Tales of the Sausage Factory

A Quick Addendum To My AWS-2/AWS-3 Prediction

Last week, I predicted the FCC would opt to auction the AWs-2/AWS-3 spectrum rather than adopt the M2Z proposal. Yesterday, the FCC issued it’s teaser for recommendations to improve broadband adoption. One of these was “[c]onsider use of spectrum for a free or very low cost wireless broadband service.”

That, of course, was M2Z’s chief selling point. They would provide a free tier for for everyone supported by adds and by the higher-speed, ad free pay tier. So do I want to revise my prediction on whether the FCC will adopt the M2Z or T-Mobile asymmetric auction proposal?

Not at this point. Sure, this tea leaf looks much more favorable to M2Z than it does to T-Mobile. But I note two things. First, the language says “consider” rather than simply “use.” The question of whether to require free service of some kind as a public interest obligation was teed up in the pending AWS-2/AWS-3 proceeding. If they were going to go with M2Z, they wouldn’t say “consider,” they’d say “use spectrum . . . .” Second, there are a number of other ways to use spectrum for free or low cost wireless. These range from expanding the use of unlicensed spectrum to facilitate creation of community wireless networks to mandating “wireless lifeline”-type programs that would require all carriers to offer cheap or free access on a needs basis. It also remains to be seen whether the FCC will actually do anything other than “consider” such an approach, or whether revenue concerns and incumbent resistance will ultimately carry the day.

So while I’m pleased to see the FCC looking at spectrum from a public interest/public welfare perspective, I’m not changing my bet on how the FCC resolves the AWS-2/AWS-3 band fight. The real questions are (a) timetable, and (b) spectrum caps, yes/no? (and no, I haven’t forgotten about Fred Campbell’s standing invite/challenge for me to justify spectrum caps generally, just haven’t gotten time yet). The FCC could conceivably issue an Order with service rules and schedule an auction date. Or it could put out a final set of rules for further notice. My personal bet is thy will move quickly — both to show they are taking action and because OMB would really like to book that revenue. But we’ll have to see.

Heck, I could be entirely wrong in my prediction and they could go with M2Z, or some variant thereof. Stranger things have been known to occur.

Stay tuned . . . .

Posted in Tales of the Sausage Factory | Also tagged , , , , , , , | Comments closed

Tales of the Sausage Factory

Genachowski's Secret $15 bn Piggy Bank, or T-mobile Triumphs Over M2Z.

I’ve been rather pressed for time, hence have not had much chance to blog on the FCC’s recent spectrum policy announcements for D-Block and the broadcast migration offer. Combine these two speeches with Genachowski’s recent statement in an interview that the NBP will finance the $25 billion via existing programs and it is clear that the FCC will adopt the T-Mobile’s “asymmetric auction” proposal for the AWS-2 and AWS-3 band, leaving M2Z high and dry. The only question is whether or not there will be spectrum caps to keep AT&T and Verizon from snarfing the good stuff, but do not expect the NBP to touch something as “controversial” as spectrum caps even by veiled implication the way the DoJ did in its comments.

Mind, this is another example of the “spectrum auctions are the crack cocaine of public policy” problem. The thirst for revenue pushes all other considerations out the window. I’m not convinced the T-Mobile approach is wrong (especially if subject to spectrum caps), and I think the D-Block finesse was extremely clever. But when revenue sits in the driver’s seat, policy invariably takes a wrong turn somewhere along the road. But it is difficult to imagine how Genachowski could resist a $15 bn secret cash cow to fend off accusations that Democrats are once again writing checks against our children’s future blah blah blah.

I unpack all this below. . . .

Read More »

Posted in Spectrum, Tales of the Sausage Factory | Also tagged , , , , , , , | 1 Comment (Comments closed)

Tales of the Sausage Factory

We File Wireless Microphone Complaint: Shure Says Breaking Law Should Be OK If You Sound Good.

As regular readers will know, among my many wireless fixations are the use of the broadcast white spaces and the 700 MHz auction. So what happens when I get to combine the two together?

Answer: A 50 page complaint and Petition for Rulemaking, another 175 pages of evidence that Shure and other manufacturers have been marketing wireless microphones in violation of FCC rules, then using the victims of this deceptive marketing scam as “human shields” in the white spaces debate, and a possible road map toward solving the potential for massive interference with new public safety and wireless services operating on the returned UHF bands. As a side benefit, it also provides a route to authorization for the hundreds of thousands (if not millions) of illegal wireless microphones, finds a use for that leftover 5 MHZ band in the AWS-2/AWS-3 proceeding (waste not want not), and potentially changes the debate in the white spaces fight by getting the goddamn fact that the overwhelming majority of wireless microphones are (at the moment) used illegally out in the open so people can have a rational discussion about interference protection.

Oh yeah, and it will require the wireless microphone manufacturers to clean up the mess by exchanging the old, unauthorized equipment for new equipment that doesn’t work on Channels 52-69. I love a plan that only punishes the guilty rather than letting the wireless microphone guys reap yet another windfall by requiring the unauthorized users to pay for their own equipment replacement.

