FCC limits in spectrum auctions are a bad idea, it will hurt T-Mobile, Sprint, and consumers
There is more to this than meets the eye, however. The issues are not simply about spectrum, but also demographics, and economics. In the end, putting limits on upcoming spectrum auctions will not only hurt Sprint and T-Mobile, we the consumers get the short end of the stick as well.
Just note that while T-Mobile’s gregarious John Legere puts on a great show in favor of “consumerism,” and he genuinely does advocate, he has proven his ability to disrupt the industry, he is managing to squeeze amazing returns out of what I would call a meager lobbying budget. Sprint has managed the same, though less flamboyantly, when AT&T tried to acquire T-Mobile. Beware the wolf in sheep's clothing.
Low hanging fruit
AT&T and Verizon have product offerings T-Mobile and Sprint don't, like basic telephone service, a sector so heavily regulated there are separate rules and laws for every state.
AT&T and Verizon have product offerings T-Mobile and Sprint don't, like basic telephone service, a sector so heavily regulated there are separate rules and laws for every state.
First, let’s get the easy targets out of the way, such as lobbying. Indeed, it is not a popular word, and there are no shortages in opinions about the issue. There are pros and cons, of course, but in the end, the efforts put forth by the industry at large have been a net-benefit overall. Don’t believe me? Disconnect your internet connection, deactivate your mobile phone, and go back to a twisted-pair phone line with a pulse (rotary) dialer.
The question then must be asked, if Sprint and T-Mobile, both multi-billion dollar concerns, are so interested in the regulatory environment coming out of Washington, DC, why are they not allocating more resources to fight for their cause? Even as leading members of the Competitive Carriers Association, T-Mobile and Sprint keep their purse strings pretty tight.
CCA, which has about 100 members, including T-Mobile, Sprint, and US Cellular, is supposed to advocate on behalf of the “little guys” in Washington, DC. Looking at their 2012 annual report, CCA spends more on its own salaries than on industry conferences and member advocacy (lobbying) combined. Mind you, lobbying is that association’s mission – to keep the good ideas “good” and to prevent the “great” ideas from ever seeing the light of day.
Remember, this is Washington, DC I’m talking about. It is the land of what I like to call “great f*****g ideas,” or “GFIs” as we called them in the Army. GFIs are not “great,” and they are often posited by someone with no experience on a given matter, or worse, relying on some insulated staff report prepared by people that did their research via Wikipedia instead of actually consulting real sources. Plainly, whenever someone says, “I’ve got a great idea...,” that is akin to the age-old adage from the south, “Hey y’all, watch this!” Such events rarely have a happy ending.
Instead, let’s just work on the premise of the benefits and the perceived value of lobbying. Verizon and AT&T outspend T-Mobile and Sprint in lobbying by more than 3-to-1. This is not just about wireless though. AT&T and Verizon are also local telephone companies. Basic telephony services are heavily regulated at federal and state levels. While wireless rates come and go, change on a nearly daily basis, traditional services have no such flexibility. The plain truth is that with the depth of services involved, Verizon and AT&T need an active lobbying presence to address a far wider array of issues than are of any concern to most other wireless carriers.
FCC Chairman Tom Wheeler is proposing that the regulatory body impose limits on how much spectrum may be won in the upcoming 600MHz auction. So, while Sprint and T-Mobile may extol the perception they are at a disadvantage, as advocates of these limits, their efforts may indeed bear fruit despite the “evil” spending of the “evil duopoly” that is Verizon and AT&T. That's not a bad return on investment for companies being outspent by millions for lobbying.
Perception cuts both ways
T-Mobile and Sprint have been bending the FCC’s ear heavily about the auction rules. T-Mobile in particular has more visits to the FCC than any other carrier recently and it has also been presenting a public image of “the little guy,” ready to mix things up at the drop of a hat. The strategy has worked well, over the past couple of quarters, T-Mobile has posted amazing gains in subscriber growth.
Based on that performance, any claim that T-Mobile makes about being at a disadvantage falls on deaf ears with me. The smallest of the big four carriers has literally turned the wireless industry in the United States on its head in less than 2 years and it is producing results that have forced the other three larger carriers to respond. If anything, T-Mobile has an industry advantage. T-Mobile has effected this change with zero government interference.
