Bidding At FCC TV Spectrum Auction May Be Restricted For Large Carriers

An anonymous reader writes "Rumors have surfaced that the Federal Communications Commission (FCC) will restrict bidding at their TV spectrum auction in 2015 to effectively favor smaller carriers. Specifically, when 'auction bidding hits an as-of-yet unknown threshold in a given market, the FCC would set aside up to 30MHz of spectrum in that market. Companies that hold at least one-third of the low-band spectrum in that market then wouldn't be allowed to bid on the 30MHz of spectrum that has been set aside.' Therefore, 'in all band plans less than 70MHz, restricted bidders—specifically AT&T and Verizon (and in a small number of markets, potentially US Cellular or CSpire)—would be limited to bidding for only three blocks.' The rumors may be true since AT&T on Wednesday threatened to not participate in the auction at all as a protest against what it sees as unfair treatment."

Comments

Government picking favorites

[Anonymous Coward]

I'm sure this will end well. Somehow I'm sure that the only loser will be the U.S. taxpayer.

Re:Government picking favorites

[lgw]

Well, to begin with, if the big players want that bandwidth they'll just buy whoever buys it. Problem solved. If some of the bidders are shell companies created for just such a contingency, so much the better.

Re:Government picking favorites

[sir-gold]

They aren't picking favorites, they are setting limits on greed.

There is nothing wrong with kicking fatty out the door when he goes back for his 10th plate at the buffet line, especially when you find out he was saving some of it for "later"
(In reference to Verizon's purchase of the 700mhz block A spectrum that they never got around to using)

Re:Government picking favorites

[schnell]

Well, to begin with, if the big players want that bandwidth they'll just buy whoever buys it. Problem solved.

What if Sprint or T-Mobile buy that spectrum? AT&T already tried to buy T-Mobile and was shot down by the DOJ, so it's silly to think that the big two could buy either T-Mo or Sprint in order to get that spectrum. With set-asides, T-Mobile and Sprint are in effect having their cost of doing business being subsidized by taxpayers, which - depending on your view of competition in cellular - may or may not be worth your taxpayer dollar.

Re:Government picking favorites

[fuzzyfuzzyfungus]

Wireless is no substitute for wireline, this much is undeniable.

How, though, is it relevant to a discussion of how to divide scarce spectrum between competing wireless use cases(doubly so when both of them inhabit markets shaped in part by a semi-substitutable wireline implementation of the service they offer)?

The question isn't whether wireless is the future (it isn't, and anybody who says it is is probably lying to save on capital investments) but whether broadcast television is the best use of an unfortunately finite natural resource; and, if it isn't, whether we owe broadcasters some sort of dignified exit strategy or whether we can just kill them and get on with our day.

Personally, I'd be the first to agree that the default 'Sell to Ma Bell or The Exaflood will eat your babies or something, something' policy is utter bullshit. Given the notable successes of ISM-band wireless protocols, despite the fact that the ISM band is kind of a slum, I'd advocate letting the poor telcoes suffer with their 4G and allocating more relatively unencumbered spectrum.

However, I'd also be the first to axe broadcast television as an institution, leaving not one transmitter upon a tower, to free up that additional spectrum. Broadcast TV is a howling wasteland and its arguments that it offers some sort of valuable public service aren't exactly getting more convincing as time goes on.

Re:Government picking favorites

[fuzzyfuzzyfungus]

Don't forget market power: something that no sane individual trusts a telco to exercise benignly, and which even ardent free-marketeers recognize as pernicious if abused.

If fatty were benevolent, well liked, and known for fairness and decency, there'd be no reason to kick him out just for being the fat guy. However 'benevolent', 'well liked' and 'known for fairness and decency' are not concepts you associate with the phone company. Terms like 'smirking, sociopathic fuckweasels' more usually come to mind. You don't want any of them getting their hands on more market power than absolutely cannot be avoided.

Re:Government picking favorites

[lgw]

Broadcast TV is a howling wasteland and its arguments that it offers some sort of valuable public service aren't exactly getting more convincing as time goes on.

Sadly true, and truly sad. But it would be a shame if we auctioned off all the cool frequencies this year, then invented some amazing new wireless tech 5-10 years from now, and had no place to put it.