And what was Shure’s response to the complaint? According to the Associated Press, Shure did not deny breaking the law. Instead, they said: “today’s uses of wireless microphones provide a valuable and irreplaceable public good, regardless of the licensing scheme.”

Or, in other words, “yeah, we broke the law — but it doesn’t matter because we will use Broadway and churches as human shields if you try to go after us” (insert international gesture of respect performed with raised middle finger at FCC).

You can see the press release here, and get copies of our complaint/Petition here. (Links to the Exhibits are on the press page.) You can see a bit more analysis from yr hmbl obdn’t below….

Read More »

Posted in Spectrum, Tales of the Sausage Factory | Also tagged , , , , , , | 6 Comments (Comments closed)

Tales of the Sausage Factory

Censorship — Ur Doin It Wrong. And That's Why A Mandatory Filiter For AWS-3 is a BAD IDEA!

I am, of course, the last person in the world to tell other people what they should or shouldn’t advocate for and how they should or shouldn’t filter themselves. Thus, I have no quarrel with the decision of the American Family Association and how they choose to display the news (provided they comply with all relevant laws pertaining to copyright, defamation, etc.) True, I most vehemently disagree with their choice of “pro-family” agenda. I personally think families will benefit more from resolving the pay gap, better laws on paternity leave, and family friendly work policies than focusing on the behavior of consenting adults. But hey, that’s what the First Amendment is all about, so we can have these debates.

So the fact that AFA apparently thinks “gay” is too nice a word and has its news reader automatically replace it with the word “homosexual” does not raise any issues for me — I’m even willing to defend this as a fair use alteration of the text for political speech. But as the good folks at People for the American Way noted (and captured on their own website — ain’t the First Amendment grand?) it can have some humorous and unintended consequences. In this case, the accidental “furtherance of the homosexual agenda” by substituting the word “homosexual” for the proper last name “Gay,” which is a problem now that “Tyson Homosexual” is breaking speed records. Man, I always knew Homosexual could run the distance! What champion.

This would merely be an amusing little anecdote were it not for the fact that the FCC has proposed mandatory network-based indecency filtering as part of the AWS-3/M2Z proposal now out for public comment. For those just tuning in, this is the proposal to create a the equivalent of a free wireless DSL line supported by advertising and a premium service the FCC has out on public notice (comments due July 9).

I promise to try to get a much longer post out on the AWS-3 proposal, but let me focus for a minute on the mandatory filtering (which is not mentioned in the text of the FCC Notice, you have to actually read through the rules). As we can see from this relatively harmless example, filtering is a blunt instrument that often does more harm than good. Even with the increase in computational power from Moore’s Law, blah, blah, no automated filtering system can even come close to making the sort of contextualized judgments of what constitutes indecency that the Constitution demands. Heck, even human beings can’t agree on what makes something indecent and what makes it art. Whenever social networking sites or search engines or whatever get pressured into breaking out the broom in the name of the children, it invariably wipes out cancer support groups, rape survivor groups, and a bunch of unrelated stuff like chess.

And the FCC wants to require that the free network, accessible to every American, will also judge whether a future headline such as “Gay Doping?” is a discussion of a possible Olympic sports scandal or an advertisement for a same-sex rave?

I can laugh about the American Family Association and their personal filter follies that harm no one but those who chose to use their news service. But I shudder to think this may be the fate of our national broadband safety net.

Stay tuned . . . .

Posted in Censorship Public and Private, Tales of the Sausage Factory | Also tagged , , , | 6 Comments (Comments closed)

Econoklastic

700 MHz: Beating the AWS-1 $/MHz/Pop

A, B, and C Blocks have exceeded their reserve prices as of round 17 in Auction 73, and E Block has reached 83.73% of its reserve price, while D Block has languished at 26.99% of reserve price since the first round. Unless a great deal of the activity in A and B Blocks is intended to preserve eligibility for later round intervention in C Block, the probable C Block winner has likely made its winning bid in round 17.

The rate at which A and B Blocks have exceeded their reserve prices by the end of round 21 today — 190.51% and 462.50%, respectively — seems unlikely to abate, which may push revenue from Auction 73 to $16-17 billion, perhaps as much as $20 billion, despite the fact that D Block will almost certainly have to be reauctioned if the current pattern holds.

How much better A, B, and C Blocks are doing at this point than even at the end of Auction 66 (AWS-1) is shown in this table, which compares the dollar per MHz per population price each license in those three blocks obtained with the provisionally winning bid as of the end of round 21 to the final dollar per MHz per population price comparable licenses received by the final round of Auction 66. Since the bandwidth is different in each auction, $/MHz/Pop standardises the data for comparison.

