NEWS: Frontline Wireless bombs out

On Wed, 09 Jan 2008 19:51:39 -0500, George <george@nospam.invalid> wrote
in <e9ydnSTG4euG8RjanZ2dnUVZ_gmdnZ2d@comcast.com>:

>John Navas wrote:

>> Because it would fail to ensure the highest value use of a limited
>> resource. You could easily have some idiot win that wanted to run
>> wide-band morse code.
>
>So whats the problem? If they did the market forces would put them out
>of business if they made such a choice just the same as if someone
>"purchased" the spectrum and chose to run wide-band Morse code.

The spectrum might still be locked up. Makes no sense.

>> You must not have much experience in construction -- that kind of
>> government involvement is rife with abuse, waste, and outright fraud.
>> No thanks.
>
>I have, I didn't say it should be run like a construction job but only
>taking the concept of responsible bidder.

Same problem.

>> A one-time license fee is not a tax.
>>
>Sure it is, ...

We'll just have to agree to disagree.

--
Best regards, FAQ FOR CINGULAR WIRELESS:
John Navas <http://en.wikibooks.org/wiki/Cingular_Wireless_FAQ>

John Navas wrote:

> On Wed, 09 Jan 2008 19:51:39 -0500, George <george@nospam.invalid> wrote
> in <e9ydnSTG4euG8RjanZ2dnUVZ_gmdnZ2d@comcast.com>:
>
>
>>John Navas wrote:
>
>
>>>Because it would fail to ensure the highest value use of a limited
>>>resource. You could easily have some idiot win that wanted to run
>>>wide-band morse code.
>>
>>So whats the problem? If they did the market forces would put them out
>>of business if they made such a choice just the same as if someone
>>"purchased" the spectrum and chose to run wide-band Morse code.
>
>
> The spectrum might still be locked up. Makes no sense.
>
>
>>>You must not have much experience in construction -- that kind of
>>>government involvement is rife with abuse, waste, and outright fraud.
>>>No thanks.
>>
>>I have, I didn't say it should be run like a construction job but only
>>taking the concept of responsible bidder.
>
>
> Same problem.
>
>
>>>A one-time license fee is not a tax.
>>>
>>
>>Sure it is, ...
>
>
> We'll just have to agree to disagree.
>


In other words, George is right.

On Thu, 10 Jan 2008 06:32:01 -0500, News <News@Group.name> wrote in
<xvmdnbcJjdutnxvanZ2dnUVZ_vTinZ2d@speakeasy.net> :

>John Navas wrote:

>> We'll just have to agree to disagree.
>
>In other words, George is right.

Is that the best you can do? How childish.

--
Best regards,
John Navas <http:/navasgroup.com>

"A little learning is a dangerous thing." [Alexander Pope]
"It is better to sit in silence and appear ignorant,
than to open your mouth and remove all doubt." [Mark Twain]
"Being ignorant is not so much a shame, as being unwilling to learn."
[Benjamin Franklin]

On 2008-01-09, George <george@nospam.invalid> wrote:
> Cubit wrote:
>> Spectrum is infrastructure. It should not be taxed.
>>
>> That having been said, I don't have a scheme for fair allocation.
>>
>>
> Why not a lottery?
>
> Lets say we put a system in place where only responsible bidders can
> apply. This would be very similar to what is used for large construction
> projects where the concept of responsible bidders is used. In order to
> bid on a large project a contractor must show they have experience and
> resources.
>
> The same could be done here. Prospective operators would need to meet
> qualifications to enter a lottery run by a disinterested third party.
>
> The winner would not be required to "buy" the spectrum which is really
> just a disguised pre-paid tax on its future users but only a nominal
> application fee to cover the cost of the lottery.

If you mean by the last sentence that making companies pay for their
spectrum allocation will increase prices for their customers, then
have you noticed how much cheaper the US cellular operators, who
got their spectrum for free, are compared to the PCS operators who
had to pay for it? No? This is, of course, because no matter how
much the original spectrum cost the prices charged to customers by
the operators will always eventually be those that maximize the
operator's income, i.e. as much as the market will bear. The operator
won't invest in spectrum or other assets if he doesn't think he
can get a return on that investment but in the end the return he
gets will be determined by how much customers are willing to pay
for the service the operator builds, not by how much the operator
invested building it. It is up to the operator to manage this
risk.