If I were an institutional investor, and John Legere pitched to me the roadmap the carrier planned to follow and that I should by large blocks of T-Mobile US stock which would in turn fund the carrier’s efforts to buy spectrum, I would probably get on board. T-Mobile has a track record of results.
However, if all I am seeing in the press is “we are at a disadvantage and we need artificial caps for spectrum auctions,” why would I, or anyone, invest in a strategy like that? You want to artificially limit investment in infrastructure by limiting how much people or companies are willing to spend on it? As an investor, not only would I not invest, but if I were a current license holder of this low-band spectrum (most of the low band is owned by TV broadcasters), I don’t think I would want to put my licenses up for sale. Why would I if I thought someone with a “GFI” results in me not getting what I think my spectrum is worth (especially if I happen to be in a top 50 market)? The result of that is less spectrum available for auction which means less money all around.
Sprint on the other hand, seems to be stuck in a world of “can’t.” Sprint wants to buy T-Mobile. Without T-Mobile, Sprint “can’t” do this, or “can’t” do that. Regulators have not been receptive to the idea even though Masayoshi Son is promising the moon and the stars in terms of broadband services. Sprint’s own lobbying effort is not doing the carrier any favors on that angle. Consultants for Sprint's lobbying arm argue, “Past European spectrum auctions indicate there’s no evidence that spectrum limits affect auction revenues, but ‘they do appear to have been effective at maintaining the number of mobile operators in the marketplace.’” So, does Sprint want four major carriers in the picture, or three?
Sprint is further hindered by the fact that if Masayoshi Son is looking to spend a heap of cash on T-Mobile, then why can’t he spend it on spectrum instead? Softbank is going to get a huge infusion of cash when the online retailer, Alibaba, goes public soon. Sprint’s parent owns nearly 40% of that company. The IPO could raise as much as $250 billion, that's a $100 billion infusion for SoftBank, enough to clear all debts, buy T-Mobile and buy spectrum. Pardon me while I choke back a tear for the "underdog."
So, Sprint’s position of “can’t” doesn’t hold water with me either, even less so when you think of the fact that the company offered to fund rural carriers’ LTE network deployments.
We are witnessing an industrial rope-a-dope of sorts. Sprint and T-Mobile are positioning themselves on the ropes while the duopoly hammer away. The problem is that if auction limits get imposed, T-Mobile and Sprint will have nothing to counter-attack with.
Another factor to bear in mind here is basic demographics. The majority of the US population is concentrated in major cities, with the remainder still settled on the eastern seaboard. Large markets like New York City, Los Angeles, and Chicago, or any of the top 50 markets, are obviously going to see the most competitive bidding. Just like real estate, wireless spectrum will command a higher price tag in these areas.
If I am a license holder in San Francisco where the economy is booming, and prices for everything there are going up, and I think that participation or financial limits are going to drive down the cost of my spectrum, I'm not going to sell it. Just ask anyone with a house for sale or apartment for rent in that city. Would I take seriously the guidance of a GFI-guy 3,000 miles away as it relates to the sale of my property?
An even worse case scenario is if I am a bidder with deep pockets, yet limited by what I can spend or win in an auction, I might choose to simply not show up. That would do wonders for the bottom line.
If we use the 2008 auction as a model, understanding that of the $19 billion in winning bids, 80% or $15 billion came from Verizon and AT&T, then how does limiting the two players with the deepest pockets possibly yield more revenue overall? Verizon and AT&T will battle each other for markets that are in their respective strategic interests, so yes, basic economic theory accounts for higher prices with higher demand for limited commodities.
Since the FCC has not given any hint as to how it would “assure no one can monopolize the bidding,” it would either have to re-parcel the licenses differently (highly unlikely), or simply impose a dollar-limit. For simplicity’s sake, we will divide Verizon’s and AT&T’s 2008 auction bids in half, each carrier spent $7.5 billion on spectrum in that auction.
What might those limits be and how will they be determined? GFI-mantra almost makes it impossible that there would be a flat dollar limit. Some mathematician somewhere will devise a model which imposes limits relative to the size of the bidding company or the major market area that is part of a given license. It will have to be this way since smaller markets will be in play amongst smaller carriers too.
