A good laugh is to be had from three USA government guys moaning that Google manipulated the recent 700MHz spectrum auction.
After all, the US government had employed teams of games theorists to try and manipulate bidders into paying as much as possible.
So, if you hire games theorists to set up a bidding system, and then get out-manoeuvred by bidders employing (better) games theorists, then tough. You’re just a loser in the game. No point being a bad loser.
What Google very wittily did was that they pledged to meet the $4.6 billion reserve price for one block of spectrum, on condition that the block in question be sold on condition that any compatible device should be allowed to be connected to a network using that spectrum.
In the end, Verizon won the bidding for the block and is now bound by contract to allow compatible devices and software from any source to access whatever network is built.
Google wanted to get this open access because it will help the adoption of its Android operating system for mobile devices.
So, by being clever, Google got what it wanted without having to pay a penny.
And now the US government is moaning away saying it could have got another $10 billion for the spectrum without Google’s amusing ploy.
Well tough you US government guys. After all you were selling off to private enterprise what could, arguably, be regarded as the public’s property.
And you sought to manipulate the bidders by employing games theory experts.
And you got stuffed.
Good.
Hopefully that’s a lesson to all the governments round the world wanting to allocate 700MHz spectrum.
They can allocate by beauty contests or by auctions.
For all these governments the question now is: Why not put the interests of the citizenry first?
Oh God, is that just too radical a notion for democratically elected pols?
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Comments (4)
What is wrong with auctions? If companies want to use their shareholders' money to reduce my tax bill, I am all in favour of it.
For all these governments the question now is: Why not put the interests of the citizenry first?
That is exactly what auctions do.
"Beauty contests" clearly have a place in Russia or Zimbawe where the Presidents friends get given public assets not because they will make good use of them, or because they pay the going rate but because the President thinks they are the most "beautiful". But in a democracy, an auction is both fairer (totally impartial) and better for the tax-payer.
Spectrum is like land, and selling it makes perfect sense.
(That said, I don't understand the US Govrernment moaning: they screwed up. They did not have to agree to Google's condition without getting them to pay up)
Posted by Roberto | April 24, 2008 2:21 PM
Posted on April 24, 2008 14:21
An auction in Zimbabwe would be an interesting option. With an annual inflation rate of 3731 per cent that means the bids would have to increase by 300 per cent a month just to overbid last month's bids. And with a loaf of bread costing 100,000 Zim$s how many 0s would a winning bid for a chuink of 700MHz spectrum need?
But if spectrum is public property, and the government of the day auctions it off to private companies, which then sell it back (very expensively in little dollops) to the public, isn't there a case for beauty contests?
And if not, then shouldn't auctions be conditional? At least our government insisted on removable SIM cards so any phone can work on any network in the UK, whereas the poor old Yanks, without any protection, have all their phones tied to particular networks.
Is that fair? Easpecially when the US networks are so shitty.
Posted by David Manners | April 24, 2008 2:41 PM
Posted on April 24, 2008 14:41
I think the complaint is not from the Government, the FCC are happy with the result. There is a suggestion that the Senators who complained are perhaps affiliated to Verizon who had to pay more than they would have liked and had to support open access - if the bid was below the reserve this would not have been the case.
Posted by Frank | April 24, 2008 6:07 PM
Posted on April 24, 2008 18:07
Thank you Frank, your remark explains the statement of my taxi driver when I was in California in March who said he wished Mitt Romney was the Republican candidate for president because Romney is a Governor and therefore knows how to run things, whereas the remaining three Presidential candidates are all Senators, and senators, he said, were 'scallywags'. A nice old-fashioned word, but I was surprised to hear it applied to US Senators.
Posted by David Manners | April 25, 2008 11:44 AM
Posted on April 25, 2008 11:44