Re:Government picking favorites

[Cryacin]

By far the greatest reason why TV channels are so tasty to cellular phone and data providers, is that they generally are lower frequency in spectrum. Why is this good? If you have a portable TV and a cell phone, you'll find that you'll still get TV signal when you don't have cellular signal. They are lower frequency, and thus penetrate further into places like carparks, concrete structures et al.

That's why in Australia, carriers like Telstra beat the pants off other carriers like the Optus network, because their plans work in more carparks, buildings and those lovely artsy fortified bunker's that you get around the place.

Re:Government picking favorites

[The123king]

I thought that was the issue we have at the moment...

Re:Government picking favorites

[evilviper]

You're quite wrong about broadcast television. With the switch to digital, it has gotten vastly more useful and practical.

Now, putting-up an antenna is the best picture quality you can get. Most stations have 2+ subchannels, so instead of 7 channels, you get 21+, and hence a proliferation of minor networks... "AntennaTV" "THIS" "MeTV" and more come to mind. And they have a far greater signal-to-noise ratio than cable channels, due to limited space and the demands of a massive broadcast audience. In some secondary (ie. old UHF-only) markets, major networks were entirely missing, due to limited space, but are now able to be carried as sub-channels on competitor's broadcast towers.

OTA broadcast viewership is increasing, mainly with young households opting for an antenna rather than cable/satellite, ssince those have lost their technical edge, and the price is hard to justify. And OTA is critical for TV-related companies... Those TV-tuners for computers wouldn't have a. big enough market without it, and no reason to exist. DVR companies also probably wouldn't be able to make it without the OTA crowd. Startups like Aereo would be gone, with no possibly legal source of content.

And tell me this... Where can you find daily national/world news with the same quality as the approx. 4am newscasts on CBS/NBC/ABC? BBC World Service looks like crap by comparison, though easily better than CNN/MSNBC/FauxNews of course. How about educational content like the broadcast networks are required to air for children? We absolutely do get a hell of a lot from broadcast OTA TV.

Re:Government picking favorites

[Ginger Unicorn]

Aren't mergers and buyouts of that kind monitored and regulated?

Re:Government picking favorites

[geekmux]

Well, to begin with, if the big players want that bandwidth they'll just buy whoever buys it. Problem solved. If some of the bidders are shell companies created for just such a contingency, so much the better.

Ah good! So glad the problem is "solved" here. I wouldn't want to think we even remotely acknowledge that thing we used to call a monopoly. Apparently it's lost all meaning beyond a fucking board game these days.

Re:Government picking favorites

[squiggleslash]

Saying "Those with money can run amok" is also picking favorites. This is about trying to get some fair criteria in for ensuring a large group of telecommunications companies will have enough spectrum, a publicly managed and limited resource.

I'm not always a fan of the way the FCC does things. The insanity of making spectrum geographic, for example, simply because that would maximize revenues when auctioning them, cost the US a decade or more of high prices and abysmal service. But this rule seems entirely reasonable.

Re:Government picking favorites

[rnturn]

Not since the Reagan administration. What actually makes the big news story is when an acquisition/merger is actually denied.

Not that AT&T will sit back and let this happen. It would be surprising if they weren't already hard at work lobbying their bought-and-paid-for Congresscritters to cut funding to any and all government agencies that would enforce this auction decision.

Re:Government picking favorites

[interkin3tic]

And tell me this... Where can you find daily national/world news with the same quality as the approx. 4am newscasts on CBS/NBC/ABC? BBC World Service looks like crap by comparison, though easily better than CNN/MSNBC/FauxNews of course.

If I'm up at 4AM, the TV guide channel is about the level of journalism I'm capable of appreciating.

Also, does the BBC website not work at 4AM? Because one could just browse that. What's so bad about the BBC world service? I'm asking honestly, I've never been a fan of video news, and never been a fan of anything that early in the morning.

Re:Government picking favorites

[sconeu]

I would switch to T-Mobile in an instant.... IF they could somehow manage to get signal coverage where I live.

Note: I live within the city limits of Los Angeles.

Re:Government picking favorites

[lgw]

Yep - they really suck at coverage. I respect their quality-over-quantity decision, but it's useless to most people. Still, they've been the lead at no-contract phones, practical pay-as-you-go, and so on.

