Month: January 2008

700 MHz: Beating the AWS-1 $/MHz/Pop

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A, B, and C Blocks have exceeded their reserve prices as of round 17 in Auction 73, and E Block has reached 83.73% of its reserve price, while D Block has languished at 26.99% of reserve price since the first round. Unless a great deal of the activity in A and B Blocks is intended to preserve eligibility for later round intervention in C Block, the probable C Block winner has likely made its winning bid in round 17.

The rate at which A and B Blocks have exceeded their reserve prices by the end of round 21 today — 190.51% and 462.50%, respectively — seems unlikely to abate, which may push revenue from Auction 73 to $16-17 billion, perhaps as much as $20 billion, despite the fact that D Block will almost certainly have to be reauctioned if the current pattern holds.

How much better A, B, and C Blocks are doing at this point than even at the end of Auction 66 (AWS-1) is shown in this table, which compares the dollar per MHz per population price each license in those three blocks obtained with the provisionally winning bid as of the end of round 21 to the final dollar per MHz per population price comparable licenses received by the final round of Auction 66. Since the bandwidth is different in each auction, $/MHz/Pop standardises the data for comparison.

Clearly the majority of 700 MHz spectrum on offer in Auction 73 is much more highly valued than the spectrum on offer in Auction 66: the average $/MHz/Pop price of an A Block license at the end of round 21 in Auction 73 is 193.53% of the final $/MHz/Pop price of comparable spectrum in Auction 66; the average $/MHz/Pop price of a C Block license at the end of round 21 in Auction 73 is 623.06% of the final $/MHz/Pop price of comparable spectrum in Auction 66. For C Block, the 50-state package (REAGs 1-8) is reaching 102.65% of the final price of comparable spectrum in REAGs 1-8 in Auction 66, while REAGs 9-11 are averaging 134.10% of what they finally obtained in AWS-1.

From the point of view of the U.S. Treasury Auction 73 is already a hell of a success. What remains to be seen is how well new entrants and smaller competitors did, whether the incumbents ran the table again, and whether we got a national third broadband pipe. But we won’t know that until the FCC releases bidder identities and bids at the end of the auction.

700 MHz: Notes From The Spectrum New Hampshire Primary, C Block Not Dead Yet

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Everyone remember how Clinton was dead after Iowa? Now who remembers two weeks ago, or even last week, when analysts wrote off the 700 MHz auction as doomed due to credit crunch? But, other than D Block’s utter failure to move (and regular readers will know my opinion of why that happened), the auction has proven a success by every measure we can obtain so far. Sadly, however, the key measures are not yet in, and won’t be until after the auction is over. Which is why, despite C Block exceeding it’s reserve price, I caution folks that we are still at the equivalent of just after the New Hampshire primaries and that any speculation about the important points of the outcome remain unresolved.

Here’s what we know for sure now:

1) The current take now stands at over $14 b. This not only exceeds the $10 b that the Congressional Budget Office (CBO) estimated, it will exceed the “wildly successful” 2006 AWS auction (which grossed about 13.9 b). A, B, and C blocks have all met their reserve prices, with the most contentious fighting in certain high value markets B block.

2) Because C Block has met its reserve price, it will not be reauctioned and the open device conditions will go into effect.

So the auction is clearly a success from Kevin Martin’s perspective (again, with the exception of D Block, which is a special case). While those like Commissioner McDowell can argue that C block might have fetched more without conditions, $4.7 billion is nothing to sneeze at. And it is clear that the aggressive build out conditions did not scare bidders away from A and B block, so (assuming the FCC is serious about enforcement) we should see increased deployment of services into rural regions.

