Spectrum: Free And Worth Billions
If someone told you they wanted you to bid on something that was free and unlimited, how much would you offer? In the latest round of FCC spectrum auctions (which have been taking place since 1994) the answer this time around was about $16 billion for rights to use the 700 MHz frequency. The winners were Verizon and AT&T with Google playing the part of the happy loser.
At the risk of hearing from every ham radio operator, unemployed engineer and smart aleck grad student in the U.S., I'd like to venture the idea that frequency allocation to prevent carriers from bumping into one another is so last century. The idea that a government agency could auction and big name companies would bid billions for frequency is one of those activities which some future generation will look back in wonder. Larry Lessig has done some interesting writing in the topic of frequency allocation.
The current idea of selling frequencies strikes me a lot like the idea of selling off the interstate highway system. Why not just sell Route 93 to the highest bidder and let them charge for highway use? Or maybe a low bidder could grab up a couple miles of Route 190 in South Dakota, or maybe just the breakdown lane? Come to think of it, I believe they do put out those rest area restaurants to bid? Whatever happened to HoJo's?
Frequency bumping was a big issue in the analog days, but digital technology eliminates a lot of those bumping issues. And while technology cannot solve every issue facing mankind, tech can go a long way to making those frequencies ranging from very low (3-30Hz, which is like submarines communicating) to extremely high frequency (3--300 GHz which is radio astronomy land) overcome range, reception and distribution issues. It would be a good use of the proceeds from the FCC auctions to apply those funds to communications breakthroughs in relatively unused frequency areas.
Anyway, I see that Google is claiming success in using the auction process to opening up the airwaves and recently Sprint and a few other companies have teamed up to give WiMax one more attempt at relevancy. Goes to show that if you can create the illusion of scarcity out of something that is everywhere and limitless, you can make a lot of money. Over and out.