Re:Government picking favorites

[lgw]

Well, monopoly is the wrong word. The problem is barrier to entry. Established large companies just suck in general, never seem to move technology forward even when it's in their best interests. Most progress comes from small companies who embrace every cool new advance just to stay alive, and succeed in changing customer expectations. If the big guy then buys the small guy for that tech, and moves to meet those raised expectations, everyone wins. That happens often in, say, software, but big telcos have always been too steeped in tradition to do anything right, so it all sucks.

Re:Government picking favorites

[radarskiy]

Why do you hate the Coase Theorem?

Re:Government picking favorites

[antdude]

But some people have issues with digital OTA. When it is not strong, picture/audio drops out and unwatchable. With analog, one can still watch even if not clear. Digital is either you get it or not.

Re:Government picking favorites

[Areyoukiddingme]

(In reference to Verizon's purchase of the 700mhz block A spectrum that they never got around to using)

They sold it to T-Mobile for $2.365 billion in January 2014.

Re:Government picking favorites

[evilviper]

That's BS. You can get a perfect digital picture, when analog signals would have been so weak as to be incorrigible from static. Seen it first hand.

Re:Government picking favorites

[evilviper]

*indistinguishable*

Stupid autocorrect.

Re:Government picking favorites

[antdude]

Nope, others and I were able to watch and hear unclear pictures OTA on TV compared to digital.

Re:Government picking favorites

[evilviper]

Nope, others and I were able to watch and hear unclear pictures OTA on TV compared to digital.

This misconception comes from broadcasters making changes to their transmissions at the same time they switched to digital. Broadcasters on VHF channels 2-6 switched to UHF channel, which obviously aren't received by VHF antennas. Some chose to cut their broadcast power to save power, and more. It even goes as far as some HDTV manufactures including weak and noisy POS tuners. I've seen this with lesser-known brands all the time.

Side-by-side, digital is FAR better. I can get digital stations with no breakup from 130mi away, with regular consumer level antennas... The low-power analog stations from 10 miles away look like crap.

You don't need to take my word for it. Look at something like tvfool.com, and see how they sort DIGITAL stations higher than ANALOG stations, even when they have up to 10dBm lower signal levels than the analog versions. I've been watching OTA on the fringes in various cities since long before the switchover, and I've seen first-hand how things have vastly improved.

Re:Government picking favorites

[sir-gold]

Only because the FCC forced them to do it. As part of the original spectrum auction, Verizon was required to put that spectrum to use by a certain date. That date came and went, so the FCC told them that they had to either use it or sell it.

Re:Government picking favorites

[antdude]

Then, how come I can't get some channels perfectly (some drop outs) that are about 20 miles away when I can with analog (not perfect clear though, but viewable)?

Re:Government picking favorites

[evilviper]

Distance isn't relevant... Could be near by but low power, or far away and high power. I'd need a lot more info to give you a specific reason. I already listed a number of possible causes.

Either way, you can't argue with physics.

at&t wasn't welcome anyway

[sir-gold]

"AT&T on Wednesday threatened to not participate in the auction at all"

Good, that leaves more spectrum for the companies that actually need it, instead of wannabe monopolists that have spectrum to spare.

Re:at&t wasn't welcome anyway

[schnell]

instead of wannabe monopolists that have spectrum to spare

Here's the problem: the more customers you have, the more spectrum you need. If you have lots of spectrum today and continue to grow, then you will need more tomorrow. If Verizon and AT&T had more and enough to spare, do you think they would be lining up to shell out $X billions of dollars for this instead of improving next quarter's profits? Given Slashdot's consensus that all corporations are obsessed with short term returns, why would the mega-carriers be shelling out huge sums of cash that could otherwise be pocketed by shareholders or executives if they didn't actually need it?

The true situation is that all carriers, big or small, can use more spectrum to increase their LTE spectral efficiencies and decrease cost per bit/customer and increase capacity. It's an interesting quandary for the FCC. AT&T and Verizon can and will pay more for the spectrum to be auctioned. That means US taxpayers get more money, which is what is supposed to happen when the government is selling public airwaves. If the government reserves some of that spectrum for smaller carriers, it fosters competition at the cost of getting paid less for that spectrum than (by market demands) it should have - in effect, subsidizing the operations of these smaller carriers at the expense of taxpayers. Do you as a taxpayer want to in effect provide free profits to Sprint or T-Mobile's shareholders - even if you don't use those carriers - because you think it's good that they are around to provide more competition? That's the fascinating question that makes this debate interesting since it has no objectively correct answer: where is the right balance between taxpayer duty and fostering competition?

