Tag: fcc

Comcast Reacts To FCC Probe By Changing Fine Print

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Well, it appears that Comcast has learned a valuable lesson from our complaint about blocking BitTorrent and subsequent FCC investigation. Sadly, but unsurprisingly, the lesson appears to be “make our policies more explicitly outrageous.”

My thanks to Marvin Amouri at Free Press for this excellent analysis of Comcast’s new terms of service. As Marvin notes, Comcast released this puppy quietly on its website, taking advantage of the pre-existing fine print to alter terms unilaterally. (Question for Comcast, if I don’t like the new terms, can I cancel without tirggering an early termination fee?)

Marvin really says everything that needs to be said on his excellent post, so I shall limit myself with simply rolling my eyes and wondering when we will have a Congress and an FCC genuinely interested in promoting broadband adoption and competition rather than providing cover for lazy duopolists squeezing locked in customers unwilling to invest in network upgrades. Oh yeah, I forgot. According to this Administration, we already solved the broadband problem.

Stay tuned . . . .

700 MHz: Oops

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The last round of the day for Auction 73, Round 31, was postponed until tomorrow by the FCC late today. The announcement on the Integrated Spectrum Auction System read:

“2/4/2008 04:11:42 PM
Round 31 Postponed
Due to a delay in the availability of complete downloadable reports, Round 31 will be postponed until 9:30 a.m. ET tomorrow, February 5, 2008.

”We will continue with the previously announced five round bidding schedule until further notice. Bidders are reminded to monitor auction announcements for further changes in the bidding schedule.”

Sources at the FCC indicate that the system glitched on producing the end-of-round reports from Round 30 and there was insufficient time to locate and correct the bug before Round 31 was scheduled to commence at 4:30 p.m. EST. Round 30 still hasn’t been posted on the Integrated Spectrum Auction System as of 4:40 p.m. EST, and it was due at 3:40, which suggests that the bug hunt is a bit more complicated than the FCC initially anticipated, but there’s no reason to think the auction won’t recommence tomorrow as scheduled.

700 MHz: More Evidence for Success of Anonymous Bidding Rules

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I’d like to reiterate what fellow Wetmachiner Harold Feld wrote yesterday: the telecoms incumbents’ claims of problems arising from anonymous bidding are nonsense, part of a campaign to sow disinformation lest Auction 73 (700 MHz) and its success persuade the FCC to permanently adopt anonymous bidding rules for its auctions.

I call your attention to this table, which compares the number of bids on each license in B Block in rounds 1-26 of Auction 73 to the number of bids on each comparable CMA in Auction 66 (AWS-1) in rounds 1-26 of that auction. Note that in general the smaller the CMA number, the larger the population of the CMA (e.g., CMA001 is New York City and its immediate environs, CMA002 is the Los Angeles area, etc.).

What is striking about the data presented in this table is threefold. First, significantly more bids are being placed in general in rounds 1-26 in Auction 73 than in Auction 66. Second, extraordinarily more bids are being placed on the smaller and intermediate-size CMAs in Auction 73 than in Auction 66. Third, a much smaller percentage of licenses are receiving no bids in the first 26 rounds in Auction 73 than in Auction 66.

I am hard put to find an explanation of this extraordinary increase in competition, particularly for the smaller and intermediate-size licenses, which does not involve the effects of anonymous bidding. I suggest that the data, even though they do not disclose bidder identities, are entirely consistent with a more vigorous presence of new entrant and non-incumbent bidders who are protected from retaliatory and blocking bidding by large incumbents by anonymous bidding and are, therefore, more willing to engage in strong competition.

The telcos and cablecos can wail and moan to Communications Daily about the “risks” of anonymous bidding to the FCC, but the principal risk of anonymous bidding seems thus far to be the risk that fat-cat telecoms incumbents won’t be able to get all the spectrum in this auction by their usual bullying and exclusionary tactics. There’s no risk at all to the treasury — revenue from the auction is already wildly exceeding pre-auction projections — and there’s no risk that competition will be wan, as the data presented here amply demonstrate.

Chutzpah, Thy Name Is Wireless Incumbent.

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So here we are in the middle of the most intensely competitive auction ever. As you can tell looking at the recent postings by fellow Wetmachiner Greg Rose this auction has dramatically pushed up the amount of money paid by bidders for licenses and has created more intense competition for a broader group of licenses than previous auctions, strongly suggesting that — as Greg and I predicted when we first started pushing anonymous bidding in March 2006 — anonymous bidding eliminates all kinds of targeting, collusion and retaliation that typically held back smaller bidders and allowed larger bidders to pick up licenses for a song. An utter smashing success (at least from the perspective of those who favor using auctions for distribution of licenses), right? Who could have a bad word to say about it?

