Spectrum of Greed

FUBAR Communications Commission (according to Lessig?)

While manufacturing, finance, construction, real estate and most other industries are awash in red ink and reeling from Ponzi scheme’s and bad financial decisions, there is one place where currency is flowing against the tide - wireless telecom.

How could this be? Well, it all started back during the primary election excitement in the first few months of 2008. While Oprah and the country were trying to determine who would be the Democratic and Republican front runners, the FCC was doing what it does best, moving stealthily behind the headlines, inviting a few close friends in, and asking them just how much they would be willing to pay for the exclusive rights to some radio spectrum that they were taking away from the TV stations because they didn’t need it anymore.

Bidding and auctions sound pretty good, right? Whoever bids the most wins, right? Everyone is theoretically eligible to win, right? Maybe, and maybe not.  More about that later.  Today the FCC has made our Congress very happy, and $20 Billion dollars richer.  They just got the check in the mail and issued the licenses that they were ransoming, er, I mean paying for. That is some serious moolah my friends, and our Congress knows just how to spend it, because guess what? There are no strings attached to this money.

In this financial climate, who could have afforded to pay $20 Billion dollars? Well, it is a short list of companies, some names you would recognize.  Was it Oprah? Was it Warren Buffet? Kirk Kirkorian? Bill Gates? Sergey Brin? Larry Paige? Donald Trump?  Ok, maybe I am dragging this on too long here, but the one company you would think would not need any more wireless spectrum was in fact the one that got the biggest national slice of the wireless spectrum that was available - Verizon Wireless. They paid $4.7 Billion. Surprised? Click here to see the full list.  The other interesting fact is a losing bidder in the auctions, Triad700 LLC (see PUBLIC NOTICE (DA 09-8)), is now getting licenses originally awarded to Verizon.  So apparently Verizon has inked a licensing deal with Triad after they won the bid.  That isn’t like scalping, is it?  No, not as long as the FCC grants you the ability to sub lease your lease on the spectrum - which they did.  Let’s see, why would someone want to get the rights to something, then sub-lease it?  Perhaps to control the conditions under which it’s used?

The $20 Billion dollars is the inconvenient truth for the FCC, and for those of us who would like to see a more innovative wireless economy. There are lots of theories about whether we fix the FCC, burn them down and start over, or try something in between, but what we really need here is some entrepreneurial genius applied to finding a more lucrative way of generating non-tax revenue for our Congress to spend. The group of people that come up with that plan, and sell it to Congress, will change the way the FCC is run. Until someone can make $40 Billion instead of $20 Billion for Congress, they can talk all they want about Net Neutrality, open markets, digital divides and dark fiber, but it will all be smoke in the wind. Money is what talks.