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Senator blasts 700 MHz auction
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It's time to put the cuckoo back into the clock. Sen. Mark Pryor (D-Ark.), a member of the highly influential Senate Commerce Committee, declared the yet-to-be-completed 700 MHz auction a disaster, saying that the FCC allowed dominant wireless companies such as Verizon Wireless and AT&T to control the auction. He said this to some 500 broadcasters at the National Association of Broadcasters' State Leadership Conference in Washington, D.C. Hmm, $20 billion for the U.S. Treasury sounds like a real disaster to me.
He also characterized the FCC of being "secretive," with FCC Chairman Kevin Martin carrying "an agenda into their agenda." I don't really understand what that means, but obviously there are some partisan politics involved.
Pryor was quoted as saying in Broadcasting & Cable that "history will show that the way the FCC structured the auction basically helped the two big wireless companies [Verizon Communications and AT&T] to the detriment of competition in this country."
Um, does he know something we don't? Since the bidding was conducted anonymously, the FCC won't release the names of the winning bidders until the auction is over. Maybe that is where the secrecy comment comes from.
But Pryor is probably right that big-named wireless carriers dominated the auction. That's the way things work in this capital-intensive business, and that's why I've always predicted that Google won't be a big winner. Incumbents such as Verizon have the wherewithal to spend billions on licenses and billions more to build out network infrastructure. That's their core business. And with the 700 MHz band the last of the so-called beach-front property, operators were prepared to drive the price up to a hefty level, especially given the fact that new 4G networks need a nice chunk of extra spectrum, about 20 megahertz, to deliver the broadband data speeds that are advertised.
In the past, the FCC has tried unsuccessfully to foster competition in the wireless market by bringing smaller players in. Bidding credits don't seem to work nor does special spectrum allocations. Just look at the PCS auction back in the 1990s. The companies that achieved designated-entity status essentially became shell organizations for AT&T and Verizon. Others, like NextWave, bid too much and filed for bankruptcy.
As much as I'd like to see competition from non-traditional players and small operators in the 700 MHZ auction, we'll pretty much see the same faces emerge as winners. But does that make the auction a disaster?--Lynnette
Comments
Posted by DM | February 28, 2008 - 12:27pm
Lynnette,
I completely agree with your column today.
I don't know what the Senator wants but it sounds like a "set aside" … Auctions which are limited to "those companies who can build the network" , by their nature exclude those companies who just want to buy the frequencies as a small business then resell them to the companies who actually will use the frequencies for commerce… Cellular frequencies used to be allocated to smaller regional carriers then those were affiliated into "Cellular One" (for instance) and bought up and aggregated by ATT. We, the consumers, have supported the larger nationwide carriers because of features and coverage areas at specific prices. We have not supported the smaller regional/local carriers to a large extent because of … limited features and limited coverage areas.
I don't want my cellular voice and data bills to go any higher than necessary to integrate new technologies (and phase out older more expensive technologies). I sure don't want my cellular bill to be another overhead tax.
Posted by Anonymous | February 28, 2008 - 5:54pm
Guess whos headquartered in Little Rock AR, the capital of Sen. Pryors represented state, oh yeah, Alltel Wireless...This is a classic case of politics as usual, with Sen. Pryor representing the interests of a corporation that is based in his home state....
Posted by Martin Cooper | March 6, 2008 - 9:38pm
Yes, the 700 MHz auction is a disaster, as are most spectrum auctions. The spectrum is a publicly owed asset that continually increases in value as we find that there a myriad of ways to use spectrum to enhance the lives of people. Twenty billion dollard may seem like a lot now, but history teaches us that this spectrum will double in value every 30 months. Twenty billion today becomes a bargain very quickly. The government should place requirements on spectrum users for effective use of that spectrum and should receive continuing payment, to us, the puplic, appropriate to that use.
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