700 MHz Auction (No. 73) Ends

The FCC ended its latest auction yesterday (see this announcement). The figure below, from the FCC, shows that proceeds from this auction as compared with previous auctions). The winners of the auction have yet to be announced.

Inside the spectrum auction

This article in Forbes provides an interesting insight into the workings of the upcoming 700 MHz auction. Since Forbes doesn't do permalinks, I will quote from the article more liberally than I prefer to:

If you're a 150-person start-up going up against the likes of AT&T, Verizon and Google in the upcoming auction of wireless spectrum, you look for any advantage possible.

Towerstream, a tiny Middletown, R.I.-based fixed-wireless Internet provider, is hoping telecom lawyer Dee Herman will give it a leg up against the competition. Herman, a principal at Bennet & Bennet, is part of a cottage industry of lawyers, consultants, engineers and economists that companies are hiring to boost their chances in the closely watched Federal Communications Commission auction that could redefine the telecommunications industry.

[snip]

Experts say larger companies are more likely to have in-house teams that assess the value of particular slices of spectrum and come up with different bidding scenarios Those with fewer resources are hiring outside consultants and lawyers, who may, in turn, work with bankers or economists to devise strategies. Even Google, which has set up a war room at its Mountain View, Calif., headquarters, is consulting with auction experts and game theorists to gain an edge over the competition.

Consultants and lawyers usually file the applications on behalf of companies. They also get tapped for a multitude of other tasks, including supervising auction deposits and payments and deymystifying FCC regulations, such as the FCC's anti-collusion rule. Consultants and lawyers also may help craft business plans, determining, for instance, how particular licenses complement a firm's projects or other spectrum holdings, how much a particular slice of spectrum is worth and what an appropriate bidding strategy would be.

These outside consultants describe their role as streamlining a somewhat Byzantine process. "The process of bidding, looking at results and strategizing with our clients to figure out their next move can be constant, consuming and all-encompassing," says Herman, Towerstream's outside legal counsel, who is also representing several other bidders interested in different geographic areas. Some clients, he says, enjoy the frenzy and get intimately involved in the details; others prefer to have updates e-mailed to them.

Experts differ on the advantages of outside help but agree that the real payoff may simply be saving time in what can be a weeks-long process. In spectrum auctions, bidding stays open until no new bids are received, at which point the entire auction ends. That helps ensure no one cuts in and outbids someone at the last minute. It also means serious competitors must keep a close eye on the auction until the end.

Compounding the complexity, FCC auctions tend to begin slowly, with two to three rounds per day, then ramp up to as many as eight to 14 rounds. A smaller spectrum auction held last fall with 168 bidders went 161 rounds over 29 days. The 700 MHz auction is expected to last longer, given thee greater number of participants and the higher perceived value of the spectrum.

Despite the plethora of options, many players will probably go it alone. The FCC says it has taken pains to make the auction process easy to navigate. A Jan. 22 mock auction is scheduled to familiarize participants with the bidding software, which has been fine-tuned over the past two years and includes a section of frequently asked questions. Like the real auction, the mock auction will have anonymous bidding, which means companies will know the amount of the highest bid and whether they submitted it, but not who they're bidding against. Limiting information in this way could help level the playing field, experts say.

While I believe that auctions are the most efficient way to do spectrum assignment, I think this article highlights some of the shortcomings of this mechanism. It seems clear that smaller participants stand at a relative disadvantage. Can you imagine how it might go if governmental agencies (eg., police and fire departments) had to enter this auction for their spectrum needs as well?

700 MHz auctions, Google and more

There has been a bit of talk over the past months on Google's wireless ambitions. Certainly, Android is a part of it, but the speculation has also centered on Google's ambitions to be a wireless operator. To that end, this item over at GigaOm was the most insightful analysis that I have yet read. Om Malik concludes that it is unlikely that Google will become a wireless operator, and is instead using the upcoming 700 MHz auction to beat current carriers up over their network policies.

To that end, the NY Times is anticipating higher auction returns in this article because of the WRC agreement that was just concluded. I really doubt it, because there is no tangible value that the WRC reallocation added for US carriers.

Finally, I found this item, also from GigaOm intriguing. If Google is indeed making its own 10 Gbps switches, it seems as though we may be witnessing the re-incarnation of the vertically integrated Bell System (albeit without the market power). Interesting how times change ... I think there is little doubt that the Bell System benefitted from having a captive R&D and manufacturing capability. Is Google discovering that as well?

Update (2007-11-20): You might find this item interesting. Do you think Google should pay attention to analysts?

700 MHz auction

Much (virtual) ink has been spilled regarding next years auction of the 700MHz band (much of which took place during my hiatus from blogging earlier this year). At the encouragement of new potential auction participants (like Google), the FCC adopted some new rules. According to this item from Ars Technica (and which has been reported elsewhere), Verizon is now appealing the FCC's decision. This could delay the auctions as the Appeals Court decides on the matter. Stay tuned ...

Emerging trend in wireless?

There has been some buzz in the industry around something that some have referred to as "wireless Carterfone", reflecting the 1968 FCC decision that began the deregulation of CPE in the wireline industry. This buzz has now risen to the level of BusinessWeek, in this article. As I blogged earlier, Google has sought the creation of a wireless wholesale market in the upcoming 700MHz auctions, where users have the freedom to attach handsets of their choice. This item points to some of the "pro" and "con" articles (emphasizing the latter, in this case).

Why do carriers build "walled gardens"? Should this be a matter of public policy or private choice? How is this different from people purchasing unlocked GSM devices?

Google and Telecom

I have blogged about Google and telecom previously in this blog. There is a fair amount of noise about this leading up to the 700MHz auction. This item does a fair job of asking some provocative questions, so I thought it useful to share it with you.