Beta
×

Welcome to the Slashdot Beta site -- learn more here. Use the link in the footer or click here to return to the Classic version of Slashdot.

Thank you!

Before you choose to head back to the Classic look of the site, we'd appreciate it if you share your thoughts on the Beta; your feedback is what drives our ongoing development.

Beta is different and we value you taking the time to try it out. Please take a look at the changes we've made in Beta and  learn more about it. Thanks for reading, and for making the site better!

Study: Limiting Bidding On Spectrum Could Cost Billions

Soulskill posted about a year ago | from the competition-isn't-cheap dept.

AT&T 140

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.'"

cancel ×

140 comments

Sorry! There are no comments related to the filter you selected.

Those who would trade a bit of freedom... (5, Insightful)

Anonymous Coward | about a year ago | (#43597243)

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

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

Re:Those who would trade a bit of freedom... (5, Insightful)

goombah99 (560566) | about a year ago | (#43597305)

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.

Re:Those who would trade a bit of freedom... (5, Insightful)

fuzzyfuzzyfungus (1223518) | about a year ago | (#43598041)

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.

Re:Those who would trade a bit of freedom... (1)

Anonymous Coward | about a year ago | (#43598577)

Accepting years of substandard and undercompetitive spectrum use in exchange for a bit of cash upfront is just nuts.

Hehe, I hear the Chicago deal -- get some upfront money and sell 25 (or is it 75?) years worth of monopoly on parking tickets control has done wonders!

It is a mini demonstration of what happens in such situation, but in a nutshell, the company will squeeze hard to make back its investment and generate some profit... at customer's expense.

Re:Those who would trade a bit of freedom... (0)

Anonymous Coward | about a year ago | (#43598707)

Communist!

Re:Those who would trade a bit of freedom... (1)

symbolset (646467) | about a year ago | (#43598181)

With enough money you can incent the populace to harm themselves. This is not new. It predates Caesar.

Re:Those who would trade a bit of freedom... (3, Insightful)

Drakonblayde (871676) | about a year ago | (#43597329)

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.

Re:Those who would trade a bit of freedom... (5, Insightful)

goombah99 (560566) | about a year ago | (#43597383)

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.

Re:Those who would trade a bit of freedom... (3, Interesting)

sanosuke001 (640243) | about a year ago | (#43597713)

That was my first thought; maybe the better thing to do is create more competition in the market instead of allowing Verizon and AT&T to fuck us even harder. Like someone else said; the consumer is going to pay for the spectrum in the long run anyway; why not lower the cost of it (or lease it as another suggested) and lower everyone's phone bills. The less money we have to spend for cell service the more that goes to other businesses (ie. taxes; which would probably make up that made-up $12 billion figure eventually).

Re:Those who would trade a bit of freedom... (2, Insightful)

DNS-and-BIND (461968) | about a year ago | (#43597731)

Yes, but in those days the government did not spend like it does today. Today the government desperately needs money, and lots of it. This $12 billion is badly needed and will enable the government to operate for almost thirty hours. Not to mention the additional revenue available by borrowing against future revenue of this sort.

Mention something like "public good" to anyone who works in Washington DC and watch the smiles and guffaws start. You just mark yourself as a redneck and an idiot with talk like that.

Re:Those who would trade a bit of freedom... (2)

symbolset (646467) | about a year ago | (#43597773)

Oh my. The rational hand of disciplined governance ought to guide the invisible hand of markets? You're going to get a lot of hate. You are also right.

Where you missed: "the gov't gets less revenue." You needed to put a "for now" at the end of that. As we know from Seward's Folly and the Louisiana Purchase, sometimes the people don't know the right course. Those investments are ripe now and paying huge dividends.

Sometimes the public good is not having to waste the blood of patriots for stuff that can be bought with money.

Re:Those who would trade a bit of freedom... (3, Informative)

Drakonblayde (871676) | about a year ago | (#43597789)

No, my assumption is that someone other than AT&T/Verizon/T-Mobile being awarded the spectrum does not automatically equal public good.

It still takes a fortune to build the infrastructure to support a wireless network. The argument being made here is that if one of the big providers were to acquire the spectrum, they'd take the cost out on their customers.

Surely y'all aren't naive enough to believe that whomever acquires the spectrum *isn't* going to do the same. They still need to be competitive, which means they still need to make money, and so they're still going to charge rates that are within the ballpark of AT&T and Verizon. If they're significantly lower, then yes, it may force AT&T and Verizon to adjust their prices downward, at least in certain markets (I seriously doubt that any other likely purchasers are going to become players on a national level).

