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.'"

Comments

Re:Those who would trade a bit of freedom...

[msauve]

Managed spectrum is in no way "free market." It is a public resource, administered by the government, and naturally constrained. There is only flexibility in demand - supply is firmly fixed.

As such, the value is not only what an entity is willing to pay, but also in what benefit the public will gain for allowing their resource to be used.

A true free market attitude would be to support a spectrum commons.

Make leases non-permanent

[Mike_K]

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.

m

Re:Make leases non-permanent

[ebno-10db]

It could even be done on a shorter term basis. There is no technical reason that spectrum couldn't be dynamically allocated amongst carriers. It's easy to build base stations that can operate over an entire band and then tell them to only use certain frequencies. Forget the bidding, or even charging for the spectrum (the customers just wind up paying for it anyway), and periodically adjust how much spectrum each carrier is given in a certain area to reflect the load on their system. If a competitor grabs some of an entrenched company's customers (perhaps by some nefarious technique like better service or lower prices) then just give some of the entrenched company's spectrum to the upstart. That would allow real competition.