Such limits will also hurt T-Mobile and Sprint, even smaller carriers depending how the rules are written. The Alibaba cash-cow will be useless to SoftBank if it is limited in how it can spend its money to acquire more low band spectrum. Whatever cards T-Mobile is holding will also be limited, since it will not be able to pool resources, sell debt, or whatever, in the process either. None of the smaller carriers hold anything close to the financial assets that Verizon and AT&T have so the end result is less money spent, and everyone loses.
The next thing that will happen with auction limits (assuming bidders show up) will be collusive bidding. This is something that has happened to some degree even as far back as the PCS auctions in the 1990s. However, if companies are going to be forced into a corner, they are going to collude again and I don’t blame them. The result is less for everyone.
Learn from the 2008 auction
The spectrum auction of 2008 was a success, but not a runaway success. Yes, total winning bids ended up being 90% higher than total reserve prices set, but an entire block of spectrum went unsold. Block D, which was a nationwide 10MHz slice of bandwidth between 750-790MHz, had only one bidder, Qualcomm. The FCC set a reserve price of over $1 billion. The market did not bear it, and Qualcomm’s $472 million bid was rejected. That block remains unsold. Where were Sprint and T-Mobile then? Surely either of them could have floated a bid to win that block in the 700MHz band. I suspect my query would be met with the sound of crickets.
So, while Verizon and AT&T were the deep pockets of the auction, they were only two out over 100 companies that won licenses during the auction. Despite that, not all licenses were sold.
Another thing the FCC needs to look at is how auctioned spectrum is being used. No one can say that Verizon did not do a masterful job of rolling out its LTE network using the blocks of spectrum it won in 2008. Big Red hit a home run getting nearly a 100% overlay of its CDMA footprint in less than 5 years. Even AT&T, who in 2008 and 2009 was having horrendous network troubles due to all the iPhone-fueled growth, has been able to enhance its network in critical areas as well and the plagues of a few years ago are largely a memory.
Sprint holds more spectrum than anyone. Granted, it is in the higher frequency bands but that does not mean it is useless. It also does not help that the carrier changes its mind on which standard to pursue every 5 minutes either. The result is you have a contiguous PCS CDMA network across the nation with a smattering of other standards along the way, WiMAX, LTE, and TD-LTE (not to mention refarming the Nextel spectrum). Is there room for improvement? You bet. Why not add some move spectrum adjacent to the 1900MHz band? Sprint has chosen not to, forgoing a bid in an auction held this past January for a nationwide license of Block H spectrum (10MHz paired in the 1900-2000MHz band). Sad thing is, whatever spectrum Sprint picks up, I'm worried the carrier will adopt a new carrier standard that no one will use (EV-DO Rev. B anyone?), and then be forced to re-farm the spectrum anyway.
Who got Block H instead? Dish Network got all of it, beating out 23 other qualified bidders for a little over $1.5 billion total. What is the company going to do with it? Hopefully deliver some 150Mbps+ LTE-Advanced service. We don’t know because Dish, while holding enough spectrum to be a wireless carrier, hasn’t built anything yet.
Limits will not change reality
The fact is that AT&T and Verizon dominate nearly all the profits, and two-thirds of the US market. Limiting their participation will not magically make more capital appear amongst the other bidders. Moreover, the FCC needs to understand that some of the players from 2008 merely bid and won licenses so they could eventually resell service or sell the license altogether (presumably for a profit). That is how investments work.
Here is another reality, part of the 2015 auction is also supposed to set-aside a dedicated fund for the development of a national public safety network, known as FirstNet (First Responder Network Authority). Based on how things are now, that minimum dollar amount is said to be roughly $7 billion. That tally will certainly be bargained downward, or even eliminated if auction limits are imposed.
If limits are imposed, it makes a very tenuous assumption that the remainder of the market will be able to fill the revenue gap left by the big players. That follows no linear line of thinking I can create. When you take the top five carriers, Verizon, AT&T, Sprint, T-Mobile, and US Cellular out of the picture, the next largest player is C Spire, then nTelos – less than 2 million subscribers combined, and net incomes that can be measured in tens-of-millions. The scale simply isn’t there to even meet the reserve prices that the FCC will have in place.