Or, more likely, AT&T and Verizon adjust their prices to actually be lower, stealing the competitors customers, strangling their revenue, and eventually putting them out of business. AT&T and Verizon can afford to absorb a short term loss to deal with a competitor. Once said competitor is no longer an issue, prices go up again.

You don't think this happens? You've never witnessed what happens when a Wal-Mart moves into an area that previously had none.

In order to actually compete with AT&T and Verizon, you need to offer a superior product and superior service, at a better price. Good luck.

Re:Those who would trade a bit of freedom... (1)

symbolset (646467) | about a year ago | (#43598089)

I think given our experience with AT&T/Verizon/T-Mobile that spectrum, licenses, real-estate or oxygen were better let to somebody else, and that would make a public good because these have become a burden on the people. Somebody else might make a lesser or equal burden, but not a greater one.

Re:Those who would trade a bit of freedom... (2)

Drakonblayde (871676) | about a year ago | (#43598219)

So, basically, we should give it to someone else because they might suck less.

I'm not real fond of that choice either.

Re:Those who would trade a bit of freedom... (3, Insightful)

TheEyes (1686556) | about a year ago | (#43598257)

So, basically, we should give it to someone else because they might suck less.

I'm not real fond of that choice either.

No, we give it to someone else because then that someone else would have to compete with the incumbents, and the resulting competition will force prices down, as opposed to our current system of two enormous rent-seekers sitting on vast piles of spectrum, doing nothing with it, and forcing us to pay extorionate amounts for terrible service.

Re:Those who would trade a bit of freedom... (0)

Anonymous Coward | about a year ago | (#43599043)

I wouldn't say they're "doing nothing with it", the allocated bands are full. However, I firmly belive that this does show that the cost of allowing ATT or Verizon to continue theri monopoly will cost the taxpayers significantly more than $12,000,000,000 . They're not going to bid unless there's a good profit on it.

Re:Those who would trade a bit of freedom... (2)

symbolset (646467) | about a year ago | (#43598295)

Considering how much the current oligopoly sucks, I'm quite OK with you (alt A: retraining them for useful work) (their own Option B) lining them all against a wall and executing them by firing squad.

The people who choose option B aren't worth saving anyway.

Re:Those who would trade a bit of freedom... (1)

alexander_686 (957440) | about a year ago | (#43599713)

Basically, I am refining what you are saying – but focusing on market structure and how to maximize the value to society.

Take a look at countries across the world. The top 2 providers make all of the profits, the rest are left with the scraps. Do you want a cozy duopoly or something more competitive? If you want something more competitive, you are going to need to give the underdogs a leg up.

Now, you can overpay for competition, and I have not read the details, but at first glance I am in favor.

Take a look at countries across the world. The top 2 providers make all of the profits, the rest are left with the scraps. Do you want a cozy duopoly or something more competitive? If you want something more competitive, you are going to need to give the underdogs a leg up.

So I have not read the details, but at first glance I am in favor.

Re:Those who would trade a bit of freedom... (4, Interesting)

msauve (701917) | about a year ago | (#43597447)

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 [wikipedia.org] .

Re:Those who would trade a bit of freedom... (3, Insightful)

Drakonblayde (871676) | about a year ago | (#43597953)

That's the way it should work. Unfortunately, reality is quite a bit different.

You're absolutely correct in that supply is fixed. You're also absolutely correct that there's flexibility in demand (which is presently going up and shows no signs of going the other way).

Your flaw is that entire public good thing.

Either the resource is to be allocated and managed for the public good, or it isn't. Given that AT&T and Verizon own such a large portion of spectrum already, the question becomes are they managing it for the public good or not. The sentiment seems to be that they're not, and as such, shouldn't be allowed to acquire more.

If that is true, then we're not getting good value from allowing them to use our resource. So why do we continue to allow them to use it? If we have no choice but to continue to allow them to use it, then the resource is not really a public one to be used for the public good.

If we are getting good value from allowing them to use our resource, then why is it a bad thing to allow them more?

It truly sticks in my craw to have to have to play advocate for Verizon and AT&T, I loathe them as corporate entities, and they're some of our best customers (I work for a company that provides a very large amount of cell backhaul for Verizon, AT&T, and Sprint).

But this entire public good argument is horseshit. The reality, whether you care to admit it or not, is that wireless spectrum is a commodity like any other. The only thing the fixed supply does is drive prices up when demand increases. Whether or not it should be that way is an entirely separate argument.

Re:Those who would trade a bit of freedom... (1)

symbolset (646467) | about a year ago | (#43598103)

If you made me king of American radio spectra and gave me let to do it I could put 50Mbps broadband in 94% of US homes in under five years - and make a profit at it. It is not that hard. Latency would suck except for the wired folk, but that's the nature of wifi.