Re:at&t wasn't welcome anyway

[non0score]

No, there's no "fascinating question that makes this debate interesting". The government should prevent any market condition where a hostile monopoly may manifest. Full stop.

AT&T and Verizon has proven that they can and will abuse their oligopoly position and not compete. This will not change in any foreseeable circumstance short of being forced into a competitive landscape. The duty of government then is to lower the barrier to entry, which, in this case, the barrier is the amazing amount of cash AT&T and Verizon has to outbid everyone else.

And if you object to taxpayers subsidizing, then I can simply point you at the cost of running any government agency that (ostensibly?) promotes fair competition: e.g. SEC. The cost to hire lawyers, set up offices, conduct audits, litigate -- none of that is free. Do I see you label "preventing and punishing insider trading" as an "interesting debate since it has no objectively correct answer" in a cost analysis? No, of course not, because it's desirable and everything has an associated cost to begin with.

Re:at&t wasn't welcome anyway

[squiggleslash]

You're assuming that the taxpayer getting as much money directly from a sale as possible is in some way legitimate government policy.

The government is not a business and the "taxpayer" has more interests than simply short term reduction of their taxes. In particular a lower cost of living, something we'll get if there's better competition and if we don't force businesses in general to have absurd unnecessary costs, is likely to benefit us more.

Short term "maximizing direct revenues from auctions" thinking is what got us into the stupid situation where spectrum auctions are geographic, resulting in decades of overpriced, poor quality, cellular service. It's also part of a mentality that's undermining every attempt to have the private sector provide quality infrastructure in the first place, usually at great social and economic cost to the rest of us. The same idiocy, practiced through property taxes, is in part why the entire railroad system in the US collapsed in the 1960s and 1970s.

We need to get away from that kind of thinking, and start looking at cost of living issues rather than what tax rate we can get away with.

Re:at&t wasn't welcome anyway

[Rich0]

It's an interesting quandary for the FCC. AT&T and Verizon can and will pay more for the spectrum to be auctioned. That means US taxpayers get more money, which is what is supposed to happen when the government is selling public airwaves.

Only if you look at the sales of the spectrum. Subtract all the monthly cell phone plan payments those taxpayers are making and AT&T/Verizon don't look like such a great deal any longer.

Too big to fail is a recipe for disaster. When a market gets dominated by one or two players, they should be handicapped until their customers have incentive to flee elsewhere and the market share drops to a moderate level. This should be done whether they're doing anything wrong or not - it is just good for the economy. Nothing personal - just business.

Re:at&t wasn't welcome anyway

[jeffb (2.718)]

Another "fascinating question". I'd suggest asking some Native Americans, or some descendants of slaves.

Re:at&t wasn't welcome anyway

[TubeSteak]

It's also part of a mentality that's undermining every attempt to have the private sector provide quality infrastructure in the first place, usually at great social and economic cost to the rest of us. The same idiocy, practiced through property taxes, is in part why the entire railroad system in the US collapsed in the 1960s and 1970s.

If you honestly believe this, it makes me suspect everything else you said.
Railroads were "growing," but their growth in tonnage was significantly less than the overall growth in product being moved.
As roads got better, the balance was was accruing to the trucking industry.

The real game changer for rail was the Dwight D. Eisenhower National System of Interstate and Defense Highways.
Private industry sure as shit wasn't going to build a coast-to-coast highway system,
so if you want to talk about "undermining every attempt to have the private sector provide quality infrastructure"
you should look at catfights private industry had over who was going to get taxed (and how much) to pay for the public highway system.

Re:at&t wasn't welcome anyway

[artfulshrapnel]

The flip side, however, is that spectrum is required to compete with these companies. The big telcos might not be too keen on shelling out $X billion at the expense of next quarter's profits, but if buying that means that Rival Startup Inc. can't get any spectrum at all? They just cemented their profits for the forseeable future at very little relative cost.

