Careless Spectrum Auctions Waste Taxpayer Asset, Analyst Says
Govt. needs to gradually auction off spectrum on a “reasonable schedule” if it wants to get maximum value for the “taxpayer-owned asset,” said Capitol Solutions CEO David Taylor in a technology forum Fri. by Citizens Against Govt. Waste Another panelist discussed the regulatory environment and future of VoIP.
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Taylor compared spectrum to the transcontinental railroad in the 19th century, saying no one would invest until the infrastructure was built, after which the economic possibilities could be realized. Prebreak-up AT&T’s estimate that 100,000 customers would use wireless by 2000 proved far too small, Taylor said, pointing to the 98% of wireless customers with 3 service choices and 83% with 5.
“Internationally harmonized spectrum” has been elusive because the Defense Dept. controls the spectrum swath commonly used abroad, Taylor said. The need to open more spectrum for commercial use was painfully clear on 9/11, when wireless traffic was 12 times higher than peak capacity, Taylor said, leading to the auction of about 90 MHz of spectrum from DoD in 1- years.
There are right and wrong ways to auction spectrum, Taylor said. Selling it off in large chunks will result in lower bids, Taylor said, while announcing auctions sporadically -- creating the impression it’s now or never to buy -- leads to overbidding, as in the U.K. in 2000. He said govt. must discourage companies from trying to make “sweetheart deals” outside the market, a goal that CTIA, for whom Taylor lobbies, has pushed against its own members. Only a steady supply of spectrum auctioned at regular intervals will lead companies to make rational decisions, Taylor said.
Lawrence Spiwak, Phoenix Center pres., addressed VoIP issues. Most people don’t know there are 2 kinds of VoIP, public and managed, Spiwak said. Public VoIP includes Skype and routes information packets anywhere it can find -- a “very inefficient use” of the IP network; “tunneling” the packets through the same channels takes up too much bandwidth, Spiwak said. Managed VoIP, such as those of Vonage and AT&T’s CallVantage, is the “future of telecommunications” because it carefully directs the packets across the entire network, maximizing efficiency and call quality, Spiwak said.
Once VoIP makes a stronger challenge to the traditional phone network, govt. might wrongly consider regulating it as a common carrier, applying Universal Service Fund fees and access charges, which bring in $26 billion each year, Spiwak said. VoIP’s current status as an information service, though, prevents it from having interconnection rights, Spiwak said, explaining that Vonage’s being cut off by another carrier, as alleged, wouldn’t be illegal. The question is not whether the FCC will regulate VoIP, but when, and the resulting rules will be “worse than the tax code,” Spiwak said.