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back to article Telcos spaff $36bn on gobbling Uncle Sam's radio frequencies for beefier cell coverage

US watchdog the FCC has raised at least US$36bn from telcos by auctioning off a load of radio frequencies for improving wireless broadband. That's more than three times the $10.1bn it expected – remember that next time your cellphone bill goes up. While Uncle Sam banks the massive windfall, cell networks can use their newly …

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  1. Mark 85

    Interesting concept this...

    The FCC said it plans to spend a portion of the auction's funds on building a nationwide communications network for 911 workers. The remainder of the proceeds will be funneled back to the treasury.

    A pity that there's no dollar amount mentioned for the "new" comm buildout. Though if it's done along the lines of everything else our government does, that $34B won't begin to cover the cost.

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    1. William Donelson
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      Re: Interesting concept this...

      Keep in mind "the government" does very little of this, it hires the work out to the corrupt private sector.

      1 0 Reply
  2. btrower

    False economies here

    So we own something, in this case something nominally worth $34 billion and even though we need it, we sell it to someone else and rent it back from them. Will the profit be magic or will we end up paying it in the end? Is it not worrisome that something that valuable was sold when clearly the people selling on our behalf had a very poor understanding of its value?

    We know the telcos cheerily charge whatever the traffic will bear, slip in fees never agreed upon and manipulate bandwidth allocation to maximize profits at the *expense* of harming the network. They are now going to take a $34 billion dollar investment, add *just* enough funds to allow them to charge for the new real-estate they own and then they are going to charge us for this thing that, remember, we need. How much will that cost? Well, whatever they can get away with. It is a safe bet that it will be a lot more than the sum of $34 billion dollars and what they spend on equipment.

    The telcos most important investment in this enterprise preceded the $34B and the $34B sealed the deal. From here on in, whatever use we get of that bandwidth it will not be what it should be and it will cost a bitter premium over what it should.

    Some will say 'yes, but we got $34B'. We did not. The people who run the government and their cronies got the money. Considering their track record, it is a safe bet we would have been better off holding on to bandwidth.

    What really bugs me is that this type of piecemeal allocation of bandwidth is blocking convergence and its attendant benefits. It is just making it more difficult to unravel the mess.

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    1. Anonymous Coward
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      Anonymous Coward

      Re: False economies here

      "and even though we need it"

      You made good and valid points on corruption and waste. And that the cost ends up being paid by customers (thus effectively it is a $34bn stealth tax). But I'm less convinced that the state had any good uses for hanging on to the bandwidth. For what purpose? And even if you can identify a valid purpose, what logic would persuade you that the government you've just panned for crony capitalism would have succeeded in achieving this purpose?

      The tragedy of this is that the Feds haven't learned from UK spectrum auctions, which led to stonking writedowns on public companies (the banks and lawyers got rich, and government got to waste the money on rubbish). But the then cash-impoverished telcos were reluctant, nay barely able to invest in network expansion or upgrades, so that we've still got dismal voice coverage, worse data coverage, a hotch potch of standards and performance, and a refusal to build out into not-spots.

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      1. Steven Jones
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        Re: False economies here

        It's true the UK and several other European auctions were setup to maximise the auction value. The German auction was even more expensive than the UK one. It wasn't helped by a number of state owned telco operators (like France Telecom) piling into the action with state backing. For the existing operators, it was an existential threat. They either got one of the new bands or they were essentially dead. Unfortunately for some countries slower off the mark, like Italy, the bubble has burst as shareholders and banks took fright. Then it all came crashing down.

        Fortunately, things have calmed down a bit. To put this in perspective, the UK 3G auction raised $34bn in 2000 (about 2.5% of GDP). Correct for inflation, and it's considerably more than this latest US auction, a country with five times the population. Not exactly cheap, but not the insane levels of 2000 in proportion to the market size.

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  3. Rampant Spaniel

    The auction is still going and the highest bid is about 2.2bn USD for the New York 10x10 with Orange County not far behind. To follow check https://auctionbidding.fcc.gov/auction/index.htm?CFID=3845691&CFTOKEN=67382551&jsessionid=g4y8JzDJ48BGYhv9tckSgNbyLXVJQLLnDg6xYJ6NQmpsrNcllGYp!819142837!-1117002762!1416872937974

    Apologies for the long link :)

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  4. Anonymous Coward
    Anonymous Coward

    You jest!

    "gobbling Uncle Sam's radio frequencies for beefier cell coverage"?

    More like:

    "gobbling Uncle Sam's radio frequencies to block competitors"

    0 0 Reply

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