Given that there his established historical precedent for companies buying up spectrum and letting it languish (see: Verizon's purchase of the 700mhz block A spectrum) and increasing evidence that spectrum availability isn't the limiting factor in cost for the big telcos (it's increasingly looking like subpar infrastructure is to actually to blame, if anything), it's fair to assume that these companies are willing to employ this strategy.

The duty of a regulatory agency like the FCC seems clear: Ensure the market remains fair and that competition works in favor of the taxpayers. Don't sacrifice that for what seems a short term gain, because the amount of gouging that happens when the market is locked up without competition will be far higher.

Re:at&t wasn't welcome anyway

[suutar]

Do you as a taxpayer want to in effect provide free profits to Sprint or T-Mobile's shareholders - even if you don't use those carriers - because you think it's good that they are around to provide more competition?

Yes. Absolutely yes. I am pretty confident that in the long run that costs me less per year than if ATT owned all the spectrum.

Re:at&t wasn't welcome anyway

[sir-gold]

Just because a company is buying spectrum doesn't mean it has a use for it.
Spectrum is a very limited resource, so one way to fight your competition is to buy the spectrum they need, simply to keep them from having it. This is especially true for Verizon, which has a vested interest in keeping it's competitors coverage area as small as possible, because coverage is their ONLY advantage right now.

Re:at&t wasn't welcome anyway

[squiggleslash]

If you honestly believe this, it makes me suspect everything else you said.

Well, tough, because it's true. Railroads were suffering from ever increasing property taxes, and the only way they could deal with them was by getting rid of as much property as possible, undermining their network effects. And like I said, it's in part one of the reasons, not the whole reason.

Interestingly most of the reasons you give are not real reasons - the Interstate system being a partial exception (though if that had been it I think the railroads would have survived), but the major ones are:

- Aforementioned tax burdens where taxes were in proportion to area and people served, not income.
- Stifling Federal bureaucracy, making it impossible to reorganize services as population shifts occurred and making cutting routes actually preferable to reorganizations.
- Aforementioned Federal bureaucracy preventing railroads from setting competitive prices. They were forced to sell many services at a loss, even when there was no reason to believe customers weren't perfectly prepared to pay proper commercial rates.
- Zoning reforms that made car ownership mandatory for anyone living in any area developed since the 1940s, plus the (deliberate, in my view) mal-administration of urban centers.

Add union intransigence to the mix, and the occasional mismanagement (Penn Central - if only they'd have let Al Perlman do his job), New Haven, etc) and it was a recipe for disaster.

bribed, unfair, stupid crap

[slashmydots]

Just fight it out with paintball guns or a poker match. Or run through the Wipeout tracks. Or Super Smash brothers. Or Dance Dance Revolution best of 3 dance-off. All this behind the scenes, cloak and dagger, pretend-fair bullshit is getting old. If there's a cap or randomization, some dreamy idiot with some dumb invention wins and doesn't make good use of it. If it's unlimited, the customers end up paying AT&T or whatever for 10 years the 1 trillion dollars or whatever the hell they bid. It's all just passed straight to the customer. If the government runs it, it's a shitstorm.

It should go to amateurs

[Anonymous Coward]

All of it. Exclusive access. Corps don't need more spectrum.

Sale or lease?

[Duhavid]

What I want to know is why is this spectrum for sale?
Why isnt it for lease? Why arent the carriers paying something per year for the use of the spectrum?

Re:Sale or lease?

[mlyle]

The argument against shorter-term leases is that you have to invest a lot in infrastructure to make use of the spectrum.

Most of these licenses that are being bid for in the auction are for ten year terms, I believe.

Re:Sale or lease?

[schnell]

Why isnt it for lease? Why arent the carriers paying something per year for the use of the spectrum?

Technically, it is a more like a very long term lease rather than a perpetual sale. Ultimately, those frequencies are still under the discretion of the FCC to allocate or revoke subject to certain conditions.

To answer your question about why carriers don't "rent" it annually, it's because there is an ecosystem around those frequencies that require huge multi-year investments. Let's say that you're carrier X and you just bought the rights to the LTE "C Block" frequencies. You need to buy hundreds of millions of dollars worth of LTE equipment that runs is the C Block, site your towers to match the RF propagation characteristics of that particular frequency band, have all your smartphone vendors that you commit to buy XXX millions of units from have their devices support that spectrum block, etc. etc. Every radio band that you add to a piece of tower equipment costs money, and adding additional bands to phones takes up motherboard space and adds extra costs, so on both sides there is a monetary cost to supporting additional spectrum bands.

