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Study: Limiting Bidding On Spectrum Could Cost Billions

Posted by Soulskill on from the competition-isn't-cheap dept.

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.'"

6 of 140 comments (clear)

  1. Those who would trade a bit of freedom... by Anonymous Coward · · Score: 5, Insightful

    For a bit of money, will soon have little of either.

    Letting the cash-rich companies have their way is surely a bad idea.

    1. Re:Those who would trade a bit of freedom... by goombah99 · · Score: 5, Insightful

      If it's worth billions more to verizon then you can be sure versizon is going to extract many ties that from the citizenry. So in the end the govt would get more revnue but the people would have less money. I'd rather have the reverse. Moreover the competition may be good.

      --
      Some drink at the fountain of knowledge. Others just gargle.
    2. Re:Those who would trade a bit of freedom... by goombah99 · · Score: 5, Insightful

      I am by no means a fan of AT&T or Verizon, but the concept of preventing a company from bidding on something in the name of competition strikes me as... anti-competitive. I'm a firm believer in a free market economy and this reeks of giving all the kids a trophy just for playing.

      Your assumption is that the sole criteria is return in dollars, and not say some other public good. When we sold land to homesteaders in the wild west we did not maximize the return but had settlement in mind. We do this with lots of resources. The public gets a greater benefit, the govt gets less revenue. We often handicap research grant scores to favor young investigators or classes of institutions. This is a case of maximizing future returns and diversifying risk rather than getting immediate return of maximum research output per dollar spent.

      Not having a monopoly may be a better use of the spectrum than simply more of the same from an existing large company.

      --
      Some drink at the fountain of knowledge. Others just gargle.
    3. Re:Those who would trade a bit of freedom... by fuzzyfuzzyfungus · · Score: 5, Insightful

      If it's worth billions more to verizon then you can be sure versizon is going to extract many ties that from the citizenry. So in the end the govt would get more revnue but the people would have less money. I'd rather have the reverse. Moreover the competition may be good.

      Honestly, the fact that spectrum auctioning is even being talked about in terms of its revenue value(I can see arguments being made that the 'auction' mechanism is a good one for identifying users most willing to pay, and ensuring that spectrum doesn't go unused, though such arguments need to face up to the empirical reality of examples like "Tons of crazy-useful stuff that we do in the shitty ISM band, not because it's good; but because it's available") suggests a level of conceptual failure that makes my head hurt.

      If the government just wants to raise money, 'tax farming' by selling off public assets to the entities most capable of extracting monopoly rents in exchange for a slight premium over what they would otherwise sell for is pitifully inefficient. If they need money, suck it up and acknowledge that it's a tax. Accepting years of substandard and undercompetitive spectrum use in exchange for a bit of cash upfront is just nuts.

  2. Not really interested in what it costs government. by rolfwind · · Score: 5, Insightful

    What does it cost society?

  3. Well, that makes it easy by Qzukk · · Score: 5, Insightful

    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.