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Cellular Giants Win Big in Spectrum Auction
'Dream of another wave of new entrants has died'
by Karl Bode 06:31PM Monday Aug 28 2006
The New York Times checks in on who made out in the recent FCC AWS spectrum auction. While touted as a chance for pesky upstarts or wistful third-pipe competitors like DirecTV to grab much needed spectrum, the paper notes it was the incumbent wireless providers who walked away from the auction happy.
"Of the $13.3 billion in bids registered thus far, $2.2 billion has come from the cable providers, bidding together in a consortium with Sprint, the third-largest cellular carrier. But about 60 percent of the total bids have come from Cingular, Verizon Wireless and T-Mobile, the first-, second- and fourth-largest cell phone companies. T-Mobile has bid nearly $4 billion, mostly for licenses in major metropolitan areas, while Cingular and Verizon have sought licenses that cover broader regions."
"The kings of the hill defended the hill," says one wireless industry analyst in the piece. "The dream of another wave of new entrants has died."

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kdandaoc

join:2003-10-13
608052427

oh well.....

sounds like an ebay move....pump up the price and then split!

pnh102
Reptiles Are Cuddly And Pretty
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NY Times Misses the Point

Does the NY Times not know what the purpose of an auction is? It is for the seller to get the highest possible price for the item being sold. Auctions have nothing to do with allowing for newcomers to enter the field.

If a newcomer could outbid any of the established companies, then said newcomer would cheerfully have access to said item.

From the government's perspective, the auction was quite successful, netting in billions of dollars. Why did the NY Times not focus on how the government made out like a bandit as a result of this auction?
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ropeguru
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Re: NY Times Misses the Point

said by pnh102:

Does the NY Times not know what the purpose of an auction is? It is for the seller to get the highest possible price for the item being sold. Auctions have nothing to do with allowing for newcomers to enter the field.

If a newcomer could outbid any of the established companies, then said newcomer would cheerfully have access to said item.

From the government's perspective, the auction was quite successful, netting in billions of dollars. Why did the NY Times not focus on how the government made out like a bandit as a result of this auction?
Yup... In this case the rich get bigger and the poor go out of business..
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Re: NY Times Misses the Point

the rich get richer, and the piss poor satellite companies get to screw (I mean raise price$) the customer again, and again, and again....
Zoder

join:2002-04-16
Miami, FL
Was wondering.

Does the money go directly to the treasury or to the FCC for their department to spend?

Sr Tech
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Re: NY Times Misses the Point

I have all ways wondered my self where the money went..

RadioDoc
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It goes directly to the Treasury's general fund. The FCC gets nothing.
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Radio Active
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Re: NY Times Misses the Point

said by RadioDoc:

It goes directly to the Treasury's general fund. The FCC gets nothing.
Dammit, RadioDoc, you got in before I could finish my Google!

As always,

Cheers.
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FFH5
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said by RadioDoc:

It goes directly to the Treasury's general fund. The FCC gets nothing.
Except maybe some extra consideration in the annual budget process.
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RadioDoc
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Re: NY Times Misses the Point

The FCC's budget is about 2% of what this one auction brought in. While I am sure there is some budgetary consideration when/if the FCC asks for out-of-ordinary expense items, the auction process is all about Congressional money grabbing. The FCC was mandated to do it, and has no choice in the matter.
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Radio Active
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said by Zoder:

Was wondering.

Does the money go directly to the treasury or to the FCC for their department to spend?
»wireless.fcc.gov/auctions/defaul···auctions

I found this on the FCC site, "Omnibus..." and "...public benefit..." jump out at me, but I did not investigate further.

/Me thinking the proceeds go into a "General Fund"... this fairly screams, "SLUSH!!!" But I could be wrong...

Cheers and good question... Inquiring minds want to know.
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FLA05

join:2006-01-11
Panama City, FL

Re: NY Times Misses the Point

The money is going to fund the war in Iraq......for about a month
firewire9999

join:2004-07-11
Livonia, MI

1 recommendation

Hmmm or the NY Times is doing the usual "SPIN" about big evil corporations, etc.
nasadude

join:2001-10-05
Rockville, MD
said by pnh102:

Does the NY Times not know what the purpose of an auction is? It is for the seller to get the highest possible price for the item being sold...
Exactly! That's not what the FCC is supposed to be about, but that's the way spectrum auctions have been set up.

The FCC should be using a process that ensures new entrants WILL win licenses, to foster competition and benefit consumers. Who the hell do you expect to win these licenses when highest bidder wins? No-name Wireless, Ltd or ATT?

If this is the way spectrum continues to be auctioned, there will never be significant competition in wireless broadband and all spectrum will be owned by the current incumbents with few possible exceptions.