What we still don’t know is whether the new auction rules gave new entrants a real chance to win spectrum, or (as the conventional wisdom had it) will incumbents Verizon and AT&T end up capturing the lion’s share of the spectrum (albeit at higher prices, owing to the introduction of anonymous bidding). That we cannot know until after the anonymity lifts when the auction ends (which, if the FCC chooses to reauction D Block under the rules proposed for reauctioning the other blocks, might not be for several months yet). Much depends on the identity of the current C Block holder. Is it Google? Verizon? Some other deep pockets like AT&T or Echostar, or perhaps the mysterious Vavasi NexGen Inc.? And is C Block settled? If the package bidder in round 17 knocked off the previous high bidder, then the previous high bidder will need to respond fairly soon or it will start losing its eligibility (bidding chips) and no longer be able to challenge.

If it turns out the incumbents capture most of the spectrum, I will need to eat a huge plate of crow and tip my hat to Commissioner Adelstein and Publius at Obsidian Wings, both of whom fretted that only Verizon could win a huge block like C Block and that we would get more new entrants by slitting the spectrum up. OTOH, if the Great Google Prophecy comes true, I will become insufferably pleased with myself for at least a month.

But, rather than pull a Tweety Bird and start treating my own speculation in the absence of data as fact, I will simply say —

Stay tuned . . . .

Have The Senate Democrats Finally Learned?

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With the Protect America Act (aka FISA on ‘roids) set to expire at 12:01 a.m. Friday, and the Senate deadlocked on the question of immunity for telcos, the Administration once again tried to employ its favorite strategy. Rather than support any kind of extension the Bush Administration is demanding that the Senate pass telco immunity or risk a veto. The conservative chorus brays how the Democrats are outing national security at risk. And why not play chicken with a vital issue of national security? This strategy has worked for Bush time and again, with no real consequences.

Still, the script did not go quite to schedule this time. When it became clear that the President could not force through the Senate Bill he wanted and get the needed changes in the House (the House Bill does not contain immunity for telcos), the President backed down and grudgingly agreed to a 15-day extension of the existing “Protect America Act.”

The question here is whether or not the Senate Democrats have learned that the temper of the country has changed. We all care about national security. But increasingly, the American people have grown disgusted with the way this Administration plays politics with national security and whittles away at civil liberties. But many Democratic leaders remain traumatized by the 2002 elections, when voters caught up in the post-9/11 scare and the hype in preparation for the invasion of Iraq decided to overlook things like the Enron and Worldcom scandals and voted out war heroes like Max Clealand who expressed even the slightest doubt about supporting our Commander in Chief in “this time of war.” And so, despite the election of anti-war Democrats in 2006, despite the President’s abysmal approval ratings, despite the fact that the majority of Americans now consider the Iraq War an enormous mistake and want to see it ended, Senate Minority Leader Mitch McConnell and the President’s media cheer leading squad continue to use the same rhetoric as if it were still 2002, and too many Democrats still tremble.

Let us be perfectly clear. The one issue delaying this bill is the question of retroactive immunity for Bush’s telco pals. While I understand why Bush would go to the wire for his buddies, why any Democrat would voluntarily so undermine the rule of law baffles me. The one conclusion I can reach is that too many of them remain mired in the belief that if the Democrats are seen as “playing politics with national security” then they will lose in ’08.

But as Chris Dodd and some other Senate Democrats understand, and as the House Democrats understood when they passed a bill without the telco immunity provision, the universe has changed since 2002. Even if political exigencies justified such an abandonment of principle as granting telcos retroactive immunity, too many Senate Democrats have the political calculation wrong. With the Democrats chosing among candidates determined to end the war and both of whom have promised to fight telco immunity, and with Republicans poised to nominate the man who has consistently defied the Administration on torture and other issues where the Administration has played the “national security” card, the message from the people should be clear: The free ride for the Administration to savage our civil liberties is over! The panic is past, and our natural distrust of a government granted unlimited power to “protect us” has returned.

I hope that the members of the Senate, particularly the Democratic members who have supported telco immunity, will take these two weeks to learn this valuable lesson. Because if you act as if it were still 2002, and give the President everything he asks for, you may indeed succeed in setting back the clock. In 2006, the American people proved we had enough of wireless wire tapping, and that enough of us were finally willing to vote out a party that supported an assault on our civil liberties. Must we prove that lesson again in 2008, by once again voting out a party that, to praphrase Benjamin Franklin, seeks to trade liberty for security only to discover it has neither?

