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Spectrum Auction Could Be A Game of Chicken
Ardvark writes "Google promised some time ago to bid at least the reserve price for the C block of 700Mhz spectrum if the FCC accepted its demand for an open access rule for devices using the band, which the FCC did over Verizon's objections. If the reserve price is not met the rule will be dropped and the block re-auctioned. It appears now that bidding has stalled just short of the reserve price. It's assumed that Google has no interest in becoming a cell phone company and with a recession looming the 700MHz spectrum now seems worth a whole lot less. If Google's strategy was to force the bidding above the reserve but still lose the auction, Verizon could be calling their bluff, threatening them to live up to their word and buy what to Google could be the equivalent of a $4.6 billion 'doohickey.'" Update: 01/31 16:01 GMT by Z : And just like that, the plot thickens: the C block has hit the reserve price during bidding.
I'm not surprised that US companies aren't falling over themselves to bid.
Take a look at what happened in the UK when the 3G air was up for sale - they threw money at it and ended up with next to no customers.
With the way things are economically at the moment, people are not looking to up their monthly spend on their mobile phone bill. Companies will have a hard time recouping a huge outlay.
simon
The telecoms can take the heat for being heartless monopolies, for providing terrible service at a high price, and for leveraging their monopolies to avoid upgrading their taxpayer-financed infrastructure.
They can't, however, be accused of not doing what will profit them the most in the short term.
In this case, they've collectively called Google's bluff. I don't see Google having $4.6B in spare cash, to purchase the spectrum they have no idea how to make money on. This is a tough spot for Google, because not only do they stand to lose their coveted "shared spectrum" rule, but they also stand to lose much of their perceived invulnerability on the market.
FIOS isn't "good" because it's a good service. FIOS is only "good" because this is Verizon's final "fuck you" to the taxpayers that helped fund its infrastructure, and an open attempt to become a totally unregulated monopoly. You see, they HAD TO lease the copper lines, because FCC mandated it. They don't have to share the fiber optics. As a result, they've been busy building the fiber network that would cement them as a monopoly, while completely ignoring troubles with their copper... leveraging the reduction in the quality of service over the copper lines, to attract people to the fiber.
The article summary is garbage, or should I say simply wrong?
Google set 4 conditions it wanted to see. The FCC agreed with 2 of them, so Google is faced with half a glass. (Yes I know the Engineer's view of half a glass.) I don't recall them saying they'd bid reserve to ensure only half of their wishes.
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
The reason they had to lease the copper, was the original copper infrastructure was gov subsidized. The fiber costs are being eaten completely by Verizon, and while I am sure there are some tax breaks involved, there is no subsidy from the gov, state or local. Surprisingly though, the service itself is great, I have had very few problems, (yes there are some that had horrible installs and could never get some things working), the only issue I have is with the billing department which I have to call every month to get the appropriate triple play discount credited to my account since their system keeps losing it, and their CS.. it is abysmal and thats me being nice to them. The install actually was pleasant, and its not subcontracted like comcasts installers, they get paid hourly, not by the number of jobs they get done, so whether they do 5 installs in a day, or spend all day at your house rewiring your internal cable infrastructure, they get paid the same.
I came, I conquered, I coredumped
My company has tripled in size over the last 2 years.
... and yes, they are still being constructed. For all the doom and gloom, business is booming in my world.
... the corrections that are made often empower people to get lower interest loans, refinance debt to pay it off quicker, and often provide incentives to allow for businesses to grow)
Yeah. People throw their hands in the air over this incoming recession, and sure the stock market is having some problems, but so many areas of this country are still doing well. The company I'm working for is hiring like mad (any aerospace engineers looking for work? let me know). Within my house, which used to be out in the country surrounded by fields, there are no less than five new housing developments that sprung up in the last year
(and "recessions" aren't all bad
i can't see why a monopoly on a prime band of communication spectrum can't be anything but pure gold. there's only so much spectrum, but more and more people and more need for communication tech every day
The auction is a gigantic tax and nothing more. If the markets are efficient, the winning company will be rewarded only related to the risks it is taking. Everything else will be going to the government, and out of the pockets of consumers.
It's laughable how the auctions are being sold as a good way to raise funds for the government without impacting the taxpayer. Who doesn't use communications technology if not the taxpayer? This is the perfect way to cripple a single industry, because a) the winning company will have less immediate funding available for infrastructure b) consumer prices will be much higher, lowering the adoption rate significantly.
Just look at what happened in Europe. A lot of countries did the smart thing and gave the spectrum to the companies that were willing to guarantee the best service levels for the cheapest consumer prices, but then a few large countries ruined it for everyone by suckering companies into auctions. (To be viewed as a serious competitor, you had to take part in the largest markets.) The end result was what I described above, and we are only now starting to recover.
If you think that the beauty contest model will result in excessive profits for the winner, keep in mind the guarantees, and the fact that one winner wasn't awarded all the spectrum.
My Sig: SEGV
they can rent it out if they win it. as in beer. they could throw it open to all carriers using an open GSM platform using whatever flavor of G3 data they like so it's fully world-compatible.
there's an idea that should have "it's MY network, and all these guys behind me will beat you if you disagree" shivering.
yes, bring your BT, NTT, Korean phone over here with you. it will work. every time you hit send, two cents to Google for use of the C block airwaves. one cent if the home phoneco had built the network in that regional area.
profit per click. no investment in the backbone. that's something they know about.
it can work.
if this is supposed to be a new economy, how come they still want my old fashioned money?