Deficit reduction by spectrum auction?

So I took up David Weigel‘s challenge in Slate: Read the Reid Plan. Read the Boehner Plan. Get Back to Me… and got as far as this stuff in Reid’s plan:

Reid plan

(Sorry, I had to take a screen shot because the original is a .pdf and the copied text takes too much work to fix.)

So I’m wondering why… let’s see… Pages 46 to 82 — out of a 104-page document — are devoted to this stuff. I really don’t know, although I’m guessing it’s good for Verizon, AT&T and other bidders on that spectrum.

There’s plenty of coverage, of course. Here’s a list, some ranging a bit from the budget fracas, but perhaps illuminating the politics of spectrum, and why it’s in the middle of this thing:

The Boehner plan is utterly opaque to me, at least at this point. But maybe that’s because this spectrum thing stands out so obviously in the Reid plan, and spectrum is a subject I know a few things about. I’m opposed to selling any of it, and think we need to get past spectrum alone as a way to understand radio waves and how they work (especially when we sell off rights to use them… it’s like selling the color blue. I’m also big on open spectrum and unlicensed wireless, but no BigCo wants either, so those aren’t on the table, even though they’re already proven sources of economic benefits. By the way, whatever happened to “the public airwaves”? Remember those?

What do the rest of ya’ll think?

9 responses to “Deficit reduction by spectrum auction?”

  1. A number of problems with your assertion, Doc. First of all, spectrum isn’t “sold,” it’s licensed. True, the fees ought to be ongoing and recurring, but the fact that they are not simply has to do with the idiocy and shortsightedness of legislators.

    Secondly, licensing frequencies isn’t like “selling the color blue.” There’s sound science behind the notion of choosing an abstract vector space and allocating different portions of that space to different people who transmit signals so that their signals can be distinguished from one another. And frequency/wavelength is not the only way to do it. See my paper at

  2. “I’m also big on open spectrum and unlicensed wireless, ” OH YEAH, the one with the most big-ass signal booster wins, and “overlaps” the less powerfull transmitters. That anarchic scenario was tried: it was Citizen´s Band. The one with the biggest bad-add booster won, overlapping all others around.

    OF COURSE, there are differences between wi-fi and CB…. modern technologies aren´t analog and they do spread spectrum and frequency hopping, along with time division and other techniques. BUT STILL, the base principles are the same: there is only a finite amount of bandwidth by going wireless. And in densely populated areas, there is not enough for everyone downloading 10mbit+ at once.

    But still… advocates of “free for all” are going to get us all cooked in microwaves. I´ve already seen “signal boosters” available “under the counter” that exceed the FCC limits, yet are sold for point-to-point links to be installed by amateurs. And since they don´t have the technical means to aim the antennas correctly, it´s highly likely someone at a high rise flat is going to get beamed “by accident” with those signals.

    THANKS VERY MUCH, but I pass. Why insist with wireless when FTTH is just around the corner?. With fiber, you can just lay out as many parallel fibres on a duct as you need, until you reach the bandwidth you need. If there´s more need, you dig another ditch and lay more pipes and fill those with fiber.

    Give me a break with wireless, already.


  3. Brett, granting your points, where do you stand on spectrum auctions in general, and on bringing them in on deficit reduction?

    Fernando, favoring open spectrum and unlicensed wireless (e.g. wi-fi) is not the same as favoring lawless free-for-all, and I didn’t say I favored the latter.

    Do either (or any) of you know where spectrum ended up (if at all) in the compromise Congress came to?

  4. I once participated in a spectrum auction. I shouldn’t have bothered. The auction process and policies are rigged in every way possible so as to ensure that either the largest corporations or the richest speculators get the license. Alas, because the FCC is no longer an expert agency and is now completely politically driven, and because Congress lacks the political will to defy the rich lobbyists of the spectrum “Big Three” (AT&T, Verizon, and Sprint/Clearwire), spectrum is now being hoarded and wasted. A shame.

  5. You don’t have to do much research to conclude that the bidding favors the biggest; Commissioner Genachowski (sp?) has said as much. But I don’t believe (nor did I read his opinion as claiming) that the bidding is “rigged.”

    It’s merely that we have a winner-take-all approach to spectrum that encourages incumbents to bid the price up beyond what a willing competitor could justify: the incumbent has a local monopoly and can pass on the costs to the existing user base (note the recent changes to data plans?) while newcomers face the chicken-and-egg situation.

    Auctions don’t have to be that way: the Treasury finds willing buyers for its IOUs that lets many firms participate, rather than trying to chop up its offering into different pieces and look for the best price by a single buyer in each. The FCC format could license spectrum for relatively shorter periods, and encourage a spectrum-sharing in any geography, so that more firms could provide competition. Technical standards would prevent an arms race of interference.

    As to the original question of “WTF is this doing in a debt ceiling?” — You have to presume that Reid knew the Senate plan was going nowhere, so this was a chance to show backers that he was trying. Politics as usual, alas, and a bit odd in that it’s the R’s who are trying adamantly to abolish the FCC’s ability to regulate wireless commerce.

  6. Thanks, Walt. I’m sure your summary is correct, and so is Brett’s: large hunks of auctioned spectrum are now lying fallow, hoarded and wasted.

    What we need is policy that favors truly free enterprise. What we have is what the Big Boys buy from lawmakers and regulators. And I see no sign of that changing, either under the current administration, or under any we’re likely to get from the Republicans, should they prevail in ’12.

  7. Actually, the bidding is often rigged, and the auction rules are ALWAYS rigged, so that small businesses, new market entrants, and innovators need not apply. This is true in so many ways and on so many levels that I could write a book about it. To cite an example: the FCC bestows a token “bidding credit” for small businesses. But any company can spin off a new small business, and bankroll it, and it will qualify for the credit. (Echostar has done this at least twice.) What’s more, while the discount goes toward a winning bid, it doesn’t apply to the deposit which one has to put down to qualify to bid in the auction. Thus, genuine small businesses must scrape up extra capital to qualify to bid. What’s more, there’s no prohibition against a “small” business started by a large company from being bought by of the big incumbents the day after the license is granted. Finally, the credit is far too small to compensate for the “foreclosure value” of the spectrum — that is, the additional value that it has to an incumbent who buys it to lock out competition.

    And that’s just one small aspect of the auction process. There’s more… and worse.

  8. Politics as usual, alas, and a bit odd in that it’s the R’s who are trying adamantly to abolish the FCC’s ability to regulate wireless commerce.

  9. Spectrum reduction should be according to Boehner plan.Its not totally opaque to me. And it can causes raise in revenues generated by it if as it says merge the wireless spectrum to mobile broadband.

Leave a Reply

Your email address will not be published. Required fields are marked *