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FCC's Spectrum Auction Approaches $20B in Bids
An anonymous reader writes "After 32 rounds, the FCC has raised more than $18.8 billion in its 700-MHz auction, well surpassing its own early estimates of attracting between $10-15 billion in offers.
That's undoubtedly good news for the agency. Since the auction began on Jan. 24, both the FCC and wireless experts have expressed ongoing concerns about meeting those estimates. Once the auction was underway, those worries were compounded by a shaky economic forecast and the possibility of a looming recession."
According to their budget sheet (133 page PDF warning), their proposed budgetary resources for 2008 is $433 million.
As I haven't been following the news very closely, does anyone know where this $20 billion will go?
I, like many Americans, am ghastly concerned with how my government spends money. I hope that the FCC doesn't pull an M.C. Hammer and put spinners on their pocket protectors or pass out diamond studded platinum iPods to all of its friends. Will this money be put under control of congressional spending? Will this money be put in a fund to supply the FCC with emergency regulation cash?
You're going to suddenly have over 40 times the amount of resources you normally have. Even if they went nuts and ordered yet another all marble Parthenon-dupe building in DC they couldn't burn all this cash. Please don't be stupid.
My work here is dung.
I figured my $50 bid wouldn't fly, but a man can dream.
The economic cycle of boom and bust is based on traditional theories of static job types. It does not take into account productivity. These auctions came out of thin air due to technology--the ability to squeeze far more into digital streams. Likewise, technology will raise the living standard of all. House crisis? Not when you have robotic builders.
Now we can pay down that TRILLION dollar budget they're proposing.
I'm auctioning the oxygen inside FCCs Washington offices, who'll start me at $1 billion?
Oh yes, the 3G spectrum auctions in Europe .
That's one expensive doohickey!
Excuse me while I gather the virgin sacrifice and assemble the pentagram required to solve your problem
Some analysts say "looming recession", people think "Oh noes" and stop buying stuff/investing => recession.
this will be only 1-2% of next years budget DEFICIT. IOW, W. spends more money than we can make, even when it is made in major chunks. Time for a new CEO.
what business exactly does a government have selling a unique public resource to some private interest (thus automatically establishing a govenment backed monopoly), rather then presiding over equitable sharing and access to the said resource by all citizens?
Yes, that's right, a federal budget growth of more than 10% per year, with no new revenue to offset spending. Who was it that we were supposed to elect to get fiscal responsibility?
I really wish Mark Warner were running for president.
Is it just my observation, or are there way too many stupid people in the world?
The current bidding for the C block has NOT stalled at $4.71 billion as the story states. A new bidder upped the bid to $4.74 billion a few days ago. This was made possible because there are 2 ways of bidding for the C block: either outright for the whole block, where the bidding reached $4.71 billion, or for 8 pieces of the block individually. If the cumulative price for the bidding of the 8 pieces exceeds the bid for the whole block, then that bid trumps the whole block bid. The cumulative bid for the 8 pieces now stands at $4.74 billion, which means that the C block is still under contention. Today's latest story from the NYT gives more info on the auction.
I believe I heard a while back that it's all paid in installments, so it's probably going right to their budget over the years to be spent on some random thing, or to hire more people to man the phone lines for the groups that just complain about everything...
Personally I'd like to see it invested in improving the broadband situation here, but i don't think that can be a reality... it would start off with great intentions, and then eventually become some crap about a 10 billion dollar highway bridge to Hawaii that the cables can run under... (and then a 2 billion dollar bonus for each of the 5 execs that were in charge of getting it done)
This is nothing more than a shameless tax on a free medium -- the wireless spectrum.
Historically the FCC has always accepted bids almost without regard to how the winner will use the spectrum and it's overall benefit to the consumer. This time round they have the requirement that the spectrum will be 'somewhat' open to competition by forcing the winner to allow any compatible device to use the spectrum.
But by allowing bids of +$4 billion they leave the winner no choice but to stick it to the consumer in order to get their money back. And that will come in the tried and true method of nickel and diming us for every trivial service they can think of.
The winners in this auction should be the ones who have the best ideas that will best benefit the consumer, *not* the ones who come up with the most bucks. I mean, did the FCC even consider that the 700Mhz part of the spectrum would probably be best used for a meshed Internet and that MIT already has a working prototype for such a network? Sadly we probably just gonna get another phone network based on the old 20th century model that maximizes profit and stifles innovation.
