from the bad-math dept
We've talked about Scott Cleland before. He's a "telecom analyst" who has a reputation for stretching the truth as far as it can go in order to contort himself into making telcos look good and anyone opposing the telcos look bad. Jim Harper points us to Cleland's latest, where he accuses Google of "fleecing taxpayers" out of approximately $7 billion with its actions in the recent 700 MHz auction. He notes Google's admission that it was only in the auction to push the bid over the threshold requiring any service on the network to be open. This isn't a surprise. It was widely assumed that Google would merely bid up to the threshold, knowing that if it could buy the spectrum at that price, that would be great, but if someone else got it and the network was then required to be open, that was great too. So this is hardly a shocking admission on the part of Google.
Cleland then compares the prices of the other blocks of spectrum available (those that didn't have open access rules) and does a back of the envelope calculation that the average price per MHz was noticeably higher on the closed access spectrum than the open access spectrum. From that point, he jumps to the conclusion that the C block (the open access block) was significantly underpriced because (he claims) telcos valued it less since it was open. Of course, there are all sorts of problems with this. He determines the amount of the underbidding by merely averaging the % difference in the A and B blocks to the C block -- but it's a massive difference. The A block was 50% higher and the B block was 250% higher. He then just averages that to 150%. Yet, anyone who bothered to actually think about it (rather than look for a weapon with which to bash Google) would note that this calculation is quite dubious. Beyond the "small sample size" problem, the very difference in price-per-MHz in the A and B blocks should make it clear that there are many other reasons why the price would fluctuate having absolutely nothing to do with whether the network was open or closed. To assign the entire blame to that makes no sense whatsoever and ignores the realities of what these different blocks of spectrum were good for.
Next, Cleland tries to spin this story as Google illegally swiping $7 billion from taxpayers -- since this entirely mythical $7 billion would have gone into the treasury, which will now have to make it up from taxpayers. On top of that, he suggests (totally incorrectly) that the only real beneficiary of the open access rules would be Google for its Android offering. Except... not quite. He's ignoring (conveniently) the other half of the equation. The open access rules benefit plenty of other companies beyond Google (in fact, any company that wants to take advantage of those rules), and will likely lead to much greater innovation and new and valuable businesses and services, that will likely generate much more tax revenue for the government than the totally mythical $7 billion. But Cleland decides to ignore all that inconvenient information in order to make an entirely bogus claim against Google.
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