It is a fact, however, that a lot of the US 800 MHz cellular
spectrum is not controlled by the same company to which it was originally
allocated. Most of these blocks have changed owners through mergers
or acquisitions. Some blocks have changed owners several times.
Each of those mergers and acquisitions involved an exchange of money,
or equity, which put a market value on the assets of the company involved.
One of those assets is, of course, the company's spectrum licenses, without
which a wireless company would have little or no value at all. So when
Verizon acquired GTE, or Cingular acquired AT&T Wireless, we don't find
it surprising at all that they spent a considerable amount of money to
acquire the spectrum assets. In fact the thing we would find very
surprising is if GTE or AT&T Wireless instead offered to give away their
spectrum licenses for free to avoid "taxing" Verizon's and Cingular's
future users. Those spectrum licenses are valuable; if you are smart
enough, owning them can allow you to make money, so you'll pay to
own one and want to be paid to transfer ownership of one you already
own.

So seeing as spectrum is traded at market prices all the time, why
would you want the first transfer, from the government to a company,
to be at anything other than a market price? No matter what the
first price is, all subsequent transfers of ownership of the spectrum
will be at market price anyway, so if the first owner pays less than
market price for the spectrum you'll just be giving that first owner
a benefit, for nothing, that they'll reap when they sell the spectrum
or make money by owning it. Giving the spectrum away, by lottery
or however, is essentially welfare for corporations, and while I'm
sometimes in favour of welfare for individual people who need it I
really don't think welfare for companies, no matter how worthy they
seem, is appropriate. If an operator who wants to enter the market
and build a network after the government allocations have been
made needs to pay full price to do so, I don't think it is fair
that those that happened to be there at the time of the government
allocations get a freebie (I also don't think it is a coincidence
that the two biggest, richest companies in the US wireless market
are, at their core, companies which received a considerable amount
of cellular spectrum from the government for nothing; it is hard
for later-comers, who need to pay for what they get, to compete
with free).

So while I don't mind placing all the regulations and conditions of
use of spectrum you think might be good for consumers up front, so
they can be factored into the price, I think the first sale of
spectrum still needs to be made at market prices just like all subsequent
sales of the same spectrum will be, to avoid giving companies a big
benefit just because they happened to be there first. The only problem
is how to determine what the "market price" for the spectrum should be,
and that is what a well designed auction is supposed to do. If companies
pay too much for spectrum at the auction compared to what their customers
are willing to pay for services which use the spectrum (the complaint
I'm hearing about the UK) that isn't a failure of the auction but
rather a failure of the business judgement of the participants. Businesses
take risks, these are the same risks that companies who enter the market
later by buying existing licenses take, and I don't think the
government should be protecting those who happen to be at the
original auction from the risks that later arrivals in the same
market will need to take. I think auctions are necessary for
fairness, while "free" is inherently unfair to everyone (consumers,
taxpayers, competitors) other than the companies which get the
freebie.

Dennis Ferguson

On Thu, 10 Jan 2008 19:46:10 GMT, Dennis Ferguson
<dcferguson@pacbell.net> wrote in
<slrnfoctg1.4f.dcferguson@akit-ferguson.com>:

>On 2008-01-09, George <george@nospam.invalid> wrote:

>> The winner would not be required to "buy" the spectrum which is really
>> just a disguised pre-paid tax on its future users but only a nominal
>> application fee to cover the cost of the lottery.
>
>If you mean by the last sentence that making companies pay for their
>spectrum allocation will increase prices for their customers, then
>have you noticed how much cheaper the US cellular operators, who
>got their spectrum for free, are compared to the PCS operators who
>had to pay for it? No? This is, of course, because no matter how
>much the original spectrum cost the prices charged to customers by
>the operators will always eventually be those that maximize the
>operator's income, i.e. as much as the market will bear. ...

You were fine up to the "i.e." (and in much of the rest of the material
I snipped), but economics research shows that profit maximizing in a
competitive market actually causes prices to fall towards marginal cost,
as can be clearly seen in the actual history of prices for mobile
telephone service. Raising prices to increase margin is more than
offset by reduced volume as customers turn to substitutes. In addition,
up front costs are _investment_, which tends to actually appreciate
given the scarcity of spectrum, not the operating _expense_ reflected in
prices.