If you could lose that spectrum next year to another bidder - you have literally spent hundreds of millions of $$$ on equipment and devices that are worthless to you - or, worse - are only worthwhile to customers who will use the network of your competitor who just bought that spectrum. If carriers could not lock up spectrum blocks long term, the uncertainty would mean that they would pay far, far less for it, so the government would extract far less money from them for that spectrum. So "selling" the spectrum under long-term leases means more $$$ for the government vs. trying to "rent" it year-to-year.

Re:Sale or lease?

[Duhavid]

That makes better sense. Thanks for explaining it to me.

Re:Sale or lease?

[Duhavid]

Thanks for explaining it to me.

Re:Another Slashdot Beta progress report

[gnupun]

Why are they still developing it? What are the goals of the new design? Who is target market for the new design? There should be a slashdot poll asking which format users prefer:
a) beta
b) classic
c) both
With this we can discover if the naysayers are a minority or not.

It seems pointless to continue developing something so inferior (but slightly prettier) to the original. Just create a nicer looking skin for classic and be done with it.

Re:What a mess

[drinkypoo]

it reeks of devaluing, and largely throwing away nearly a century of public infrastructure

What public infrastructure? All that infrastructure is private. That's [part of] the problem.

Spectrum sharing?

[swb]

I can't but help think that there needs to be some way to share or combine spectrum between carriers. It seems grossly inefficient to have a geographic footprint served by multiple carriers over a wide spectrum but have phones that can only talk on part of it due to arbitrary division by the carriers.

It also seems like it creates such ridiculous barriers to entry that competition is inherently limited because the requirements to being a carrier are so large -- you need radio spectrum and broad coverage.

I think there should be some kind of scheme where handsets work on all possible spectrum and carriers are forced to allow connections from all devices. When a subscriber from carrier A gets on tower run by carrier B, carrier B needs to handle their connection and backhaul at some defined cost. A system of backend accounting to balance the cross-carrier connection charges could take into account the usage of each other's infrastructure, with charges reduced depending on the carrier's infrastructure investment at the specific cell site (ie, if carrier A has a backhaul presence but not RF presence at a site, their usage costs would be proportionally less.

It would be in the carriers best interest to have their own towers to offset backend costs. The benefit to consumers would be better coverage, since any one cell tower could offer maximum spectrum coverage resulting in fewer overall towers needed.

AT&T

[AndyKron]

AT&T is mad because it can't have all the cookies. Fuck AT&T!

"Government shouldn't pick winners in markets!"

[jeffb (2.718)]

"Winners should pick winners in markets."

-Winners in markets

Did that in Canada

[davecb]

The bigs just squeezed the little guys, all legally, until they started to fail. Then they bought them and got the frequencies.

Re:Did that in Canada

[Hamsterdan]

Yup... Public mobile had everything unlimited for 35$/month, were bought by Telus, and guess what? no more unlimited and a pathetic data quota for 45$...

Mod parent up

[Iconoc]

AC gets it. No more complicated than what is written above.

Don't do this to us

[zeroryoko1974]

Don't do this to us, you will make us have to buy these smaller carriers, and that will make us sad pandas

Work to eliminate large guard bands

[pedrop357]

Part of any future spectrum auctions should require that the company getting the new spectrum develop technology that allows the use of their new service with minimal guard bands and minimal interference to adjacent users.

If this means Verizon, AT&T, et al have to develop newer better filter technology for the other users' equipment, so be it. Though I understand the necessity of guard bands right now, I hate seeing 1-7mhz chunks of supposedly valuable spectrum basically unused to mitigtate interference.

Re:Work to eliminate large guard bands

[metaforest]

Those guard bands are there because state of the art RF tech cannot create so called 'brick wall' filters that do not have serious, deleterious, in-band, cost, and/or component scale side effects. There is some aspects of RF physics that place some rather arbitrary limits on how we generate and detect wireless communications. The boffins keep chipping away at it... and it does get better over time... but bandwidth precision is one of those devils in the art that is hard to beat down.

Re:What a mess

[evilviper]

https://en.wikipedia.org/wiki/...