RadioDoc
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Re: NY Times Misses the Point

Tell that to your Congresscritter. They set the rules. The FCC just carries the water.
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short09

join:2006-07-21

Re: NY Times Misses the Point

said by RadioDoc:

Tell that to your Congresscritter
they wont listen unless u give a congressman $25000
PDXPLT

join:2003-12-04
Banks, OR
said by pnh102:

From the government's perspective, the auction was quite successful, netting in billions of dollars. Why did the NY Times not focus on how the government made out like a bandit as a result of this auction?
While revenue-generation was the mostly widely reported aspect in the press, and the one politicians like to talk about, that's not the "real" reason why the FCC does these auctions. After all, $10-20 billion is almost the rounding error in the yearly Federal budget, and these are for long-term, multiyear licenses. The fees they generate are a drop in the bucket.

Rather, these auctions are supposed to be an extercise in classic free-market-based economics. By selling to the highest bidder, the intent is to put the spectrum to its "highest and best" use; i.e., by giving the license to the entity that values the spectrum the most, the idea is that it will go to the party that can generate the most earnings from it. According to free-market ideologues, maximizing earnings == maximizing "utility" == maximizing the use of a public resource == maximizing the public good.

Whether this actually turns out to be the case remains to be seen. Critics contend that the incumbents may now just sit on the spectrum and do nothing with it, and only bought it to lock competitors out. 'hardly the "highest and best use" the gov't had in mind. Time will tell.

RadioDoc
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Oh please...

"The dream of another wave of new entrants has died."

That dream died years ago...1996 to be exact. Any "new entrants" would have just sold out to the big dogs anyway.

And it's "touted", not "tauted".
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Re: Oh please...

said by RadioDoc:

...And it's "touted", not "tauted".

Score one for the spelling police!

I saw it, too...

D'Oh! Karl slid into the "Correction Zone" before I could finish my post!!!
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FFH5
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Comcast & TimeWarner making wireless internet move?

At the same time, cable companies like Time Warner and Comcast have teamed up with Sprint Nextel to bid on chunks of spectrum to expand their limited presence in the wireless business. Analysts said the cable companies were likely to use the spectrum to offer wireless Web access, not necessarily phone service.

Of the $13.3 billion in bids registered thus far, $2.2 billion has come from the cable providers, bidding together in a consortium with Sprint, the third-largest cellular carrier.

Emerging technology that lets wireless phones use data networks instead of traditional cellular networks to connect calls could give the cable companies a route into the phone market.

More likely, analysts said, cable companies are buying spectrum because they are interested in building a network of wireless hubs to let their customers log onto the Internet not just at home, but also in cafes, parks and hotels.

The cable consortium has bid for dozens of licenses, some of which cover the New York metropolitan area, where Time Warner Cable provides service, as well as Philadelphia, Washington and Chicago, where Comcast is the main provider. It has also bid for licenses in Los Angeles, San Francisco and other cities.
Looks like the cable companies are going to try and cut the city WiFi networks off at the pass.
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wifi4milez
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Re: Comcast & TimeWarner making wireless internet move?

said by FFH5:

Looks like the cable companies are going to try and cut the city WiFi networks off at the pass.
That wouldnt necessarily be a bad thing. In fact, I would bet that some of the cable wireless networks will be up before some of the city networks we have been talking about for years. The already-one-year-behind-schedule Philly network comes to mind.......
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brooklynman4

join:2004-09-07
Brewster, NY

I heard

I heard verizon took the cake

roamer1
sticking it out at you

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Atlanta, GA

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Auction 66

About the only places where anyone besides the major wireless carriers are getting anything are rural areas, and in most cases the companies getting the rural areas are small ILECs who want to do wireless (in lieu of or in addition to DSL) in-region or expand out-of-region somewhat.

IMO, the satellite companies pulled out far too early. I don't think not being able to compete with more than TV will kill them off, but with phone companies moving to IPTV and the satellite companies essentially unable to do VoD on their own, it will certainly hurt (DirecTV and Dish rely on partnerships with phone companies for a lot of their business.)

Of the existing wireless carriers:

T-Mobile has by far the most to gain or lose from this auction -- compared to the other three major wireless carriers, T-Mobile has relatively little spectrum in most markets (as little as 10 MHz in a few) and desperately needs more to catch up with the others data-wise.

Verizon Wireless could use more spectrum, but isn't truly desperate for it in most places; Sprint Nextel (who is bidding jointly with the major cable companies) is in a similar position.

Cingular participating in the auction as extensively as they are strikes me as a bit strange, as they are awash in spectrum in most areas (the only significant exceptions being the handful of markets where only the original Cingular or only the former AT&T Wireless had operations, such as Denver, Minneapolis, and Panama City, FL.) It almost seems as if Cingular may be trying to hoard spectrum so that T-Mobile and others can't get it...

Alltel sitting things out also strikes me as strange -- they still have huge gaps in their footprint, namely the Northeast (where all they serve is a single county in Connecticut that Cingular had to sell when they bought AT&T Wireless), where they are stuck roaming on other carriers. They seem to want to go beyond "mostly rural super-regional" and go truly national, but how in the world can they do it without anything in the Northeast? The opinion of many is that Alltel will buy out other carriers to get what they need -- Metro PCS, whose operating markets are close to or adjoin Alltel service areas and who has also been bidding for a Northeast REA license, seems like a particular target.

-SC
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