by Carlo Longino

Company Says Spectrum Auctions Don't Work, So Just Give It Some Airwaves Instead

from the nice-try dept

Different countries' telecom regulators take different approaches to handing out wireless spectrum. Some use so-called beauty contests, where interested companies file proposals for the airwaves in question, and the regulator judges them on some set of criteria and gives out licenses. In the US and many other places, regulators use auctions, selling off licenses to the highest bidder. The FCC's auction system can get quite complex, with all sorts of different licenses for different areas and different amounts of spectrum, and discounts for smaller companies and bidders. While we wait for a complete overhaul of the spectrum allocation process, in many cases, auctions are a "least worst" solution. The FCC plans to auction off some 700 MHz spectrum this summer, and its properties make it very desirable for wireless broadband providers. Part of this spectrum has already been allocated for public-safety use, and some companies are trying to use that angle circumvent the auction process and grab more spectrum for lower prices, or even free. The general idea is that they would build a nationwide network and lease capacity on it to operators and service providers, and earn revenue from that. They'd then also charge public-safety groups for access to the network, but would give their traffic priority on it, particularly during emergencies. There have been other, similar proposals for other spectrum in the past, including one group who wants a 15-year license for some 2100 MHz spectrum for free, then promises to offer free ad-supported service across the country, and to pay 5% of the revenues from a faster, paid service to the government. While we're skeptical of any plan that promises to build a nationwide wireless network, then offer free service, given the huge costs of building such a network, we noted at the time it was nice to see people exploring alternatives to spectrum auctions.

Now, the company behind that proposal, M2Z, is back with an in-no-way-at-all-biased survey it says shows that spectrum auctions don't always work. While that point is pretty clear -- just look at the NextWave fiasco for proof -- it's also pretty clear that this study really can't be regarded as an unbiased, objective view of the topic. While spectrum auctions certainly aren't perfect, it's hard to see simply giving away spectrum to anybody that puts together a plan and gets some VC as an ideal method, either. In any case, this all highlights the interest in and need for a reexamination of the FCC's spectrum allocation policies, and in particular, a look at how creating a much more open, flexible market for spectrum (including opening more unlicensed spectrum) could be beneficial.

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  • identicon
    HEWAC, 30 Mar 2007 @ 2:39pm

    Innovation should be rewarded

    The M2Z application, which offers to share 5% of top line premium revenue with the Treasury, makes a whole lot more sense than the "license once, never pay a renewal fee" scheme currently enjoyed by the incumbents. Furthermore, they also promise to build out to 95% of the American public so people without Internet access today can benefit from this revolution. That's huge. The existing providers just skim off the most profitable customers and clearly, they would never share 5% of their growing revenue streams with the government. M2Z's innovative approach is raising the bar for the industry and I applaud it.

    reply to this | link to this | view in chronology ]

  • identicon
    |333173|3|_||3, 31 Mar 2007 @ 1:11pm


    THe frequency used fro 802.11n is in the middle of one of ht emain bands for RADAR, which needs the same attributes of a balance between high frequency adn range, as a wireless network. Since the USA, like most othr governemnt s, consider the correct operation of RADARs more important than the correct operation of wireless networks or garage door openers, the FCC is unlikely to make that frequency range "free". Class 15 is basically and instruction whach says that "you may make a device which operates on this spectrum, but if anything else interefers with it tough. However, you are not to interfere with the primary use of this spectrum.

    reply to this | link to this | view in chronology ]

  • identicon
    Mike Rossiter, 31 Mar 2007 @ 2:14pm

    giving the spectrum away...a how to guide!!!!

    Company A says "give me free spectrum and erm...I PROMISE that I'll build a national emergency network for use when the current system is overloaded.

    Answer - Tell them YES you can have the free spectrum but the emergency network MUST be the first thing to go live before any profit-making services!

    Also why not stick in a nasty get-out clause......

    If you fail to build your network AS SPECIFIED with within one year, then you GUARENTEE to not only hand back the spectrum but also to pay the government and to compensate the other businesses who wanted the spectrum but didn't get it by .

    Then the only companies who'd bother to want spectrum would be those who'd USE IT as they promised to...they'd have to deliver their freebies promises FIRST and if they just sat on the spectrum they'd lose HUGE SUMS to their rivals!

    reply to this | link to this | view in chronology ]

  • icon
    Steve R. (profile), 31 Mar 2007 @ 6:29pm

    To me the spectrum debate has unfortunately been one-sided where the spectrum privatization crowd has done all the whining.

    First, the privatization crowd claims that "private" ownership will allow the for the efficient use of the spectrum. While this may appear appealing on the surface it is a disingenuous argument. The spectrum is already in "private" ownership. The government is holding the spectrum in trust for the American people. Next, who has given the privatization crowd the right to expropriate public property??? If the shoe where on the other foot, the privatization crowd would be screaming how their private property was being illegally seized by the government. Additionally, for a group that detests socialism I find their arguments to be very socialistic. By analogy, many people are able to afford a single home on a large lot. This is hardly efficient as maybe three or four families could live on that lot. The same is true with the radio spectrum. The privatization crowd thinks it has a right to expropriate and allocate private property!!!! Seems very Jacobian of them.

    Second, one of the idiotic mantras is that privatization is needed to solve the interoperability problem with emergency radio service. The problem is a management problem that the emergency service crowd needs to resolve, this is NOT a radio spectrum issue. I fail to see how allowing a private company would magically solve this issue. Look at the fact that private companies when it comes to telecommunications like to lock out their competitors. There was in a recent post that some companies would not allow calls to go to certain phone numbers. Now, all of a sudden, they are expected provide an open standard for emergency service communication? I don't think so. Additionally, why should the emergency service crowd pay a private company to use radio spectrum that they can already use for free? Please note that the emergency service crowd already provides private companies with income through the purchase of equipment and the use of consultants to set-up their systems. All the privatization crowd wants is another toll-booth to extort more money from the public.

    reply to this | link to this | view in chronology ]

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