There is nothing wrong with any of these companies, but limiting auction participation is going to result in fewer bids, smaller bid, less sales, and a likelihood of no sales for some licenses. Simply, companies like nTelos or Cellcom, and even larger regional carriers like US Cellular, do not have the resources to pick up premium licenses in major markets where they have zero operations to begin with.
Build confidence, build partnerships
T-Mobile and Sprint run the risk of psyching themselves out of the game if they don't behave like the national carriers they are on some issues. As competitors to Verizon and AT&T, a more careful analysis of possible weaknesses are in order. Verizon just choked up a huge sum of money to take 100% ownership of Verizon Wireless. AT&T has been spending money hand-over-fist to upgrade its network to keep up with demand, more than $14 billion in the past couple of years. I'm not saying count Big Red or AT&T out, but no one in this game has a bottomless pit of cash. If no limits are created, do I think AT&T and Verizon will grab the lion's share? Yes. Do I have any doubts about them putting that spectrum to work quickly? No.
If T-Mobile and Sprint really want to make the auction interesting, then pool resources and create a partnership company between the two carriers, invite US Cellular, Dish, and whomever else from the CCA wants to join, and dominate the auctions. Have the partnership company sell access on a share-based, market-based, fee and revenue structure to the partner carriers and everyone makes use of it. Players like C Spire and nTelos would find themselves with access to a larger network and direct service in more markets.
Of course, I don’t expect T-Mobile and Sprint to actually do that, as it would increase competition across the board, we wouldn’t want that now, would we? All I know is this, if I am raising money for something, I don't "not invite" the richest people I know to the party. If the rules, already very complex, get even more ridiculous, then don't count out the possibility that AT&T and Verizon may choose to sit out of the auction altogether. Chalk it all up to a GFI.
1. 1ceTr0n (Posts: 501; Member since: 20 May 2012)
Watch as Sprint biatchs and moans to hell and about about this "unfair" level of business
12. TheRequiem (Posts: 138; Member since: 23 Mar 2012)
Sprint has more spectrum then everybody, they don't even need to bid for this spectrum, it's pointless.
22. lsutigers (Posts: 697; Member since: 08 Mar 2009)
A correction to the article, Sprint also has a wireline business along with AT&T and Verizon, T-Mobile does not, they are wireless only. However, Sprint's wireline business is enterprise focused (global ip fiber backbone), they spun off the residential wireline side as Embarq / Century Link.
2. 0xFFFF (Posts: 2015; Member since: 16 Apr 2014)
I had to register just so I could express my disappointment at PA posting what is obviously nothing more than a propaganda piece written by ATT/Verizon.
T-Mobile is essentially the only company that's delivering something better for the US cell phone consumer that's come along in a long time. ATT and Verizon are essentially nothing more than an abusive duopoly, content to charge overcharge consumers and do as little as possible to deliver actual value to the market.
One reason America is beginning to lose the tech race is because of the regressive nature of the wireless market. By limiting how much bandwidth regressive companies like ATT and Verizon can purchase, the FCC is giving T-Mobile and other players a chance to revitalize the wireless market -- something America sorely needs to remain a vital and innovative nation.
3. Maxwell.R (Posts: 158; Member since: 20 Sep 2012)
You might want to re-read it. First, it's an editorial. Second, if anything, I praise T-Mobile because of the effect the company has had on the industry. It has done so without "government" help, and so roping itself into such a scheme now is going to hurt everyone. Third, facts are facts, Verizon has a sweet network, and it's LTE deployment was pretty much flawless. I'm not even a big red customer and I can see that.
Next, the FCC auctions are two-fold, they are meant to bring in revenue in exchange for more spectrum resources to the carriers. If you are raising cash, you don't ostracize the people with money.
Just as I said, there is nothing wrong with any of these companies. I simply do not accept the premise that a company as innovative as T-Mobile needs "help" to compete.