Answer: All the people who hate anonymous bidding BECAUSE it eliminates the ability to signal, retaliate, and collude and thus makes the auction more competitive. i.e. The incumbent wireless licensees (other than Verizon, which wanted anonymous bidding to avoid being targeted).

More below . . . .

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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 . . . .

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 . . . .

Not Giving Up On The Great Google Prophecy

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You can read a far more brilliant analysis by Greg Rose on why the punditry on the trickle of data from the 700 MHz auction is all wrong here. Briefly, Greg maintains that this slow convergence on the reserve price over several weeks of bidding is what to expect from a serious auction, and that the failure of parties to bid heavily on C or D Block in the early rounds with so much activity going on in the smaller blocks is a sign of a strong auction to come. Little players on the side are active for the specific licenses that they want, while the large bidders slowly stalk each other up to the reserve price on the major block.

For me, having stacked much on the Great Google Prophecy, I will cheerfully admit to being too close to things to judge objectively. But here are two tidbits of food for thought.

1) Google CEO Eric Schmidt made the evolution of the wireless net a centerpiece of his speech at Davos. How likely is it that Google CEO would hype the importance of wireless if they were not planing to win licenses?

2) Most analysts predicted Google would come in, bid the reserve price for C Block, and leave. They haven’t. So far, no one has bid the reserve price for C Block. Instead, the price has crept up gradually. Now it could be that Google will only bid high if it must, for fear of getting stuck with licenses it doesn’t want. But if that is the case, why show up at all? “To save face with the FCC?” Yes, but we will know after the auction when the identities of bidders and round by round information is revealed if Google never bid. So the “save face” excuse doesn’t really hold water. Rather, it seems likely that they are bidding like everyone else, i.e., like bidders that want to win.

Straws in the wind, perhaps. But no worse than the straws of data everyone else is trying to spin into gold.

Stay tuned . . . .

Definitely Not Smarter Than the Average Bear

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Much of the press surrounding the first two days of the FCC’s 700 MHz auction has been like this Information Week story. I confess to being both amazed at the shallowness of the reporting and amused at its gloom and doom tone. To hear the press tell it, it’s time to be very bearish on this auction.

A look at historical precedent is salutory. The FCC’s Integrated Spectrum Auction System files for Auction 66 and Auction 73 are the places to start.

At the end of round four in Auction 66 (AWS-1), the high bids for the EAs, CMAs, and REAGs were, respectively, 4.15%, 7.09%, and 12.03% of the final net PWB prices with 47.84% of licenses receiving at least one bid. At the end of round 4 in Auction 73 (700 MHz Band) the high bids for EAs (A and E Blocks), CMAs (B Block), REAGs (C Block), and the nationwide D Block license were, respectively, 31.87%, 43.03%, 39.06%, and 26.99% of reserve price with 83.80% of licenses receiving at least one bid.

Auction 66 netted $13.7 billion. Auction 73 has a reserve price threshold of $10,386,011,520. By any objective criteria Auction 73 is off to a much better start generally than Auction 66 was. The fact that the D block has had only one bid in the first four rounds isn’t terribly unusual; several licenses which eventually went in Auction 66 for very substantial sums had very little early-round action. It’s important to point out that auctions with relatively high reserve prices tend to exhibit slow convergence bidding on reserve price and provide significant incentive to try to obtain the license for as little over reserve price as possible. When this tendency is coupled with the FCC’s bidding increment rules, it is rather obvious that the auction is going to take some serious time and that it’s rather impressive how close to reserve price the bidding is at so early a stage.

Auction 66 ran 161 rounds. I expect Auction 73 to run at least 100 rounds, and probably significantly longer. It is much too early to announce that the results of Auction 73 are disappointing… unless you appear to know as little about how FCC spectrum auctions actually work as much of the press does.

Did Morgan OBrien and Cyren Call Kill Frontline?

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I’m getting a number of folks from different walks of life coming forward with the same story: Morgan O’Brien was the direct cause of Frontline’s investors pulling out.

Of course, there is no way I can actually confirm this on the record because the people in the room either can’t talk about it (due to the anticollusion rules) or won’t. Nevertheless, having confirmed this with sources I find reliable and who could not have coordinated with each other, I feel I need to come forward here and put this on the table. D Block and the public safety partnership are far too important to end up falling victim to the combination of insider baseball, manipulation and greed that appears at play here.

I have absolutely not talked to anyone at the FCC about this. No one at the FCC can legally respond to any of this, and I would not ask them to do so. Similarly, in my discussions, I have been at pains to avoid any conflict with the anticollusion rules. Nevertheless, the sources I have are, I believe, reliable, and I have therefore made a decision to go forward with this story. I must also add that because I am on sabbatical, I have not had any discussions about this with my employer, Media Access Project, or with anyone at Media Access Project while developing this story.

Details below . . . .

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