All the rights they promise — all the wrongs they bring
Stewards of the Judgment, suffer not this king!

Stay tuned . . . .

Our stupid discourse

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Here’s Montel Williams, making sense on the subject of press coverage of Heath Ledger versus coverage of troops killed in Iraq.

According to this post on daily Kos, from which I lifted this idea,

Three minutes into this awkward segment on Fox, one host cut off Montel in order to go to a commercial. Montel did not return after the break. Four days later, after 17 years as a television host, Montel lost his job.

Continue reading

700 MHz: The C Block Minuet

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The fact that the C Block has dangled on the precipice of reaching its reserve price from round 13 to the close of today’s bidding action in round 16 has led to speculation that Google never intended to go seriously for the spectrum, but was merely trying to goad Verizon or ATT into committing on the Block. I grant that we have almost no intelligence on who the C Block bidders are, and it is very, very early to speculate on the auction’s ultimate outcome. However, I have a theory, grounded in an understanding of game theory and the auction rules, which calls this latest conventional wisdom into question.

There are at least two, and possibly three, current bidders for the bulk of C Block. Two have been trading off the lead for the 50 state package (REAGs 1-8), let’s call them A and B: A in the first round (1 new bid), B in the second (1 new bid), A in the third (1 new bid), B in the fourth (1 new bid), A in the fifth (1 new bid), B in the seventh (1 new bid), A in the eighth (1 new bid), B in the tenth (1 new bid), A in the twelfth (1 new bid), B in the thirteenth (1 new bid). B has been the high bidder since the thirteen round with no need to raise its bid. In the sixth round there were also mid-range bids placed individually on REAGs 1-8. Either the individual bids on REAGs 1-8 in round six were B’s response to A’s bid on the package in round 5 or another bidder, C, forayed at that point.

B can sit indefinitely on its current bid, waiting for the minimum acceptable bid (MAB) to converge on the reserve price of the Block without requiring activity waivers (the FCC historically reduces MABs in the presence of bidding inactivity). That would allow B to obtain the package for almost $122 million less than the current MAB for round 17. A must bid on REAGs 1-8 either on the package or individually in round 17 or lose eligibility, since it has had to expend three activity waivers to avoid bidding in rounds 14, 15, and 16. That is what we know.

I hypothesize that B is Google, that it is sitting just below the reserve price, and will continue to do so unless another actor bids, until just before the close of the auction, when it will bid the reserve price and save roughly $122 million. I grant that it is also possible that B is Verizon or ATT or some other bidder which I don’t know and haven’t mentioned. But game theory and the auction rules explain why B is sitting pat. A has to bid in round 17 (the MAB for the 50 state package in round 17 is over the reserve price of the Block, and the sum of MABs for REAGs 1-8 individually in round 17 is equal to the MAB for the 50 state package), or B’s strategy is likely to win.

How To Give America Wireless Broadband For Christmas 2009 — the Lesson from 3.65 GHz Deployment.

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Granted for me it would be Chanukah not Christmas, but I think a real kick ass wireless network with oodles of competition and nifty new gadgets would make such a good present for America for Christmas 2009. And, as the reports from the field on the piece of wireless spectrum the FCC opened up last June show us, the FCC can bring it to us by opening the broadcast “white spaces”.

Sascha Meinrath, a serious partner in crime in spectrum reform, has some data from the field on deployment of equipment in the 3.65 GHz band the FCC finally opened for real in June 2007. Now, a mere 6 month later, Sascha reports on wireless ISPs (WISPs) using this band in the field to deliver broadband. As Sascha writes:

WISPs have been leading the charge and people are reporting 15km non-line-of-sight (NLOS) connectivity with 3650-3700 MHz (operating at 10W) — which is a huge boost over 802.11. Meanwhile, capacity seems to be hovering around 15 MB per 7.5 MHz (or 20MB per 10MHz) — so 100MB connections over 15km without line of sight are quite feasible using this band. All in all, that’s pretty impressive for first-generation equipment. The equipment vendor Aperto is claiming that their new equipment will get 20MB per 7MHz (so you can see the development curve is already fairly steep).