4. 0xFFFF (Posts: 2015; Member since: 16 Apr 2014)
Basically the "editorial" has a few worthy observations about the state of the mobile world, but is mostly FUD about ATT/Verizon not being able to buy enough spectrum because of the recent FCC ruling, and how this is a bad thing. When, in fact, it is not a bad thing.
History has shown that monopolies are abusive and ATT/Verizon is nothing more than a two-headed monopoly. In a better world, both of these companies would be broken up, just like the original AT&T was broken up. Ironically, these two giant companies were both part of the original AT&T. So basically, we are back at square one and the consumer is getting completely screwed.
If these two goliaths were broken up and data services (wired and wireless) were reclassified as utilities and regulated as such, it would do wonders for the economy and the lives of everyday Americans. Making any argument that what is good for ATT/Verizon and their duopoly is good for everyone else too -- well, that is disingenuous propaganda, IMO.
6. Maxwell.R (Posts: 158; Member since: 20 Sep 2012)
Right, because over-regulation of "utilities" has done what exactly? The last meaningful reform to telecom utilities was the Telecom Act of 1996, and even then, it tied the hands of the companies that literally build the system.
After the Ma Bell break up, exactly nothing happend to prices. The wireless sector is lightly regulated by comparison, and because of one major player, T-Mobile, the entire industry is facing pressure to reduce rates and is doing so.
All without any FCC bureaucrat stepping in and "forcing fairness" which as we all know, is anything but.
The revenues of the smaller 90 carriers in the US I bet to not match a quarter of the cash flow of VZW or AT&T. You can't make up the difference in volume with these auctions. Stay tuned for another article as AT&T has already signaled it may not participate in the auctions next year. Who's going to make up that $10 billion+ shortfall?
There's no FUD, I'm saying T-Mo is not thinking things through, and Sprint could end up shooting itself in the foot if these rules get implemented (which I believe will be a split vote by the FCC panel either way) because then no one will be able to bid enough.
If AT&T and Verizon get boxed out of bidding in say, Los Angeles, and now its up to the "smaller" carriers, then T-Mo or even US Cellular can't participate based on whatever the rules say, do you really think a company based in the Southeast like C Spire is going to want to get in that market? Build infrastructure from the ground up in one of the most expensive states to do business in? Nope. Just like Qualcomm couldn't get Block D in 2008...
There are no little guys in all this. T-Mobile is not some helpless player in all this action.
5. MartyK (Posts: 688; Member since: 11 Apr 2012)
" I simply do not accept the premise that a company as innovative as T-Mobile needs "help" to compete".
So basicly what you are saying is allow the companies with the biggest/deepest pocket buy and control as much as their heart/pocket desire?. What is wrong with you?!.
AT&T's is $325.757 billion.
Verizon is $194.25 Billion
Sprint is $31.84 Billion
tmobile is $23.42 Billion
7. Maxwell.R (Posts: 158; Member since: 20 Sep 2012)
Right because all the new lower rate tiers coming into play were brought on by whom? BTW market cap does not denote available cash or sellable debt.
8. Slammer (Posts: 929; Member since: 03 Jun 2010)
Holy crap Maxwell. I hope you never become a General in a battle. You are essentially in favor of handing the weapons to the two most powerful adversaries. While I understand some of your points as being reasonable, you sound like Randell Stephenson trying to put the entire AT&T monopoly back together again. You do realize a duopoly is in many ways, worse than a monopoly. You deny that AT&T and Verizon have worked as cartel to seize up assets for no one else to have by swapping with each other and discarding the less desirable for the smaller ever since the breakup? How does this help us consumers again? I dont believe the two larger controlling 80% of the industry marketshare is enjoyable in anyway.
You claim tmobile has "Shaken" up the industry. I contend that Tmobile has only given John Legere a popularity run for sound bites. The VZW and AT&T industry is only responding to smaller carrier initiatives just like they have always done historically. In the end, it has only helped the two gain more momentum at the expense of the smaller. Tmobile's new subs are skewed numbers to present a wave of transition. However, I do believe the wave of these subscribers are the least profitable of the larger two. Tmobile needs to grow by more profitable financial spending, not offering freebies or eliminating revenue driven plans. You also claim tmobile received no help from the Government. However, if not for the Government calling a red flag on the AT&T/Tmobile union, Tmobile wouldn't be here and it is still looking to find a Mom.