Re:Those who would trade a bit of freedom... (1)

Drakonblayde (871676) | about a year ago | (#43598227)

But could you do it as a private company?

If not, could you do it while making enough profit to demonstrate fiduciary responsibility and keep your shareholders from rioting?

Re:Those who would trade a bit of freedom... (1)

symbolset (646467) | about a year ago | (#43598265)

With government permits in hand you bet your ass I could raise the money to make it so. That is a slam dunk.

Re:Those who would trade a bit of freedom... (0, Troll)

crutchy (1949900) | about a year ago | (#43598487)

something tells me if you were as business savy as you make out you would be wealthy already... that you feel the need to brag on slashdot implies you aren't

Re:Those who would trade a bit of freedom... (1)

symbolset (646467) | about a year ago | (#43598525)

I have all I need, and it can't be taken away, so yes I am insulated from the downside risk. Do I have to be exposed to the risk to play your game? Sorry, but my priorities are not yours. Big bets are for when you haven't yet got what you need. I'm past that.

Re:Those who would trade a bit of freedom... (1)

symbolset (646467) | about a year ago | (#43598541)

Does that make me wealthy already? I thought not, but your description makes me feel both wealthy and free!

Re: Those who would trade a bit of freedom... (1)

Anonymous Coward | about a year ago | (#43597463)

This has to be one of the dumbest comments you can make in regards to wireless spectrum. You do realize that a "completely free" market would not have spectrum to government auction in the first place right? The whole point of allocating spectrum blocks is to maximize their use without unnecessary interference for the greatest benefit to the public. The government and corporate interests are only necessary where they contribute to that goal. If an institution is going to just grab the spectrum almost solely to limit competition, then I'm quite happy to ban them from the auction.

Re: Those who would trade a bit of freedom... (1)

Drakonblayde (871676) | about a year ago | (#43597677)

Are you not paying attention to what I said? I understand completely that this can't be a situation where you just open the floodgates and whomever can bring you the most cash wins.

I have a problem with restricting the bidders in the name of 'competition'. Excluding viable competitors just to let other folks have a shot has absolutely nothing to do with the public good.

If AT&T and Verizon are capable of managing additional spectrum in a responsible manner that is consistent with the public good, they should not be hamstrung from the process of acquiring more. I have yet to see a valid argument as to why either of them acquiring more spectrum actually harms the public good.

If they prove themselves poor caretakers, then simply take it back and give it to someone else. After all, the resource belongs to the public and is administered by the government right?

If you think that the government can't (or shouldn't be able to) take back auctioned off spectrum, then I guess it's not really a public resource after all, now is it?

Re: Those who would trade a bit of freedom... (0)

Anonymous Coward | about a year ago | (#43597807)

If AT&T and Verizon are capable of managing additional spectrum in a responsible manner that is consistent with the public good

Yeah, right.

If they prove themselves poor caretakers, then simply take it back and give it to someone else. After all, the resource belongs to the public and is administered by the government right?

That sounds good in theory, but in practice it's a lot harder to take it away once it's been handed out than it is to keep them from getting it in the first place.

Re: Those who would trade a bit of freedom... (2)

Drakonblayde (871676) | about a year ago | (#43597837)

That sounds good in theory, but in practice it's a lot harder to take it away once it's been handed out than it is to keep them from getting it in the first place.

Which pretty much hamstrings the argument that wireless spectrum is a public resource to be allocated for the public good, doesn't it?

Here's reality - the wireless spectrum is a commodity like any other, and once in the hands of a private entity, the public good has little, if anything, to do with it. Said private entity is going to attempt to exploit the resource in the name of revenue and profit just like AT&T and Verizon would.

But wait, I thought revenue and profit were bad for the public good?

I strongly suspect that once you get past the facade of rationality that folks who want to hinder AT&T and Verizon's ability to acquire spectrum, you'll find the primary reason for their opposition is something along the lines of "I really fucking hate AT&T/Verizon"

Re: Those who would trade a bit of freedom... (0)

Anonymous Coward | about a year ago | (#43598053)

Actually they are likely to increase profits without increasimg revenue like many companies have been doing for the last few years. Guess how that works out.

Re: Those who would trade a bit of freedom... (1)

Drakonblayde (871676) | about a year ago | (#43598239)

All depends on how they go about doing it. If they can increase profit without upping revenue by getting more efficient and better at what they do, then I have no problem with that.

If they go the other way and degrade service to bring down overhead, obviously, not so good.

Re: Those who would trade a bit of freedom... (0)

Anonymous Coward | about a year ago | (#43597849)

Verizon and AT&T already HAVE proven themselves poor caretakers. If the way they run their current networks can't be taken into consideration what can?