To give you a feel for the real-world implications, folks testing things out reported, “6mb/s indoor at 2 miles NLOS. The base station was a 1 sector install using diversity at approximately 50ft up on tower using 120 degree sectors” — try to get that with an 802.11 access point.

Allow me to draw a few policy implications from this. The lead time from settling the rules to actual deployment of services took six months. By contrast, we have not yet seen any significant deployment in the AWS spectrum auctioned 18 months ago. Yes, some of that was due to the delay of some government licensees in migration. But much also has to do with the nature of licensed v. unlicensed networks. Licensed networks require huge investment of time, resources, standardization of equipment, etc., etc. By contrast, unlicensed networking equipment can be built, certified and deployed effectively relatively quickly.

Policy makers should take note of this in the debate over the broadcast white spaces, aka the vacant channels on the broadcast dial. Broadcasters and some large carriers (like Sprint and T-Mobile) want to see the white spaces licensed rather than opened to unlicensed use. The current broadcast spectrum auction will not begin to bear broadband fruit until 2010 or 2011 at the earliest. And if the FCC were to decide to license the white spaces, we could expect similar lengthy delays while the FCC devised auction rules, held an auction, then waited for the winners to (hopefully) deploy something useful.

Given the continued laggard pace of our national broadband, shouldn’t the FCC learn from its success in the 3.65 GHz band? Licensed and unlicensed networks complement each other, each offering different capabilities. We have taken the first steps toward building the licensed wireless networks in the broadcast spectrum. Why not unleash unlicensed in the white spaces? If the FCC approved rules now, it would practically guarantee that devices could be certified and deployed as soon as we completed the digital transition. Indeed, given the backing of the broadcast white spaces by so many different developers, as compared to the relatively modest backing for 3.65 GHz, the probability of seeing a plethora of wireless networking devices and consumer products available to Americans by Christmas season 2009 rises to almost a certainty. By contrast, we will be lucky if the winners of the 700 MHz licenses will have broken ground on their first towers by then.

Doesn’t America deserve a kick ass wireless network for Christmas 2009? I think so. And if the FCC applies the lesson of its 3.65 GHz success to the broadcast white spaces, we can have one.

Stay tuned . . . .

I, John: One citizen's official response to the State of the Union speech

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George,

Who cares what you think?.

End of response.

For the 8th time in a row, I’ve found better things to do than watch our so-called president perform the annual feeding of the ducks, also known as the State of the Union pep rally. I trust that if anything truly wonderful or horrible transpired I’ll find out about it soon enough.

I’ve only read one thing about the speech so far: this guy’s comments seem to be about right.

I swear, there’s no better commentary on the United States Congress during the reign of Herr George W. Bush, peace be upon him, than I, Claudius, which I watched again this year. For a rueful break from CSPAN sometime, check out its brilliant depiction of the cowardly, self-regarding, debauched, oligarchic Roman Senate abdicating its role in governing the republic, ceding power to a succession of vipers, megalomaniacs and madmen whilst holding on to the the perks and trappings of power that come with ostensibly representing vox populi and tell me if that doesn’t remind you of a certain deliberative body currently occupying space in the general Redskins/Nationals/Orioles/Wizards/Hoyas viewing area. To push the analogy further, Is our Georgie more like Nero or more like Caligula? Ah, who gives a fuck. I’m sure I don’t. I’m just waiting for our Claudius to show up. Who will it be? Who will be our calculating idiot-who-wasn’t, who saw all, never missed a trick, bided his time until his country was willing to accept his radical return to her best, noblest ideals? It could have been Al Gore, but alas, we lacked a Praetorian Guard to kidnap him and force him into office, will he or no.