700 MHz Auction Concludes

The FCC 700 MHz auction concluded recently and the major winners were Verizon and AT&T. While this may seem like bad news to those who would have preferred more competition as a result of this auction, FCC Chairman Martin explains that a number of smaller competitive companies did indeed win a large chunk of spectrum.

For example, 99 bidders who were not AT&T or Verizon won 754 licenses representing 69 percent of the 1,090 licenses sold. For example, Frontier Wireless, won 168 licenses in the E block to establish a near nationwide footprint for its services.

In a press release, FCC Chairman Kevin Martin had this to say:

Even in a difficult economic climate, revenues raised in this auction exceeded congressional estimates of $10.182 billion by approximately 187 percent – nearly twice the amount Congress had anticipated would be raised to support public safety initiatives, the digital television transition and $7 billion in budget deficit reduction.

I suppose from the FCC’s perspective this is great news and moreover it is a nice shot in the arm for the US government at a time when we could use the revenue.

The problem here is that this money and much more will now be extracted by the winning companies who the last time I checked were not non-profit organizations.

In other words, the government has just ensured the price of broadband will be substantially more than it could have been.

If you want to understand the power of free wireless spectrum, just think about life before WiFi. Think about how much it has improved and how much more productive the world economy is as a result of WiFi using unlicensed spectrum which was blessed by the FCC.

How many WiFi devices have been sold in the US these past years? Tens of millions? Hundreds of millions? Access points, WiFi telephony phones and WiFi-enabled printers are just a few of the categories of product that are sold as a result of WiFi being available.  How much better is life because we can work when and where we want on WiFi networks?

I am trying not to be too Utopian here but I wonder if it wouldn’t be better to have a lottery for these frequencies and in addition take the frequencies back if they aren’t rolled out to the public in a timely manner.

In addition, a serious concern for all of us should be the negative effects of having incumbents win any frequencies in a part of the country in which they already dominate. What is the incentive to compete with yourself and help consumers by lowering prices? I wish there was a way to ensure every slice of this spectrum was distributed in a manner in which the maximum competition was created.

The problem is that some of the deepest pockets belong to the companies who don’t want this competition and have semi-monopoly or duopoly positions.

So hats off to the FCC for doing what is in the country’s best interest but I wonder if we shouldn’t look at what is really what in our best *long-term* interest and stop worrying about the present.

See Also:

Gary Kim:          Verizon, AT&T, EchoStar Biggest FCC 700 MHz Auction Winners
Mae Kowalke    Verizon Wins C Block in 700 MHz Auction, FCC Ponders…   
Tim Gray           Some Cheers for FCC 700 MHz Auction
AT&T, Verizon Dominate Airwaves Auction
Airwaves Auction Winners Named
TechWebNews  Verizon’s Open Network Not A Game-Changer For Enterprises, Yet

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