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There is nothing market-based about incentive auctions

Posted September 28th, 2012 in Broadband, FCC, Government Regulation, spectrum, spectrum auction and tagged , , by Alton Drew

On 28 September 2012, the Federal Communications Commission announced the opening of a rule making proceeding that will implement procedures for the spectrum incentive auctions described in sections 6402 and 6403 of the Jobs Act. The FCC describes the incentive auctions as market-based, but based on the law itself, I can see nothing market-based about these auctions.

For one thing there are the false signals that will be sent from a mandated reverse auction. The reverse auction gives broadcast TV license holders a chance to announce the prices at which they may be willing to let their broadcast spectrum be made available at. The spectrum will then be made available for competitive bidding by wireless carriers.

This is where I have a problem with Congress and the law. The reverse auction sends the market for spectrum licenses the wrong signals. Once a carrier engages the FCC in a competitive bid for spectrum, there will be a risk of overbidding for the precious resource. There is nothing in the law that says the competitive bidding price offered by a wireless carrier should not be allowed to exceed the price sought by the TV broadcaster.

The only way to claim a market-based bidding process is to allow wireless carrier and TV broadcaster to communicate and negotiate a price for selling and acquiring spectrum. Congress and the FCC should not run the risk of inefficient prices eventually sliding into consumer prices.

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The Public Interest Raises its Head … Again

The New America Foundation today held a two panel discussion on the public interest standard as it applies to broadband and spectrum. Larry Irving defined the public interest as including universal service, diversity, and localism. From what I gathered, the premise was transitioning these broadcast public interest components to broadband.

In other words, society has as a social policy goal ensuring universal access to broadband services; making sure a diverse array of voices can receive and send messages via broadband; and ensuring content sent and received via broadband includes homegrown content about things going on next door, including news about Mrs. Wilson’s cat being caught in a tree …

Okay, I digressed a little on the cat in the tree.

Is this really in the public’s interest in broadband services or the use of spectrum for that matter? The problem with the public interest standard at the Federal Communications Commission is that it looks at the airwaves as something primarily for consumer consumption. Big mistake. As guardian and gatekeeper of a public resource, it should look at the airwaves as a national resource that we use to produce output. As a creature of the Congress, the FCC should analyze the public interest in terms as a regulator of commerce.

Spectrum is a conduit in the flow of commercial activity; the movement of goods and services. The primary good or service carried through this conduit is information. The conduit is indifferent to the information. It’s indifferent to whoever is selling and buying it. This is why burdening access to and use of spectrum with consumer concerns is pointless.

The only public interest standard that should matter is whether access to the air waves is being put in the hands of the carriers that will use it best, and that these carriers do indeed put spectrum to use.

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Taking the notion of four eyes to another level

Posted September 30th, 2011 in broadcast television, cable television, Facebook, Twitter, wireless communications and tagged , , , , by Alton Drew

I’m all for app development, creativity, and free market capitalism, but this piece in The Wall Street Journal caught me Afro-Carib-Irish eyes this afternoon.

Seems like broadcast and cable channels are considering developing applications for wireless devices that would allow viewers to interact with TV show actors and advertisement.

Just imagine Bobby Bubba sitting on the couch with the iPad on his lap and the 100 inch flat screen in front of him. Also imagine First Lady Michelle Obama having a fit as she tries to convince home slice to get off the couch.

If you work from home and have a couple kids buzzing around, you should be able to deal with the added distraction apps can provide.

I can see a broadcaster leveraging a platform like Twitter or Facebook to deliver content to listeners or viewers wherever they may be, while eliciting their comments. I guess the big difference is that with the app, a broadcaster can engage real time with the viewer while advertisers hawk their products to Bobby Bubba.

I for one don‘t care for the intrusiveness and would rather that businesses that I regularly patronize, like my grocery store, or gas station, offer me a free download of their app. That way I know who is bombarding me with ads, but I wouldn‘t mind so much because I already have a relationship with the advertiser.