This is the real reason the FCC ordered analog tv scrapped: so they could sell the bandwidth.
Who tagged this "reserve not yet met," and which reserve were they talking about? There are lots of pieces being auctioned off, and I am not sure about all of them (such as the public safety chunk), but the one that most /. readers are concerned with is the C Block. The reserve for the C Block was met last Thursday.
"Anyone who [rips a CD] is probably engaging in copyright infringement." - David O. Carson
You say that like it's a bad thing. I suppose you advocate the agency allowing the spectrum to be wasted indefinitely while there is a solution that can free the bandwidth for other uses. It isn't as if the proceeds of this, in part, aren't being used to subsidize the cost of OTA digital to analog converters for those affected. It would appear that you really don't know what you are talking about, perhaps the tinfoil hat is on too tight.
You don't make the poor richer by making the rich poorer. - Winston Churchill
20 billion / 50 million = $400 per customer if they have, say, 50 million customers. Say they want to get their money back over 10 years or 120 months, that's $3.33 a month. Not bad. They won't have 50 million customers very quickly or easily though.
This is the real reason the FCC ordered analog tv scrapped: so they could sell the bandwidth.
You just figured that out? It's not even a secret.
However, you're thinking about it backwards. Americans were already screwed, because a bunch of TV stations were hogging the best frequencies for free. Worse, analog TV wastes a huge amount of bandwidth. I don't think it's fair that the old TV stations are getting new digital frequencies for free. Those airwaves are worth billions.
This is getting ridiculous. Isn't the government to regulate industry, not own and sell it? That sounds more like Communism.
In Soviet America, Wireless spectrum sells YOU!
"Teach a man to build a fire, and he's warm for a day. Set a man on fire and he's warm for the rest of his life."
Did anyone else read the headline as $208? Maybe it's just my font but for a moment I was planning on bidding myself. I'm not sure what I'd do with a wireless spectrum at the moment, but for that kind of money it'd be worth buying one just to keep around in case of emergency.
To feed a troll - 1...
The spectrum has value to data carriers. They can build transmitters and charge customers money for wireless data access. How much will the carriers charge? As much as the potential customers will pay. And the customers will value the service in comparison to other available sources.
If the carriers got this spectrum for free and had zero competition, then they could charge $1000/minute or whatever customers will pay when the only alternative is no wireless communication. All the profit goes to the carriers, not lower prices for consumers.
If, on the other hand, paying $4 billion for the spectrum makes the carrier's service too expensive to compete in the market, then well they shouldn't bid. If absolutely nobody can justify bidding that much for the spectrum, then the government will run a new auction with fewer restrictions or a lower reserve. If nobody else wants it, then I'm sure the inventors with the world-saving idea can pony up twenty bucks.
Of course, that's if they win the auction.
About 2.5 weeks of interest payments to service the debt.
This whole spectrum auction makes me sick to my stomach, because they go about it the whole wrong way. Instead of auctioning off a monopoly on limited spectrum to the highest bidder, can't we come up with a more public-serving 'auction'? I mean, a highest bidder auction for something like this is akin to asking, "Whose willing to charge the american public the most amount of money to use radio frequencies"?
Why don't we turn that around, and have reverse-auctions for something like this. Not a lowest bidder auction, but rather an auction by whoever is willing to contractually agree to the lowest prices charged to consumers, or something like that? Then, they are legally bound to that price point, and if for some reason, they can no longer find it profitable to do business at that price, they can offer the spectrum back to the government to go through another round of auctioning, where maybe they can get it again at a higher price. . . if they aren't outbid by someone undercutting them.
Granted, it'd have to be slightly more complicated than this (the bidding process would need to include some kind of Service Level Agreement whereby the companies are bound to a certain level of customer service, what services are offered for the basic, contracted price (e.g. are they just offering voice at the contracted level, or are they also offering data, etc; what kind of access will other companies have to the customer base, etc).
But, my point is, if my government wants to serve me, as a citizen best, a highest-bidder auction is almost certainly not the way to do that, because it just drives prices up; instead the government should use the auction process to drive prices down while guaranteeing some base level of service, and maybe the auction process could take into account the additional charges for 'premium services'. Try to get the best deal for the citizens of the country, not the worst deal for them.