Re: Those who would trade a bit of freedom... (1)

Drakonblayde (871676) | about a year ago | (#43597881)

Now that argument, I don't have a problem with (and I actually agree with). Proving yourself effective at managing the resources you already have before being granted more of the same is a much better argument for kicking Verizon and AT&T out of the auction than the argument of 'other people should have a chance just cuz'.

Re: Those who would trade a bit of freedom... (0)

Anonymous Coward | about a year ago | (#43598719)

this can't be a situation where you just open the floodgates and whomever can bring you the most cash wins.

Don't use words you don't know the meaning of. It makes you look like an idiot.

Re:Those who would trade a bit of freedom... (4, Insightful)

jensend (71114) | about a year ago | (#43597545)

Ah, but what they're bidding on is not merchandise but a government-enforced monopoly. Normal free-market rules are already out the window; you may call what you propose a free market solution but really it's a mercantilist solution. Selling letters of patent to whoever brings the most into the Crown treasury is precisely the kind of thing Adam Smith was writing to oppose in the first place.

Normally the solution is to get rid of the government-granted monopoly. But that doesn't work out so well here. We license spectrum because leaving it to the free market to figure it out would result in horrible interference and transmit power arms races -- a classical tragedy of the commons market failure.

In many market failures government won't actually manage to improve the situation. But the spectrum really is a clear case where intervention can improve social welfare-- as long as we don't get confused about the purpose of spectrum regulation and start treating it like it's a free market designed for increasing government revenue.

Re:Those who would trade a bit of freedom... (0)

Anonymous Coward | about a year ago | (#43597813)

I'm a firm believer in a free market economy

Absolute belief in an economic theory is absurd. Allowing a small number of companies to corner natural resources is not a good idea. It doesn't matter what our political structure is if it allows a small group of people (companies are people right) to control the distribution of natural resources. They really might as well be kings. Unless of course you meant that everyone should be able to use whatever spectrum they want and whoever can generate the strongest signal wins. But I could see problems with that too.

Re:Those who would trade a bit of freedom... (1)

fuzzyfuzzyfungus (1223518) | about a year ago | (#43598047)

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.

Were you sick the day they discussed 'market power' and 'rent seeking' in EC101?

Re:Those who would trade a bit of freedom... (0)

Anonymous Coward | about a year ago | (#43598443)

... a free market economy ...

Such a market depends on competition. The resource under the hammer is the radio spectrum. Selling all of it to one customer creates a monopoly which is anti-competitive. Remember what happened when Mexico sold all of its water infrastructure? Remember what happen when California sold all of its electricity generation infrastructure? The monopolistic Ergon reduced supply until it was below demand, causing blackouts.

Selling a natural monopoly for profit doesn't work.

Re:Those who would trade a bit of freedom... (0)

Darkness404 (1287218) | about a year ago | (#43597391)

Restricting AT&T/Verizon from bidding on it reduces freedom and reduces the free market more than letting all interested firms bid on it. We need a truly free market to reduce abuses, not more regulation.

Re:Those who would trade a bit of freedom... (1)

citizenr (871508) | about a year ago | (#43597469)

Restricting AT&T/Verizon from bidding on it reduces freedom and reduces the free market more than letting all interested firms bid on it. We need a truly free market to reduce abuses, not more regulation.

Freedom to make money is at odds with public good.

Re:Those who would trade a bit of freedom... (1, Interesting)

AlphaWolf_HK (692722) | about a year ago | (#43597905)

That is a very stupidly naive statement.

You know all groups who have formed movements off of that premise have ultimately fallen, without even any outside interference from those ideologically opposed. Take the Icarians for example, who literally had an entire city pre-built just handed to them for basically nothing (Nauvoo, IL.) Even with those nice things just handed to you, in order to keep them nice you have to work. When there is no freedom to make money, people get lazy and shit falls apart, just like the Icarians did. They were never persecuted or harassed, they just fell apart on their own, along with every other group like them.

The only way to prevent shit from falling apart with no money incentive is to establish a command economy where somebody tells you what job you'll have, and you'll like it. If you don't like it, you are either excommunicated, jailed, or executed.

History has proven time and time again that putting heavy burdens on free markets results in a declining society. Russians figured out in the 50's that people eventually wouldn't work for free, so even they started setting up a very limited form of capitalism, which only allowed them to scrape by for 30 more years before the whole thing fell apart. China figured that out in the 80's when Deng Xiaoping declared: "To get rich is glorious", and their standard of living has grown dramatically ever since.