--
Best regards, FAQ FOR CINGULAR WIRELESS:
John Navas <http://en.wikibooks.org/wiki/Cingular_Wireless_FAQ>

John Navas wrote:
> On Wed, 09 Jan 2008 23:15:56 +0000, Mark McIntyre
> <markmcintyre@spamcop.net> wrote in
> <13oaldcp3k8bp53@corp.supernews.com>:
>
>> John Navas wrote:
>>> Nonsense. You're beating a dead horse.
>> So tell us, does the process you propose work in practice? Did it work
>> last time? Has it ever worked? By worked I mean to the public benefit.
>
> Spectrum actions have a good track record, a major reason their use has
> been continued and expanded.
>
>> I invite you again to look at the UK's 3G auctions.
>
> They worked quite well, some buyers remorse notwithstanding.

I'll have what you're drinking.

You're barking mad if you think they worked quite well.

John Navas wrote:
>
> My own take is just the opposite. Otherwise they'd be shedding their 3G
> spectrum instead of promoting it heavily.

You /really/ don't have a clue do you? If you've spent a billion quid on
a multuyear license, you absolutely *have* to promote it heavily, in the
hopes of getting a return. No company accountant in their right mind
could afford to simply write off the expense.

John Navas wrote:
> On Thu, 10 Jan 2008 06:32:01 -0500, News <News@Group.name> wrote in
> <xvmdnbcJjdutnxvanZ2dnUVZ_vTinZ2d@speakeasy.net> :
>
>> John Navas wrote:
>
>>> We'll just have to agree to disagree.
>> In other words, George is right.
>
> Is that the best you can do? How childish.

Given that you were unable to produce a counter-argument, one is forced
to conclude you don't have one. Ergo, you lost.

And how childish of you not to concede that point.

On Thu, 10 Jan 2008 23:50:17 +0000, Mark McIntyre
<markmcintyre@spamcop.net> wrote in
<13odbpplkuln242@corp.supernews.com>:

>John Navas wrote:
>> On Wed, 09 Jan 2008 23:13:19 +0000, Mark McIntyre
>> <markmcintyre@spamcop.net> wrote in
>> <13oal8fna9nhnd3@corp.supernews.com>:
>>
>>> That's a neocon argument.
>>
>> It's actually a free market economics argument,
>
>That's what I said. And I notice you ignored my point about this being
>why governments need to have better advisers.

I didn't see that as a relevant point. I still don't. The whole point
of using the free market is getting government out of the way.

>> backed by a great deal of confirming evidence.
>
>Horse's gonads. Luckily however this isn't alt.politics.flames so I
>really can't be bothered to discuss why "free market economy" is an
>oxymoron, especially in the US. Do feel free to read up on GATT,
>tarrifs, the WTO and Antigua sometime though.

Been there; done that. It's imperfect, but still a basically free
market.

>> I actually do want companies to be motivated by profit instead of by
>> regulation.
>
>Right - so you agree you want companies to be motivated by how much
>money they can make out of us, not by whether the public good is served
>and whether society benefits. Capitalism at work again. For some
>definitions of work.

Yep. Because it clearly does produce public good, as in better products
and services at lower prices.

--
Best regards, FAQ FOR CINGULAR WIRELESS:
John Navas <http://en.wikibooks.org/wiki/Cingular_Wireless_FAQ>

On Thu, 10 Jan 2008 23:53:51 +0000, Mark McIntyre
<markmcintyre@spamcop.net> wrote in
<13odc0g8qbf5oca@corp.supernews.com>:

>John Navas wrote:
>> On Wed, 09 Jan 2008 23:15:56 +0000, Mark McIntyre
>> <markmcintyre@spamcop.net> wrote in
>> <13oaldcp3k8bp53@corp.supernews.com>:
>>
>>> John Navas wrote:
>>>> Nonsense. You're beating a dead horse.
>>> So tell us, does the process you propose work in practice? Did it work
>>> last time? Has it ever worked? By worked I mean to the public benefit.
>>
>> Spectrum actions have a good track record, a major reason their use has
>> been continued and expanded.
>>
>>> I invite you again to look at the UK's 3G auctions.
>>
>> They worked quite well, some buyers remorse notwithstanding.
>
>I'll have what you're drinking.
>
>You're barking mad if you think they worked quite well.

We'll just have to _respectfully_ disagree. ;)

--
Best regards, FAQ FOR CINGULAR WIRELESS:
John Navas <http://en.wikibooks.org/wiki/Cingular_Wireless_FAQ>