Same As It Ever Was - The Spectrum Auction Ends

by publius

So the big 700 MHz spectrum auction is over, and the big boys won big. I’ll have much more to say later, but Verizon and AT&T won almost everything. The total auction netted about $19 billion, with roughly $16 billion from Verizon and AT&T.

If anything, though, these figures understate the companies’ dominance. The largest spectrum blocks most conducive to new national competitors (i.e,. the ones Google was eyeing) all went to Verizon Wireless. Also, some of the remaining spectrum (Echostar’s) isn’t well-suited for wireless broadband. As for the rest, much of it is too small to matter. To compete against the big boys, you need big expensive chunks of spectrum. Much of the remaining spectrum, however, is divided up into much smaller slices, which are far too small to allow providers to compete nationally.

The big picture here is that this chunk of "beachfront" spectrum held the possibility of introducing new wireless broadband players into a very consolidated market. Instead, the rich got richer. And so, wireless broadband will continue to be developed as a complementary service, rather than as a substitute to the Internet service you have at home. In other words, the auction pretty much guaranteed that you won’t be “cutting the cord” of your current broadband service anytime soon. For all the hullaboo, wireless broadband remains a pretty crappy service all across the country.

All is not lost though. The auction prices did trigger the “open access” provisions in the new big Verizon block, but it’s unclear how (and whether) these will actually work. The FCC has been very vague on the nuts and bolts here – probably for good reason. Anyway, more later.

And for those who want deeper levels of wonkiness, keep checking with Harold Feld and Susan Crawford.

[UPDATE: I should add that the Crawford post provides an excellent and detailed background to the auction and why it matters, etc.]

Comments

[Brett Bellmore]

My current broadband service at home IS http://www.airadvantage.net>wireless. The phone companies aren't even bothering to replace the wire in the ground out here, everyone is dropping their land lines and going to cell phones because those wires are wearing out and not being replaced.

[Turbulence]

Brett,

Can you please provide a cite to your claim that "those wires are wearing out and not being replaced"? While all infrastructure needs constant maintenance and occasional repair, I don't think this statement is true in general.

And while many people have been ditching their landlines, that has more to do with the fact that they need to carry a cell phone for out-of-the-house calls anyway, so there is no point in paying for land line service that they don't need and that complicates everything by adding a second phone number where they can be reached.

[Anarch]

And while many people have been ditching their landlines, that has more to do with the fact that they need to carry a cell phone for out-of-the-house calls anyway,

In my case, it was because one land line to my apartment was literally costing me more per month than an entire three-person family cell phone plan (including the cell phones). It's just not economically feasible around these parts unless you're splitting the costs.

[Turbulence]

Anarch,

Um, wow. Maybe I'm spoiled from living in an urban area, but the last time I was paying for a landline, it was less than $15/month. Was your service really much more expensive? If so, any idea why?

[Gary Farber]

"Maybe I'm spoiled from living in an urban area, but the last time I was paying for a landline, it was less than $15/month."

Datapoint: I've been paying Qwest ~$37/month for a landline with no long distance for five years, which was also my connection to the internet, until about 2 months I switched to a package with Comcast which brought phone down to $33 with unlimited long distance in CONUS, if I don't misunderstand (and added broadband and cable with additional charges).

I've never looked into cell phones because I haven't have enough of a life to have any use for one. It's possible this may change in the near future.

[Adam]

Can you please provide a cite to your claim that "those wires are wearing out and not being replaced"? While all infrastructure needs constant maintenance and occasional repair, I don't think this statement is true in general.

Twisted-pair lines don't "wear out." Neither do power lines, but they still need maintenance. Stuff breaks. The point, I think, was that wireless generally only requires you to do work at the transmitter and receiver; if an underground cable breaks, that's a lot of work to fix. This is even more of an issue in urban areas where it's hard to get at the cabling.

Um, wow. Maybe I'm spoiled from living in an urban area, but the last time I was paying for a landline, it was less than $15/month. Was your service really much more expensive? If so, any idea why?

Could be a bunch of different reasons, but the most likely explanation is that your states set different rates for estimating TELRIC costs...

Datapoint: I've been paying Qwest ~$37/month for a landline with no long distance for five years, which was also my connection to the internet, until about 2 months I switched to a package with Comcast which brought phone down to $33 with unlimited long distance in CONUS, if I don't misunderstand (and added broadband and cable with additional charges).

Gary: I think you're paying too much. Universal service support should be paying most of your bill.

[Adam]

Another point worth mentioning is that DSL requires a lot of upgrading on the twisted-pair cable to boost the power over short distances, and lots of the old infrastructure just isn't up to it. My understanding is that one way that the cables can degrade is if you pump an insane amount of power through them and they fry (NB: I'm not an engineer). Verizon has reportedly abandoned their copper-wire customers; they just push their fiber now.

[Anarch]

Was your service really much more expensive? If so, any idea why?

No clue. I used to pay around $40/mo all told (long-distance, taxes, etc). After I switched carriers, I paid roughly the same until -- possibly due to a payment mishap* -- the price began to skyrocket, and I was ultimately getting charged $120 / mo by the time I gave it up completely. It's possible I could get back to $40/mo were I to revert to my original carrier, but it's simply not worth it to me.

* I thought I had enabled autopay three times in a row, only to be disappointed each time. Some serious miscommunication there.

[Adam]

I thought I had enabled autopay three times in a row, only to be disappointed each time. Some serious miscommunication there.

Sounds like your provider probably wasn't too disappointed in that miscommunication. :)

[Brett Bellmore]

Ok, granted, the wires aren't wearing out in the sense that the current through them is degrading them; That takes a freaking long time for macro-scale wires. (It does happen in chips sometimes.)

What's happening around here is that the signal quality is becoming more and more contingent on the weather, as seals break down. Towards the end, when the wireless company finally put up a nearby tower, I only got 56k during long dry spells, and frequently had to let the line ring for hours during wet periods, to dry it out enough for any connectivity at all.

[Anarch]

Sounds like your provider probably wasn't too disappointed in that miscommunication

Strangely, I think my credit card companies were also ok with that kind of miscommunication too.

["Oh, we're sorry, we can't seem to email you at your address this month! Even though we managed it the month before and after! Sorry!"]