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Study: Limiting Bidding On Spectrum Could Cost Billions
itwbennett writes "According to a study (PDF) by the Georgetown Center for Business and Public Policy, restricting the ability of Verizon Wireless and AT&T to bid in upcoming spectrum auctions would drive down the bidding during the auction, and could cost the U.S. treasury as much as $12 billion. Even a partial restriction of bids by Verizon and AT&T could have a significant impact on auction revenues, said Douglas Holtz-Eakin, a co-author of the Georgetown study. Matt Wood, policy director at digital rights group Free Press, fired back, saying 'No one is talking about completely barring AT&T and Verizon from the incentive auction. Sensible people are talking about making sure that more than two companies have a chance at obtaining spectrum. The fact that these duopolists hired economists to parrot the companies' own talking points isn't really that newsworthy.'"
For a bit of money, will soon have little of either.
Letting the cash-rich companies have their way is surely a bad idea.
Every time the government doesn't get every penny and ounce of blood it can out of everyone doesn't mean it's "costing" the government anything.
How is cellular spectrum allocation done in other countries, and how many carriers do they have? Knowledge of any other country is appreciated. I've long wondered how it would be in cellular with an old Ma Bell (AT&T pre-divestiture) style monopoly. Part of me likes the competition idea, but with spectrum so limited and cellular infrastructure so expensive to build, it seems awfully wasteful. It's not quite a natural monopoly, but it verges on it.
What does it cost society?
can't really have it both ways... of course the deep pockets can pay more for more revenue-generating spectrum, what else is new?
help reduce the cost of cell phones. not worry about how to squeeze more money out of a allready broke public
Is it worth 12 billion dollars to keep AT&T and Verizon from controlling the airwaves?
If I have been able to see further than others, it is because I bought a pair of binoculars.
Clear the hams out of their VHF and UHF allocations, good bandwidth for better uses
The U.S government is printing $85 billion a month as part of its quantitative easing program to prop up the US economy and provide unlimited liquidity to banks. I would not mind a week worth of 'extra' printing to allow other carriers to compete.
Linkage with great description of how much money this really is:
http://demonocracy.info/infographics/usa/federal_reserve-qe3/money_printing-2012-2013.html
Our carriers provide great service, but at a monthly cost that is outpacing inflation and really should DECREASE based on technological advancements. Knowing that both Sprint and Tmobile are cash strapped makes this a perfect time to place a high bid and push the two out of the market for spectrum expansion.
This is a very tough industry to understand and regulate.
That $12 billion projected loss for the government is a double-edged sword. Presumably, it represents but a fraction of what the two companies would charge users for use of the spectrum in a pure duopoly market. Preserving competition may mean less revenue for government in this situation, but helps hold the duopolists' prices down. So the public benefit is there.
$12 billion up front is a HELL of a lot cheaper than the cost to taxpayers should we end up with even less competition in the wireless market than we currently have. Just look at Frontier communications for an example of what happens when a company is allowed to own a market (rural "broadband" in their case).
Or does this story dismiss its own relevance at the end?
as this man would have said.
Unfortunatly that thinking is an extreme minority among those whos voices count.
The question to ask is: which way will build value?
If Verizon and AT&T will just sit on the spectrum doing nothing, then the government gets 12 billion extra and it will be wasted. The government doesn't do anything that's useful or valuable to the people any more - it only generates pointless bureaucracy and sweetheart deals. It's the aristocracy of "pull".
If players other than Verizon and AT&T will use the spectrum for new and innovative products, generate intellectual property (ugh! that word...) and add value to the economy, then the government gets 12 billion less which will go unnoticed (a minor drop in the bucket), but it will enrich America and perhaps generate tax revenue over time.
Let's give Verizon and AT&T a chance at the new spectrum. They kept the 200 billion we gave them to bring broadband to 86 million homes in America and did nothing, but that was a long time ago.
They wouldn't do that to us again, right?
First, I believe in a free market. However, the teleco industry is generally a creature of government created and sanctioned monopolies. To claim that the free market has any position in this (either allowing government supported monopolies to extend their influence and power by bidding on the spectrum or by denying them the ability to bid on the spectrum) is wishful thinking at best.
I think they are absolutely right that limiting their ability to bid on this spectrum will cause the price to be lower. That only makes sense since you are limiting the 2 biggest and best funded companies from going all out for it. But in the long term, I think it will be better and bring in more money to have more than just 2 strong competitors in the cell phone business. Revenue comes from more than just the money from selling the spectrum. If we can help open up the market so there are more successful companies in it, that is better for everyone involved and will hopefully spur both growth for the other companies and innovation in the industry, which will lead to further growth and a better economy in general.
"Information wants to be expensive" - Stewart Brand, the same guy who said "Information wants to be free"
Here is a simple way to make telecoms move on the spectrum they are sitting on: make the lease non-permanent.
If each lease lasted, say, 15 years, and had to be rebid, say, 5 years before the lease expires, the incentive to sit on spectrum would diminish greatly. The prices that companies are willing to pay for spectrum might diminish somewhat, but not utilizing spectrum would start costing real money, and new competition would have a chance to enter the market every now and then.
The problem with the current system is that obtaining a lease to spectrum gives companies a permanent monopoly on the spectrum forever, which decreases the incentive for competition. The spectrum is a sunk cost and delaying utilization of it is merely a loss of revenue, but not a direct cost.