No sir, I can't grasp the mindset that just giving the two larger more ammunition, is a beatiful thing.
One thing that did pique my thought was the demographical strategy for the carriers that you mentioned. AT&T and VZW being the all encompassing national carrier in filling in rural areas is a nice twist in sales. However, the mindset for consumers is more coverage is what is wanted. I find all 4 of the carriers already have good coverage in the highly populated metropolitan areas, yet AT&T and VZW are still the most go to carriers due to "perceived coverage". With the two hording respectable 700Mhz spectrum for their networks and delivering good service to its subs, why shouldn't the two smaller be able to to offer an equal balance in the most competing markets with choice spectrum as well.
9. Maxwell.R (Posts: 158; Member since: 20 Sep 2012)
To address your last paragraph first, if AT&T and VZW are blocked out of a particular market for spectrum under the rules, let's say they were approaching a dollar figure of say $2 billion for spectrum in San Francisco and the threshold is tripped and they can't bid anymore.
So now it falls to T-Mo and Sprint, they have won a couple rounds and they start bidding hot and heavy in the same market, then *they* may be blocked as well, even if they bid *less* because depending on how ill-written the rules are, they may hit the threshold of "owned" low-band spectrum.
Then if falls to mom-and-pop sized companies that want nothing to do with doing business in the most expensive city in the country. So remaining slices of paired 5MHz block go unsold.
So, instead of two companies dumping as much as $4 billion in the till, you have three or more companies putting up somewhere less than $3 billion because the second string of players don't have as much money.
It is generally accepted that it takes a 10x10MHz block to be able to deliver on service. Naturally, more is better, 20x20MHz is great (that's what Dish has with its AWS-4 spectrum btw).
It is expected that the auction will have between 60-85MHz worth of spectrum up for auction. If 30MHz is set aside, there is barely enough for one winning bidder to have meaningful footprint. Everyone else has a fragmented, ineffective block.
If you have 85MHz up for grabs for everyone, it is a far greater chance that at least three bidders are going to get to win that action.
VZW and AT&T are not "hoarding" 700MHz spectrum, they paid big money for that in 2008 and have built it out. That is the LTE network in action. T-Mobile was apparently not intersted in that auction due to the cash it spent in 2006. For those that don't know btw, T-Mobile owned the 2006 auctions, doling out over $4billion, and taking more spectrum than VZW or AT&T combined.
Finally, when it comes to ammunition, there is no such thing as too much. I speak from first-hand experience. ;-)
21. Augustine (Posts: 607; Member since: 28 Sep 2013)
Excuse me, but the government's business is to serve us the people, not to maximize revenue by favoring monopolistic corporations. Especially ones that got so much favor, as in free spectrum that made them the behemoths and source of prostitutes for senators that they are, in the past. Either the government is with us or with their paymaster corporations and its apologists in Phone Arena. I guess that I answered my own challenge...
10. downphoenix (Posts: 2266; Member since: 19 Jun 2010)
Legally I believe you are supposed to inform us that this article is a parody or a paid advertisement for AT&T and/or Verizon, because that's what this article looks like to me.
16. jrod78414 (Posts: 99; Member since: 18 Dec 2013)
Did you mean, SATAN? Is that you? hAHAhAHa ACE Ventura never gets OLD . THat was good man.
13. dspkblympkbl (Posts: 46; Member since: 23 May 2013)
This would make a great season of "Damages," if it was still on the air, ;)
14. Guti986 (Posts: 21; Member since: 26 Dec 2013)
I'm confused. Wouldn't the cap be for the amount won in any particular market (based on the percentage of what is already owned by the carrier in that particular market), and not any particular dollar amount cap??
