself is natural public land
it falls under federal regulation because it is 'public land', just like national forrests
the feds grant licenses for various entities to use public land, so in the same way they grant licenses to use the spectrum
that's the story
Thank you Dave Raggett
When they did this in the UK, I was working for one of the companies bidding (although I had nothing to do with it), and we all got totally addicted to watching the game unfold.
The four incumbent operators (at the time, it was Vodafone, BT, Orange, and One2One) weren't allowed to bid on the biggest slice, so you had a load of new faces slugging it out for that one. These companies were also allowed to bid for the other four slices, but basically the four incumbents couldn't afford not to secure a slice, so everybody knew that one way or another they would end up getting them, and it was just a question of how much they'd end up paying.
So there were two rounds of bids every day, with the game ending when nobody made a new move for two rounds. So it was a bit like musical chairs - you never knew when the music was going to stop and you had to make damn sure you were holding a slice of the bandwidth when it did. Incredibly tense.
And when it all finished, it became clear that Vodafone had been stung hard. As I said, there were four slices that the current operators were allowed to bid on, one of which was significantly bigger than the others. Now, Vodafone had the deepest pockets, this was known by all playing. So once it became clear that Vodafone had decided they were having the biggest slice, it seems that the other operators took it in turns to outbid each other for it, forcing Vodafone to go up and up. And then once they'd pushed the price up to nearly twice as much as all the other licences, suddenly they stopped bidding for the big slice and settled for the smaller ones, leaving Vodafone high and dry.
Anyway, it looks like the US process is something similar, so keep an eye on it, it's top entertainment.
Holy crap, EVE macro miners are coining that much cash these days?
People replying to my sig annoy me. That's why I change it all the time.