Begin forwarded message: From: David Josephson <dlj04@xxxxxxxxxxxxx> Date: August 20, 2006 11:30:46 AM EDT To: dave@xxxxxxxxxx Subject: Re: [IP] Spectrum Gold RushDave, for IP if you like. The policy of spectrum auctions is seriously flawed, indeed, and has more public policy nightmares in it than you might imagine. It has been tried here and in the UK and in both countries has resulted in the bankruptcies of many of the bidders, and their suppliers. Whole chunks of the spectrum are tied up, largely unused, because the prices paid were unreasonable. The tale of the 39 GHz band should be instructive for people looking into this. All of the source documents are available at wireless.fcc.gov/ auctions/30 ...
29 bidders won 2,173 licenses in May of 2000 for over $4 billion. 2 GHz of spectrum, from 38 to 40 GHz, were sold off in regional licenses 50 to 200 MHz wide. The major bidders such as Winstar, Advanced Radio Telecom and Adelphia hoped to establish high speed connectivity to the premise (Winstar called itself Winstar Wireless Fiber). The business premise was that there was such pent-up demand for connectivity that people would pay more than fiber prices for short microwave hops. Such high frequencies are ideal for hops of 3 miles and less, and narrow beams are possible with small antennas. But did no one notice that the densely populated areas where this would be practical already had a glut of dark fiber, providing far more bandwidth, far more reliably, than could even be imagined over radio at the time?
Tens of thousands of radios were built by companies like P-Com, Stratex, California Microwave and others. Prices were in the usual range of commercial microwave equipment of the time -- $30,000 - 60,000 for a 2-mile link of 45 Mbps capacity. Winstar planned a huge buildout, and "lit up" hundreds of buildings in cities. I'll skip the intermediate steps. Today none of the high bidders or major equipment vendors is healthy, and most are gone. You can buy this equipment on eBay, much of it still with Winstar inventory stickers, for 1-2% of the original price. The last I tried to make it work for a local client, the companies that had bought up the licenses from the failed original bidders were still asking $50 to $500 per channel, per month, just for the license. This is contrasted with the usual FCC license fee of $1580 per channel for a 10 year license for frequencies in nearby non-auction bands, which still have capacity nearly everywhere.
FCC is an easy target for scorn, but most of the blame does not lie there. Through successive administrations they have been tasked with an absurd mandate, that the "public interest, convenience and necessity" test of the original Communications Act of 1934 was best served by allowing the market to set the price for spectrum as if it were real estate, urban planning be damned. In one instance we have seen it work -- if you consider the development of the cellular telephone industry -- but only because the public could be sold on needing a phone in every pocket. That approach doesn't work in every case.
-- David Josephson
Begin forwarded message: From: Brett Glass <brett@xxxxxxxxxx> Date: August 19, 2006 11:50:00 PM EDT To: dave@xxxxxxxxxx Subject: Spectrum Gold Rush Dave:For IP, if you'd like. Our wireless Internet service provider, which has been seeking licensed spectrum for many years, knows how much spectrum is worth; we know that even the FCC's minimum bid in its current auctions is too high to allow profitable operation in many rural regions. But we've consistently been aced out of these auctions by large "spectrum barons," which bid far more than the spectrum is worth and then hoard it -- perhaps seeking to drive its market value up to what they paid by creating scarcity. These same companies are also forming small "shell" companies so as to obtain discounts which were supposed to be reserved for small entities like ourselves. We urgently need licensed spectrum to serve our customers, but the horribly flawed auction process is making it unlikely that we'll ever obtain any.--Brett Glass, LARIAT.NET ---------------- Bidders Convinced of Huge Pot at the End of the Spectrum By Arshad Mohammed Washington Post Staff Writer Friday, August 18, 2006; Page D01The country's biggest telephone and cable companies, already fighting a ground war to sell consumers TV, phone and Internet service, have taken their battle to the air.Both sides have spent the past two weeks bidding billions of dollars against one another to buy electromagnetic spectrum -- the frequencies that carry cellphone calls, TV broadcasts and wireless Internet access.While they cannot see, taste or touch what they're bidding on, the companies can smell profit if they can grab enough of the airwaves at a government auction.It is an article of faith in the industry that, over time, more and more communications will become wireless -- making spectrum a must- have asset for any company that wants to be a player."Spectrum is like money. You never have enough," said Roger Entner, a wireless analyst at independent research firm Ovum.But it is a limited resource, and extremely expensive.The federal government is expected to raise as much as $15 billion from its current auction. The airwaves up for grabs would be used to offer fast wireless Internet access and ever-more-elaborate cellphone service that puts e-mail, music and video into the palm of your hand.This auction and another, due to be held by the end of January 2008, are regarded as the last, best chance over the next several years for companies to acquire "beachfront" spectrum that is exceptionally well suited for wireless Internet and phone service.What has been most striking about the Federal Communications Commission's Advanced Wireless Services auction -- which began Aug. 9 and could last for weeks -- is that satellite TV providers and cable companies were among the 168 bidders.Full text athttp://www.washingtonpost.com/wp-dyn/content/article/2006/08/17/ AR2006081701574.html------------------------------------- You are subscribed as dlj04@xxxxxxxxxxxxx To manage your subscription, go to http://v2.listbox.com/member/?listname=ipArchives at: http://www.interesting-people.org/archives/interesting- people/
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