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$12 billion is a drop in the bucket. If it gives smaller competitors the ability to actually compete in the wireless space, then I'm all for it. The fact that VZW and AT&T have much fatter wallets and a bunch of spectrum (in fact, VZW specifically has more spectrum than they really likely need at this point) should be all reason needed to throw them out of the game.
Reserachers from MathLogic deparement of Land of ZoggyPoos discover that
a COULD CAUSE b
does not mean the same thing as
a DOES CAUSE b
despite much confusingness.
-- The Grand Teddy Bear has Spoken: "Windows 8 Source Code Available NOW! more disgusting than your pr..."
Let's not auction spectrum at all. It reduces the freedom of people to speak over the radio waves, and the 1st Amendment is pretty clear about regulating speech.
could cost the U.S. treasury as much as $12 billion.
It's all in how you spin it, isn't it?
Flash: Duopolists willing to pay government $12 billion to extend duopoly. "Duopoly rents sure are nice!" says duopolist CEO, "We'd be happy to give the government a taste of the action." Film at eleven.
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I don't get it. Sure if you think of spectrum as gold veins and you are selling mining rights.
But it is artificial. The government pays these companies to develop something, then charges them for spectrum.
It becomes a billions of dollars business for the government, and for the carriers who only have to pay a bit less than they receive.
The point IIRC was to deliver low-cost, high quality applications. That has nothing to do with paying for spectrum and the phone companies have shown they don't put the money they get to use building infrastructure, which is why an upstart like Google can parachute in and deliver high quality fiber connectivity.
How about we just scrap the whole thing and start over again?
Really? I would think the only thing at&t and Verizon care about is the cost to society.
Wow, sent an e-mail as suggested when clicking on "use classic" banner, and got a fast response that addressed my msg
I'm not quite sure of the freq's they are talking about bidding on but the greater return on investment would be to turn it over to unlicensed spectrum. Sure the gov wouldn't get a nice fat check up front but the downstream return would be huge. Let the market use that bandwidth as IT sees fit not what one of two companies see's fit. Sure greater 4G coverage and capabilities would be fantastic but the public would be paying out the nose for it. The US already is the most expensive location in the world for mobile data service and amazingly enough both Verizon Wireless and ATT keep making record profits even though its SOOO expensive to implement the next gen networks. If we were to let the spectrum go into the unlicensed we would see further adoption of Wi-Fi coverage or Wi-Fi like coverage from companies that are willing to side step the profit mongers currently running the show.
Limited terms of exclusive use (say 5 years) to let the winner capitalize on new tech, but then the bandwidth is reallocated via the next lottery to 2 other competitors. Later, rinse, repeat. Each new spectrum allocation then becomes spread across the corporate landscape over the long term, and no one can bribe, scheme or manouevre their way to a bandwidth monopoly.
What does it cost society?
Well... you know how our mobile phone networks are utter shit compared to the rest of the world? Plan on that continuing. You know the limited range and speed of wifi? Expect more of the same. In short, the cost to society is that the status quo remains.
Now, what happens if we don't get more of the same? Well, there's a chance, mind you I don't know how much of one, that the above-referenced problems would get better, or go away entirely, and even do so affordably.
But let's be honest; there's $12 billion here that the government can put in its coffers, and everyone who agrees with this gets a fat contribution to their re-election campaign. Who the fuck cares about the cost to society? It's just there to serve the rich anyway... Keep eating your dog food, Citizen.
#fuckbeta #iamslashdot #dicemustdie
Given the way taxes play I have to earn $10 to pay about $6.
The phone company has to pay taxes on their $6.....
The result is a very retrograde tax on the almost poor where the fee gained from auction get paid for by a whole tax chain.
This issue/ game has little impact on the proverbial 1% most of which have the company pay for their phones (all ten of them).
Sadly the restrictions on tower location and handset radio technology further complicate this retrograde hidden tax.
Truth is stranger than fiction, but it is because Fiction is obliged to stick to possibilities; Truth isn't. Mark Twain.
Why have an auction if they want a fixed amount of revenue? Just set the price to 20 gazillion and sell it to the first sucker.
Excuse me, but please get off my Pennisetum Clandestinum, eh!
I have no problem keeping Ma Bell Part A (Verizon and every baby bell they bought) and Ma Bell Part B (at&t and every baby bell that verizon didn't already own) from cheating the Sherman Anti-Trust Act by running a duopoly instead of their original monopoly
AT&T and Verizon are operating as near monopolies right now. Not letting them bid may lose a bit of revenue to the government, but it saves people a lot more money in charges and contracts by making the market more competitive.
F..k Verizon and AT&T. What's in the best interest of the people? Allowing Verizon or AT&T the spectrum sure isn't.
They're just going to pass along the amount they pay to their customers so I really don't care.
Why is it that we sell this spectrum? Do the purchasers get to use the spectrum forever for a one-time fee? Why are we not renting the spectrum for an on-going revenue stream?
Mod parent up! It is interesting and adds to the discussion, despite being like my position: open a ultra wide bandwidth next-gen internet wifi network with emphasis on broadcasting to replace TV, cell phone, and radio (except UHF, ham.) We are stuck with bandwidth monopolies as long as we limit ourselves to the link layer - move to a packet layer and suddenly it can be shared by more AND way more flexible.
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Come on. This headline reads like something that will save consumers billions - limiting the power of a duopoly- will actually COST them billions.
I mean, nice try.
For the most part yes they do basically get it forever.
Why these aren't 10 or 15 or maybe max 20 year leases is because the FCC is fucking stupid, that and of course they along with congress are paid off.