Every country that officially still holds the same belief that you just expressed in that one sentence is in third world living conditions. I say "still" because no collective population is ignorant of history enough any more to try it on a large scale, which is why that ideology has been in constant decline for a long time now. Nonetheless, people with your line of thought think that it'll work if only we tried enough, completely oblivious to the fact that it has had hundreds of large scale genuine implementations that even Marx himself would define as a perfect commune.

Marx himself was somebody who had shit just handed to him his whole life, and when daddy stopped giving him money he started the communist movement thinking that it would all work out fine if everybody just handed everybody else everything. From each according to their ability, to each according to their need.

Re:Those who would trade a bit of freedom... (1)

LocalH (28506) | about a year ago | (#43597947)

Not always.

Re:Those who would trade a bit of freedom... (3, Insightful)

fredprado (2569351) | about a year ago | (#43597473)

The natural progression of a truly free market is money agglutination, monopolies and the collapse of the economy because of speculation. That is why there never was a real world implementation of laissez-faire capitalism and there will never be.

Free market is a concept that resides in the realm of fantasy, together with communism.

Better yet (0)

Anonymous Coward | about a year ago | (#43597505)

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.

Re:Those who would trade a bit of freedom... (3, Insightful)

ebno-10db (1459097) | about a year ago | (#43597543)

We need a truly free market to reduce abuses

A truly free market (more importantly, a truly competitive market) is one where new suppliers can enter the market. Unfortunately spectrum is a strictly limited resource. Therefore allowing currently entrenched companies to buy big chunks of spectrum and block future entrants into the market is highly anti-competitive.

Re:Those who would trade a bit of freedom... (2)

VortexCortex (1117377) | about a year ago | (#43598365)

All the data towers are doing the same shit. They could be standardized, funded by tax money directly (instead of a 100 billion handout that just disappears). If the spectrum belongs to the people then let us just have it completely. Dedicate a bandwidth for cellular use according to the people's demand, then saturate it with capability to provide service. The access could be leased to the carriers, and our devices could frequency hop to whatever chanel was noise free. New competitors could lease the access at the comparative prices to existing carriers. Need more towers in a given region? Gee, that exactly matches the population density. Huh. Telcos could lobby for more towers in a given area if they think they need them, and they'd all be on the same side instead of competing with incompatible protocols.

Governments should own the backbone, or mandate it be shared. Look at the energy market for a workable solution: Power brokers opened up competitive prices for the little guys. If it'll work for poles with wires on them, it'll work for wireless poles too.

That'll never happen though because of the "Free Market", and "regulatory capture", and [insert whatever other corruption you want to throw in]. Protip: In a true free market, whomever could afford the biggest antenna would always win by drowning out the little guys.

Re:Those who would trade a bit of freedom... (2)

Grave (8234) | about a year ago | (#43599003)

This is pretty much what I've been preaching now for years. Infrastructure that is vital to the public good and that requires the use of a physically limited resource, such as roads or power lines, is already expected to be government owned. Why is radio spectrum not treated the same way at this point?

Re:Those who would trade a bit of freedom... (2)

symbolset (646467) | about a year ago | (#43598073)

Yeah, this is starting to look like the classical problem for which the solution is "torches and pitchforks".

Dear Reporters (3, Insightful)

Anonymous Coward | about a year ago | (#43597247)

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.

Re:Dear Reporters (4, Insightful)

hawguy (1600213) | about a year ago | (#43597365)

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.

Exactly - sky high spectrum auctions amount to a tax on the consumers that are forced to pay back the billions that the company spent to buy the spectrum. Encouraging more competition from smaller carriers by banning the big boys will likely save consumers many more billions than the government would have "earned".

From TFA:

But a policy to restrict the ability of Verizon Wireless and AT&T to bid on the spectrum would drive down the bidding during the auction and leave less money for a nationwide public safety network and the U.S. treasury

Why should spectrum auctions (i.e. my cell phone bill) pay for a public safety network?

Re:Dear Reporters (1, Troll)

penix1 (722987) | about a year ago | (#43597593)

Why should spectrum auctions (i.e. my cell phone bill) pay for a public safety network?

Because you are a member of that public. Go ahead and say that line the next time you need 911. Keep that line in your head the next severe weather outbreak happens and you need to take shelter. Keep that in mind after the disaster when you are trying to piece back together the remnants of your life....

Re:Dear Reporters (1)

ebno-10db (1459097) | about a year ago | (#43597635)

Obviously we need a public safety network, but that does not mean it has to be paid for by what is essentially a cell phone tax. As you point out, everyone potentially needs the public safety network, therefore it's reasonable to pay for it out of general revenues.

Re:Dear Reporters (1)

penix1 (722987) | about a year ago | (#43597689)

General revenue is also a tax. I fail to see the point of what pot of gold it is plucked from. It makes far more sense to me to have the users of that safety network support it.

