DailyTech - US Gov to Sell Wireless Spectrums to Raise $25B

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IT US Gov to Sell Wireless Spectrums to Raise $25B
Tuan Nguyen (Blog) - February 7, 2006 5:53 PM

10 comment(s) - last by m0mentary.. on Feb 7 at 10:10 PM

Wireless is such big business that the Bush Administration is now selling airwaves

Wireless communications has been explosive business for many companies recently. We recently reported that Dell, and now IBM and others are beginning to integrate 3G wi-fi technology into laptops. This will enable customers to stay connected as they travel. In another startling developing, Google and Skype have teamed up with FON Technologies to bring ultra high-speed WAN access to the public. Some FON hot spots are already up and running in the US.

With so much to be made on the air waves, the FCC decided that now it would try and sell wireless frequency ranges starting at 90MHz. The plan is part of the Bush Administration to drum up dollars to use on other projects. The sale will take off in the form of an auction, and analysts expect that bidding could reach as high as $25 billion from now through to 2009. According to Reuters:

The FCC is also expected to start selling by early 2008 wireless airwaves that television broadcasters are giving up as they move to other frequencies for their higher-quality digital broadcasts. That move is slated to be done by February 17, 2009.

So far, T-Mobile and Verizon Wireless are expected to bid.

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25 Billion U.S. Dollars

By The Boston Dangler on 2/7/2006 6:08:51 PM , Rating: 2

The Great Public Property Give-Away continues. This bandwidth is worth eleventy trillion dollars, and it's being given away, pennies (fractions of?) on the dollar. Just like last time.

RE: 25 Billion U.S. Dollars

By masteraleph on 2/7/2006 7:56:01 PM , Rating: 2

By definition, something is "worth" whatever the buyer is willing to pay. It could have potential values far above that, but it is not "worth" eleventy trillion dollars unless someone is willing to pay eleventy trillion dollars.

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RE: 25 Billion U.S. Dollars

By android1st on 2/7/2006 8:38:46 PM , Rating: 2

Here we go again, more taxes on the rich. Who says Bush suffers from cronyism and a strong sense of generosity towards the wealthy? Here is a great example that he views us as a major revenue stream...

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RE: 25 Billion U.S. Dollars

By m0mentary on 2/7/2006 10:10:32 PM , Rating: 2

That was kind of what I was referring to. I remember Dole and McCain had some sort of opposition to selling/giving away? the digital spectrum.

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sell?

By m0mentary on 2/7/2006 6:02:31 PM , Rating: 2

Im not sure thats a good idea. Can't they just rent it out?

RE: sell?

By breethon on 2/7/2006 6:03:48 PM , Rating: 2

Does that mean that I can get highspeed wireless internet out if the middle of Vermontville, MI? 30 miles from any kind of civilization......

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RE: sell?

By NullSubroutine on 2/7/2006 6:23:10 PM , Rating: 3

you cant 'rent' it out because to have equipment that falls within non-sold spectrums requires you to have an FCC licence, which are very expensive.

the wireless products you are using now are using 'sold' frequencies.

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It's been happening for some time... but licenses are not perpetual

By Shadowself on 2/7/2006 7:28:14 PM , Rating: 5

What they are auctioning off is the right to put in a license application. Every broadcaster above a certain power has to have a license or be transmitting in one of the "unlicensed" bands. This auction is for licenses in bands to be licensed.

This sort of thing really got underway with the second round of Direct Broadcast Satellites (DBS, such as DirecTV and Echostar [Dish TV]) back in about '93. One of the licenses for one satellite slote went for about $800 million; another, less desirable slot, went for almost $200 million. With almost $1 billion out of one auction, Congress and other agencies within the U.S. government suddenly looked at providing licenses as a revenue source. (Back in the 80s the cost of inputting a license for DBS licenses was a $2,000 filing fee. That's one hell of a long way from $800 million.)

What did $800 million buy MCI (the "winner" of the auction for that slot)? MCI was assured that a technically compliant license application (they still had to meet all the FCC and ITU rules and regs) would be accepted and a license to operate a DBS satellite would be issued to MCI. The license would be good for at least 10 years after launch of the satellite ... and ... MCI got the right to renew the license for the cost of administrative fees (whatever they would be at the time of re-licensing). MCI did not "own" the frequencies, and not did it really get the right to control them. MCI meerely got the right to put a satellite up in that slot and the right to broadcast on certain frequencies to people's homes.

The same will be true of the companies that win these proposed auctions. It is not very different from the cell phone auctions of the past few years. A company that wins a specific auction, for say western Los Angeles, gets the right to submit a license application to have receivers and transmitters in the specified bands set up in western LA. If the application is rules compliant then the company gets the license and can operate the system in that land region only. These licenses are most likely good for 7-10 years with an explicit allowance for renewal (if they have not violated any of the rules in the mean time).

This company would need to win another "auction" if they want to do the same thing in San Francisco... and another for New York City ... and another for Washington DC, etc. Sometimes in these terrestrial auctions the FCC combines various desired and undesired areas into a single region (often combining urban and rural areas and forcing the company to implement in both regions -- if the company does not implement in both regions it risks losing it's license in the desirable area).

What about non-service related bandwidths?

By ninjit on 2/7/2006 6:51:45 PM , Rating: 2

So where does public use stuff fall under this?

Things like Bluetooth, and the ever increasing 802.11<x> stuff, where there isn't a service provider who "owns" the spectrum.

Are these owned by the government?

Ok this makes sense.

By Plasmoid on 2/7/2006 7:21:20 PM , Rating: 2

First its transitioning to digital broadcasting so emergency services can use those frequencys. Now its so we can sell them right back again.

Did i miss something?