Clearly the majority of 700 MHz spectrum on offer in Auction 73 is much more highly valued than the spectrum on offer in Auction 66: the average $/MHz/Pop price of an A Block license at the end of round 21 in Auction 73 is 193.53% of the final $/MHz/Pop price of comparable spectrum in Auction 66; the average $/MHz/Pop price of a C Block license at the end of round 21 in Auction 73 is 623.06% of the final $/MHz/Pop price of comparable spectrum in Auction 66. For C Block, the 50-state package (REAGs 1-8) is reaching 102.65% of the final price of comparable spectrum in REAGs 1-8 in Auction 66, while REAGs 9-11 are averaging 134.10% of what they finally obtained in AWS-1.

From the point of view of the U.S. Treasury Auction 73 is already a hell of a success. What remains to be seen is how well new entrants and smaller competitors did, whether the incumbents ran the table again, and whether we got a national third broadband pipe. But we won’t know that until the FCC releases bidder identities and bids at the end of the auction.

Posted in Econoklastic, General | Also tagged , , , , | 2 Comments (Comments closed)

Econoklastic

700 MHz, Part I: How Do the Bidders Compare to AWS-1?

This is the first installment of a three-part essay on the upcoming 700 MHz auction which the FCC will be starting in January 2008. Part I looks at the aggregate data on potential bidders and compares them to bidders in the AWS-1 auction. Part II examines the new entrants and major actors in detail. Part III analyzes potential bidding strategy on the part of the most important actors in the auction.

It is difficult to understand why so much is being made of incomplete applications and the postponement of the final application and upfront payment deadline to January 4, 2008 for the FCC’s 700 MHz auction. This is FCC business as usual as far as auctions are concerned. Auction 44, the Lower 700 MHz auction, was postponed from June 2002 to January 2003, and of 153 original applicants only 125 qualified with upfront payments. The second Lower 700 MHz auction, Auction 49, was postponed to May 2003, and 56 of 60 applicants qualified. The AWS-1 auction, Auction 66, was postponed from June to August 2006 and had 171 incomplete applications (and 81 completed) as of July 2006; ultimately 168 bidders quaified and made upfront payments.

Looking at the applicant pool, the potential 700 MHz bidders differ somewhat from the AWS-1 bidders in the aggregate:

more below…

Read More »

Posted in Econoklastic, General | Also tagged , , , , | 1 Comment (Comments closed)

Tales of the Sausage Factory

Back From Vacation And FCC Auction Still Going On . . . .

As I guessed, the FCC AWS Spectrum Acution continues apace. My two weeks off proving an insufficient time for the wonkiest and most expensive of online multiplayer games — spectrum auctions.

You can track the “action” (as we must call it) here. A quick flip through the current standings yields some interesting patterns so far. The DBS Wireless partnership, Wireless DBS LLC, started with some strong positions on regional licenses. Over time, they have been forced out by Spectrum Co (the Comcast/TW/Sprint group), AWS Wireless (the Salmesi “wild card”) and traditional cell phone cos. Dolan family (Cablevision) took a position in the NYC market (its home base) but also appears to have been knocked out.

A look at the overall stats in round 29 shows that T-Mobile, unsurprisingly, has the lead bid on the most licenses — 129. Spectrum Co comes in nest with 96. After that, there is a significant drop off in the number and nature of licenses held, with traditional cellular companies Cingular and Cricket holding 43 each. Interestingly, AWS is next, with 38. There follows a list of smaller fry with diminishing numbers of licenses in less desirable territories. Of the cable players aside from Comcast/TW, only Cable One (Washington Post) continues to have a presence with 24 licenses.

Unless something dramatic happens, the auction is unlikely to yield a drisuptive player/new competitor (unless one counts Spectrum Co).

More after I unpack and look at the stats.

Stay tuned . . . .

Posted in Tales of the Sausage Factory | Also tagged , , , , , , | 1 Comment (Comments closed)

Tales of the Sausage Factory

Handicaping This Week’s Big Spectrum Auction

And what a long strange trip its been to get here! In 2004, Congress passed the Commercial Spectrum Enhancement Act (CSEA), which required government users to vacate some choice spectrum so the FCC can auction it. You can see the FCC’s official page for this auction here. You can see my recent general musings on this auction on the Public Knowledge policy blog here.

But none of this tells the whole story. After two controversial rulemakings, a pending legal challenge, and the appearance of a host of new bidders, FCC Auction 66: AWS-1 is ready to start this week on August 9. A look at the list of who has come to play signals an auction of unparalleled visciousness, determination, and probable manipulation by sophisticated bidders because the FCC wussed out and did not adopt anonymous bidding.

For those interested in my handicaping what a report from the Center for American Progress describes as a corrupt means by which incumbents keep out competitors and what I have called “a really wonky version of Worlds of Warcraft,” read on!

Read More »

Posted in General, Spectrum, Tales of the Sausage Factory | Also tagged , , , , , , , , , | 1 Comment (Comments closed)
  • Connect With Us

    Follow Wetmachine on Twitter!

Username
Password

If you do not have an account: Register