Re:Dear Reporters (2)

ebno-10db (1459097) | about a year ago | (#43597725)

I fail to see the point of what pot of gold it is plucked from.

Fairness. I see no reason to impose a tax specifically on how much one uses a cell phone (this from someone who rarely uses his dumb phone). You're the one who pointed out everyone potentially needs the public safety network, and I don't think that potential need is proportional to how much you use your cell.

Re:Dear Reporters (1)

penix1 (722987) | about a year ago | (#43597999)

Your point fails because even on hardwired lines there are charges for the safety network (911 fees they are generally called). If you want to talk fairness then what you are proposing is the landline users pay for it when you don't have to. Doesn't sound very fair to me. And taking it out of the general revenue means those who don't use it (for whatever reason) are subsidizing those that do. Again, it doesn't sound fair to me.

The point is, there are inequities all over the topic of taxes. Whether it comes from general revenue or not. And these are services that have to be paid at some point. Cell phones have caused a special headache for emergency response (911) because of their mobile nature. Getting a true fix on them can be a daunting task and increases that cost. That is why the tax as you put it is higher.

On a side note, when was the last time you saw a pay phone in a city these days? Ever try to call 911 without using your cell? Trust me, it is one of the most challenging things to have to go through.

Re:Dear Reporters (1)

hawguy (1600213) | about a year ago | (#43598083)

Your point fails because even on hardwired lines there are charges for the safety network (911 fees they are generally called). If you want to talk fairness then what you are proposing is the landline users pay for it when you don't have to. Doesn't sound very fair to me. And taking it out of the general revenue means those who don't use it (for whatever reason) are subsidizing those that do.

Your argument fails because the Public Safety Network [wikipedia.org] has nothing to do with 911 service (other than the fact that when the 911 operator calls a firetruck, the firetuck will use the public safety network to say he's on the way). The public safety network is a tool used by EMS responders, just like a firetruck or police car, and I certainly don't see why a hidden fee buried in cell phone costs should pay for firetrucks.

If a nationwide coordinated public safety network is something that the federal government should be paying for, then it must be something that we'll all benefit from and should be paid for by everyone, not just cell phone users.

Re:Dear Reporters (1)

hawguy (1600213) | about a year ago | (#43598093)

General revenue is also a tax. I fail to see the point of what pot of gold it is plucked from. It makes far more sense to me to have the users of that safety network support it.

Right, general revenue is a tax, which is how infrastructure that benefits everyone should be paid (or through use taxes, like gas taxes). Not buried in a spectrum sale that will lead to higher cell phone prices for consumer with the revenue used for something that benefits everyone whether they use a cell phone or not. What if all agencies decided that they should earn revenue - maybe the FDA should charge meat packing plants $10M/annually for their required inspections and then use the revenue to pay for new police cars because everyone needs the police, right? And it's better than a tax, because it's "free money" for the government that will be paid by consumers through higher meat prices.

How is cellular allocation done elsewhere? (3, Interesting)

ebno-10db (1459097) | about a year ago | (#43597253)

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.

Re:How is cellular allocation done elsewhere? (3, Interesting)

elbonia (2452474) | about a year ago | (#43597355)

In Europe it's pretty much Vodafone and T-Mobile which also makes the EU a duopoly. There was a recent auction [nytimes.com] in the Netherlands that turned into an all out bidding war which actually sent the stocks of the telcos there down sharply. The price of the auction is just passed down to consumers through prices increases, reduction of services, or added fees. So while the treasury may lose $12 billion that amount wont be passed on the consumer so it's a wash. It's probably better for everyone to limit AT&T and Verizon and make sure there's more competition.

Re:How is cellular allocation done elsewhere? (2)

zyzko (6739) | about a year ago | (#43598725)

I would not say Orange [wikipedia.org] is insignificant and there are others [wikipedia.org] , some national or operating in a small area [wikipedia.org] with a large market share and grand plans for expansion (the Sonera part of the last company I linked is the former Finnish national post & telecom office, which was split up as a several private companies in 1990s - the "Telecom" part then became Tele and further Sonera which spent billions of euros on auctions for an example in Germany for 3G licenses, which never did anything and both Sonera and Telia still being minority-owned by Finnish and Swedish governments their actions have spurred a lot of discussion on how to handle "taxpayers money").

Re:How is cellular allocation done elsewhere? (2)

zyzko (6739) | about a year ago | (#43597551)

There are two basic models, auction and beauty contest. Those who favor auctions usually point out that for "common good" auction is better, because even if it yields huge sums of money to the government which may be seen as a tax prices are (when the money is a lump sum, not percent of revenue or profit) always going to be as high as the consumer is willing to pay for a service. The advocates of beauty contest say that it gives a better chance to newcomers and favors large scale adoption of new technologies more quickly.