15. jrod78414 (Posts: 99; Member since: 18 Dec 2013)
Yes Maxwell We get it, the Man With Most money and no incentive to help the people out is inovating,yes Sprint Has the most spectrum, but not the one it needs to help with building and rural expansion. T-mobile has a Sugar Daaddy everyone knows that. Verizon admitted that they dont need to cap or throttling it has capacity but hey the like to charge. What has this gotten lower prices for evryone no just more.I think alot of your views are messed up. If you dont want to play fair they do away with SPrINT and Tmobile. Let it become TWC or COMCAST they are TRUE INOVATORS EXPLOIT your wallet but hey THEY HAVE MONEy. Seems google has them stirred up with thier entrance with internet offereings. The government is going to sell even it make 10 million dollars. Not sure what point you made just it seems you want ATT as the LEADER. BUddy I believe you can never have enuff ammo but when it comes to the people/ customers we all want to win. PS. I do like Phone arena commetors responses to Maxwell, if we are this lively about this debate how you think the general public feels. Everything you said is an opinon like mine stated with facts peppered here and there. And like all great things in life, if you dont like it you dont have to play, I think ATT and Verizon will Survive. Wiping my heartbroken tear for ATT and VERZON . PHONEARENA COMMENTORS thanks for Keaping it REAL PEACE I think I enjoy comments section more now. BOOya
17. Joshua9007 (Posts: 61; Member since: 08 Jun 2012)
The whole problem with this back-and-forth arguing on this thread is that everyone is missing the point. The limit is (trying) not to be about the amount of spectrum that each carrier currently holds, but about not allowing one (or 2) companies from BUYING THE FARM. This includes Sprint/Softbank, because if they wanted to after the sale of Alibaba they could possibly even steal it from Vzw (as they just spent a ton buying out Vodafone)... From other things I have seen, it will be something to the effect that no one company can purchase more than XX% (say for example 35%) of the spectrum in a given market, even if the big 2 purchase all they can, it will leave the door open for competition.
Don't forget that At&t/Vzw still have the most customers, and therefore will need to get a decent amount of spectrum to keep the service on par with the smaller guys who have less customers per area and therefore will not be as constrained by the Amount of spectrum, they will just need to get a seat at the 600Mhz table so the service will geographically cover more area and make it financially feasible to provide rural service. (I read a report that said it would take 14 towers to cover an area with 2600Mhz service where one 800Mhz tower could cover that area)
The only thing that I would say about your example, is that this spectrum will actually be more valuable in the rural areas rather than major markets. SanFran will have coverage from almost any carrier in the city, and although more spectrum = more capacity and lower band = better coverage and penetration... it is more valuable for wide area coverage for the smaller carriers. We'll just lump all the carriers in the CCA when I say that they have a smaller cost structure compared to the big 2, and that spectrum that allows the most coverage with the fewest towers is preferable to make service profitable.
So while I expect At&t/Vzw to win up to their max in the cities, I expect sprint/t-mobile/CCA members to take a larger share of the rural licenses. Verizon already has a large rural coverage map, adding spectrum would increase capacity and slightly improve coverage, but it is not as necessary as it is in the city. Sprint/t-mobile will spend more aggressively in these areas because they are at a huge disadvantage with low band spectrum, which limits their ability to compete in these areas.
On the main theme of this article, to those who thought it was written in a way that favored At&t/Vzw, you are wrong. The author is worried about the money that it might raise, and he is right economically because it is an incentive auction. This means that the money raised needs to be an ECONOMIC profit compared to the profit the broadcasters could make by advertising on their broadcasts over several years. There should be minimum bid requirements that satisfy the broadcasters in every market, and if there is any excess spectrum after everyone has bid, At&t/Vzw should be allowed to bid again.
18. jrod78414 (Posts: 99; Member since: 18 Dec 2013)
Not going to lie even you noticed what everybody saying. Maybe that means something.
19. Joshua9007 (Posts: 61; Member since: 08 Jun 2012)
I cannot edit my comment, but after reading it, I had mis-typed something. I did not mean to sound like the % was how the auction was going to be, but rather it was a suggestion I had read elsewhere and I liked. I realize that it would be harder to impose since they are using 5X5Mhz bands, but I think that the Idea is better than the 30Mhz set aside for companies with less than 1/3 of the total spectrum in an area.
But the government is never going to satisfy everyone, and is never the most efficient economically... so what are we expecting? We'll have to wait and see how this all plays out.
20. james1 (Posts: 56; Member since: 16 Mar 2013)
Phonearena..............how much is ATT/VERIZON PAYING YOU?