An extra $20B in income for the Government that the carriers will then spend the better part of the next 10 years recouping through their usual business practices like maintaining quasi-monopolies, ridiculous usage limits, massive over-subscription, anti-net-neutrality practices like "most favored streaming service" and other regressive, growth-inhibiting moves.
There is this "pure capitalist" ring to allocating spectrum through auction but the practical effects have been devastating. It's trading $20B in income now for stifling the growth that dumb, unrestricted, fast mobile pipes would offer to the remainder of the economy.
That's what the regulators told Coase when he proposed auctions.
The problem with this argument is that it presumes spectrum would be allocated productively (or "fairly") in the absence of an auction. But that historically wasn't the case, and isn't the case with any number of other scarce resources doled out by governments.
Even among good-faith claimants, there is competition, obstinacy, incompetence, and waste; those things are fundamental to all of enterprise. That's true of auction winners as well, of course, but at least we're (a) getting revenue for the resource, and (b) forcing people to put their money where their mouth is: you don't write a 9-10-figure check without having at least some earthly clue of how you'll put the thing you bought to use.
Yet we've put a bunch of 2.4 GHz spectrum out there with essentially "here you go, please channel hop, use up to those dBm" and it certainly has been a vastly, vastly more productive use than any single one of those carrier spectrum auctions.
And why did that happen? They probably figured it was worthless to auction given the attenuation. So if something nets minus dollars in your auction scheme but trillions of economic value, hey, I think we're still waiting for some data to come in on this thesis.
This is the reality of light frequencies. We restrict all of them, and have only a whitelist of actually usable open spectrum that everyone crowds in.
What we really need is just a blacklist of low frequencies for emergency coding and military use, while the rest are open. Intentional interference would still be illegal as it is now, because that is a disjoint law independent of whether spectrum is private or public.
Some wireless systems need to work. We cannot lose the lead in a Broadway show, security radio at a major event, time synchronization, air traffic control, or the ability to make a 911 call because someone wants to torrent a TV series in 4k. "Sorry, spectrum is crowded today, go home" is not a viable option for the many businesses and situations that depend on RF the way it is for WiFi in a crowded apartment complex.
Wifi spectrum usage is also managed to a large extent by spatial separation. There are still fairly strict power limits on 2.4GHz devices which ensure that they have a relatively short range, so while your neighbor might interfere with your wifi, neither of you are going to have any effect at all on someone even half a mile away.
> has been a vastly, vastly more productive use than any single one of those carrier spectrum auctions
How much of that productivity is derived from the fact that support costs are externalized? Devices having issues connecting to WiFi, network occasionally disappearing for no good reason, neighbor stepping on your WiFi channel, Roku or PlayStation frequently buffering when playing online video? Tough luck, Google is your friend.
Carriers do not have the luxury of enjoying such laissez-free relationship with paying customers.
Carriers do not have the luxury of enjoying such laissez-free relationship with paying customers.
That has not been my experience. Where I used to live, there was line of sight to multiple towers, presumably enough to get every carrier. Yet service was spotty at best. My monthly data usage was like 70MB or less, not because I dodn't want to use it, but because the 3G speeds were so slow (LTE was even slower and flakier). 30% of the time web pages wouldn't even finish loading.
Yes, this is $20B invested into virtual claims that could be invested into networking assets.
I still remember the exact place I stood in the locker room in 2000 when my manager remarked similar about the €50B auction in Germany in the wake of similar ones across Europe. It struck me odd. Over the next decade he was proven right. The debt load forced a consolidation of carriers and then suppliers. The effects are still visible in balance sheets.
The problem is that the amount bid is not so much a function of reasonable expected profits but more a question of how much money can be raised. Medium to long term profitability risks are discounted by managers as not bidding has an immediate impact on themselves.
There is this "pure capitalist" ring to allocating spectrum through auction but the practical effects have been devastating. It's trading $20B in income now for stifling the growth that dumb, unrestricted, fast mobile pipes would offer to the remainder of the economy.