I'm not entirely in favor of either, the key part is to make the auction fair and have boundaries or the beauty contest relevant in terms of what must be implemented (not too strict, not too lax) and evaluate properly. Where I live, Finland (and I think this applies to Sweden at least partially as well) we have one of the lowest cell service prices (well below UK and US, Hong Kong and other very dense areas do beat us) and we have had a hybrid model where there has been elements of both in place for bidders, depending on the situation (economic, need to get new technology implemented, politics, you name it) the auction sum or the beauty contest criteria has been the more relevant factor. We now have 3 separate nationwide networks and several virtual operator on top of those (some "cheap labels" of the network owners, some operators renting the airspace and providing cheaper and/or different service than the network owning carrier).

Re:How is cellular allocation done elsewhere? (0)

Anonymous Coward | about a year ago | (#43598765)

In the UK, we recently had a spectrum auction for 4G services. But one operator (EE, an amalgam of two of our larger operators) sold off some of their older spectrum in order to switch some of their 2G spectrum to 4G early, much to the annoyance of other smaller providers. 3 (the smallest provider here) get some guaranteed spectrum at a lower price, much to annoyance of larger providers.

In the end, the auction raised less money than the government expected, causing George Osborne to shit himself at the 'loss' of £1+ billion.

Not really interested in what it costs government. (5, Insightful)

rolfwind (528248) | about a year ago | (#43597257)

What does it cost society?

Re:Not really interested in what it costs governme (0)

Anonymous Coward | about a year ago | (#43597403)

Unfortunatly that thinking is an extreme minority among those whos voices count.

Re:Not really interested in what it costs governme (2)

AvitarX (172628) | about a year ago | (#43597579)

Really? I would think the only thing at&t and Verizon care about is the cost to society.

Re:Not really interested in what it costs governme (3, Insightful)

girlintraining (1395911) | about a year ago | (#43598123)

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.

money begats money... (1)

neurocutie (677249) | about a year ago | (#43597263)

can't really have it both ways... of course the deep pockets can pay more for more revenue-generating spectrum, what else is new?

people end up paying the bill in the end (0)

Anonymous Coward | about a year ago | (#43597265)

help reduce the cost of cell phones. not worry about how to squeeze more money out of a allready broke public

Well, that makes it easy (5, Insightful)

Qzukk (229616) | about a year ago | (#43597275)

Is it worth 12 billion dollars to keep AT&T and Verizon from controlling the airwaves?

kill ham radio (0, Flamebait)

Anonymous Coward | about a year ago | (#43597279)

Clear the hams out of their VHF and UHF allocations, good bandwidth for better uses

Print a little extra (0)

Anonymous Coward | about a year ago | (#43597301)

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.

About that $12 billion figure (2)

marbux (761605) | about a year ago | (#43597307)

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.

That's cheap (2)

saleenS281 (859657) | about a year ago | (#43597309)

$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).

Re:That's cheap (0)

Anonymous Coward | about a year ago | (#43597431)

AMEN!!!!

Is it just me (2)

Miros (734652) | about a year ago | (#43597343)

Or does this story dismiss its own relevance at the end?

Send Economists, Guns and Money (0)

Anonymous Coward | about a year ago | (#43597385)

as this man [youtube.com] would have said.

Does it build value? (4, Insightful)

Okian Warrior (537106) | about a year ago | (#43597413)

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 [newnetworks.com] 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?

Re:Does it build value? (2)

schnell (163007) | about a year ago | (#43598077)

They kept the 200 billion we gave them

Are you sure it's 200 billion? The author you cite seems to have thought it was $30 billion [amazon.com] . Wait, no, it was $200 billion [isen.com] . Ah, sorry, now it's $300 billion [newnetworks.com] . Maybe it's inflation?

Not saying that the American public wasn't shortchanged by the Baby Bells - back in the day when they actually existed, I never encountered a more anticompetitive group of oligarchists in all my career. But let's not necessarily keep repeating this "OMG telcos stole $200 billion" meme without a little more quantification and justification.

Telecoms Have Little To Do With the Free Market (1)

Dragon Bait (997809) | about a year ago | (#43597417)

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.

Re:Telecoms Have Little To Do With the Free Market (4, Insightful)

Arker (91948) | about a year ago | (#43597527)

It's not just wishful thinking, it's a gambit in an assault against our ideas. Anything that is done based on the idea that the free market is involved here is done on false premises and bound to fail. For which the nonexistent free market will be blamed.

The spectrum auction is a scam from beginning to end. The idea that anyone can own spectrum betrays a complete misunderstand of "own" and/or of "spectrum."

The best one could do is establish a customary right of occupation. By using the spectrum in question for something of value. If they dont use it they should lose it. If we ignore spectrum which is reserved but unused, there is suddenly a considerably greater supply.

The telecoms in this country are monopoly capitalists, not free marketeers, and this has been true longer than I have been alive. And I am a bit older than the average slashbot. This has only gotten worse over time. Their idea of competition is competing with other telecoms to see who can sway more congresscritters to their side. Just look at how many times the taxpayers (and ratepayers in monopolised/privileged districts, same thing) have paid for fibre coverage in the US. Enough to provide it border to border, sea to sea, several times over. What's the current percentage of us that have it? 10, 15%? And how many telecoms are still actively expanding coverage? Trick question, the answer appears to be 0.

Immediate versus long term (1)

dirk (87083) | about a year ago | (#43597429)

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.

Make leases non-permanent (4, Interesting)

Mike_K (138858) | about a year ago | (#43597451)

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 (4, Interesting)

ebno-10db (1459097) | about a year ago | (#43597519)

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.

Re:Make leases non-permanent (1)

sanosuke001 (640243) | about a year ago | (#43597699)

I love this idea; the thought that something like EM spectrum can be bought seems ridiculous. I understand the need to limit its use since having everyone attempting to use the same chunk would make it useless for all but "selling" it is telling the purchasing company that they now don't EVER have to deal with competition because nobody else can ever use that chunk.

Re:Make leases non-permanent (0)

Anonymous Coward | about a year ago | (#43598481)

... entire band and then tell them to only use certain frequencies ...

Those frequencies are used in 'sell and forget' devices like cordless phones, cell phones, High-speed modems, wi-fi equipment. If the allotted frequencies change then all those devices needed to change their firmware to the new permissions list. All spectrum buyers will need to obey the allocation decisions, so they all need some means to inform their online devices. While not difficult, it will require a new public-domain standard and a regulatory body to make the allocation decisions. A public standard will prevent vendor lock-in.

In the grand scheme of things... (1)

Anonymous Coward | about a year ago | (#43597499)

$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.

In other news (1)

GrandTeddyBearOfDoom (1483117) | about a year ago | (#43597503)

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.

Duopoly Profitable, Says Expert (4, Insightful)

Bob9113 (14996) | about a year ago | (#43597533)

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.

Re:Duopoly Profitable, Says Expert (0)

Anonymous Coward | about a year ago | (#43597753)

could cost the U.S. treasury as much as $12 billion

The US treasury prints money. If they wanted $12 billion, they'd print it.

The regulatory fees of the provider always exist. If a new provider can give satisfactory service at a lower price than Verizon and AT&T, then the increased cellular customer base would generate more revenue. The author clearly only counted additional revenue from AT&T and Verizon, ignoring additional revenue from providers that could grow due to an acquisition.

Re:Duopoly Profitable, Says Expert (0)

Anonymous Coward | about a year ago | (#43598687)

The US treasury prints money. If they wanted $12 billion, they'd print it.

That money doesn't come out of thin air, it's effectively taken out of the pockets of everybody who holds US dollars.

Scrap it. (1)

mattr (78516) | about a year ago | (#43597549)

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?

How bout turning it over to unlicenced spectrum? (0)

Anonymous Coward | about a year ago | (#43597737)

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.

How about a lottery instead of an auction? (0)

Anonymous Coward | about a year ago | (#43597797)

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.

If only ... (1)

niftymitch (1625721) | about a year ago | (#43598147)

If only cost/ fee savings moved out to the consumer.

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.

Just fix the price (1)

flyingfsck (986395) | about a year ago | (#43598337)

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.

The ghost of of an evil monopoly (1)

sir-gold (949031) | about a year ago | (#43598427)

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

no, it saves billions (2)

stenvar (2789879) | about a year ago | (#43598521)

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.

What's in the best interest of the population? (1)

IAdoc (1252498) | about a year ago | (#43598977)

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.

of course... (1)

slashmydots (2189826) | about a year ago | (#43599619)

They're just going to pass along the amount they pay to their customers so I really don't care.
Load More Comments
Slashdot Login

Need an Account?

Forgot your password?

Submission Text Formatting Tips

We support a small subset of HTML, namely these tags:

  • b
  • i
  • p
  • br
  • a
  • ol
  • ul
  • li
  • dl
  • dt
  • dd
  • em
  • strong
  • tt
  • blockquote
  • div
  • quote
  • ecode

"ecode" can be used for code snippets, for example:

<ecode>    while(1) { do_something(); } </ecode>