6 ms·

Why was this downvoted? Seems like a fairly well-written argument - would love to hear counter-arguments instead of blanket downvoting.

xhkkffbf 6y ago
I'll give it a go. It's a nice argument, but it's needlessly negative, almost for show. Consider the claim that's it's a loss if the company shows poor returns. If it had good returns, the anti-auction folks would claim some small group is getting rich off what used to be a public good. Poor returns for the company means that the auction is limiting the plunder and that sounds like a win to me. And why is this a loss for the government treasury? If the returns are poor, there wasn't much more juice to squeeze from the orange, right? So it sounds like the government (and often the taxpayers, sort of) are getting as much as they can for very little work. I'm much more sympathetic to the deeper arguments about structure of auctions and how they might be improved. Why not auction the spectrum off for a shorter time? Maybe use smaller chunks of spectrum? The auctions are just a competitive algorithm and they can become more accurate with finer resolution.
- haltingproblem 6y ago
  Governments gets 2x revenue from revenue sharing than from auctions so govts do lose. Your argument uses self-justification but there is a counter factual for which empirical data exists. Companies also lose as they have fixed liabilities on their balance sheet. If companies are hamstrung by debt then they do not have resources to invest in their network, subscribers suffer. Who exactly wins for this grand experiment in top-down auction design?
  - hcknwscommenter 6y ago
    >Governments gets 2x revenue from revenue sharing than from auctions so govts do lose. Citation needed. >there is a counter factual for which empirical data exists And yet you provide none.
    - haltingproblem 6y ago
      Meta-ironic because it is in the article :)
      - creddit 6y ago
        But it’s not. There is a claim that this is true for India but N=1 is not very generalizable. It’s also not clear why we should believe that a rev-share model both brings in more gov revenue but also somehow prevents the TelCos from being overburdened. The source it linked to is paywalled.
        toast0 6y ago
        It's rev-share vs pay upfront with financing right? A telco could never be overburdened by the rev-share in the same way as a upfront payment. If the rev share is too high so using the spectrum isn't economical, the telco could simply not build out (and probably lose their license, which is OK for them, it wasn't economical). If the prepaid price was too high, they still have to pay it from spectrum activities and other activities; but they probably can't sell the spectrum to retire the debt, because the price was too high.
        marcinzm 6y ago
        Isn't that incentivizing companies without much existing market share in the area to just bid high revenue shares? At best they get some money and at worst they close up shop thus coming back close to neutral. Maybe they even get to screw a competitor for a few years as they stall build out. Of course the population gets hurt if the latter happens since they get no infrastructure.
        toast0 6y ago
        You can adjust the auction terms to try to avoid bad outcomes. A) bid out smaller alocations to allow more networks B) require a deployment plan to bid, and progress on the plan to keep the allocation C) some equitable way to periodically rebid in absence of abandoned spectrum D) some sort of open access provisions (maybe spring this on the market after it's largely built out) Of course, some of that requires a competetent regulator with clear authority, as well as not too much corruption and reasonably swift court systems to handle disputes. But a point in time, single payment auction works better with those things too.
  - colinmhayes 6y ago
    Revenue sharing should be implemented via auction. Otherwise how do we discover the efficient percentage to be shared? All of the problems you pointed out have little to do with auctions, which are just a way for markets to discover prices when supply is very limited, and everything to do with poorly implemented auctions.
- Spooky23 6y ago
  It's a loss because a big, capitalized winner takes all auction benefits a small number of entities with big pockets. As a society in the US, for example, we're burdened with 3 giant telcos controlling the most productive public airwaves. Plenty has been written about the negative affects of these types of arrangements with respect to 19th century railroads. Auctions happen at a point in time and leave alot of value on the table. Spectrum purchased in 1999 is worth much more today. If the government retained title to spectrum and allowed for smaller chunks, smaller players could participate and compete in the market -- look at how dial up ISPs in the 90s drove prices for internet from $40/mo in the early 90s to <$10 in 1999 or so. The mobile market is very different -- we pay more for a commodity that gets cheaper to deliver over time; AT&T wireless margins are >50% for a commodity service as a result of the limited competition.
  - creddit 6y ago
    I think you may have misread what was written when you claim > It's a loss because a big, capitalized winner takes all auction benefits a small number of entities with big pockets. This is the exact opposite of what the parent poster was arguing against which was the claim that the TelCos had poor returns (ie they were NOT particularly beneficial to those entities).
- bluedevil2k 6y ago
  Spectrum is generally sold on 15Mhz blocks. 10 for download, 5 for upload.
KorematsuFred 6y ago
OP suggested markets work. HN folks downvoted without presenting arguments.
donavanm 6y ago
Its a statement, not an argument, as I read it. Theyre ignoring other confounding factors, the agency of both telecoms and policy makers, and basing the lose-lose-lose on a limited subset of auction markets. Additionally theres no other suggested mechanism besides a vague wave at “revenue sharing” where you have the same problem of determining what the appropriate rate is.

xhkkffbf 6y ago

I'll give it a go. It's a nice argument, but it's needlessly negative, almost for show. Consider the claim that's it's a loss if the company shows poor returns. If it had good returns, the anti-auction folks would claim some small group is getting rich off what used to be a public good. Poor returns for the company means that the auction is limiting the plunder and that sounds like a win to me. And why is this a loss for the government treasury? If the returns are poor, there wasn't much more juice to squeeze from the orange, right? So it sounds like the government (and often the taxpayers, sort of) are getting as much as they can for very little work. I'm much more sympathetic to the deeper arguments about structure of auctions and how they might be improved. Why not auction the spectrum off for a shorter time? Maybe use smaller chunks of spectrum? The auctions are just a competitive algorithm and they can become more accurate with finer resolution.

haltingproblem 6y ago
Governments gets 2x revenue from revenue sharing than from auctions so govts do lose. Your argument uses self-justification but there is a counter factual for which empirical data exists. Companies also lose as they have fixed liabilities on their balance sheet. If companies are hamstrung by debt then they do not have resources to invest in their network, subscribers suffer. Who exactly wins for this grand experiment in top-down auction design?
- hcknwscommenter 6y ago
  >Governments gets 2x revenue from revenue sharing than from auctions so govts do lose. Citation needed. >there is a counter factual for which empirical data exists And yet you provide none.
  - haltingproblem 6y ago
    Meta-ironic because it is in the article :)
    - creddit 6y ago
      But it’s not. There is a claim that this is true for India but N=1 is not very generalizable. It’s also not clear why we should believe that a rev-share model both brings in more gov revenue but also somehow prevents the TelCos from being overburdened. The source it linked to is paywalled.
      - toast0 6y ago
        It's rev-share vs pay upfront with financing right? A telco could never be overburdened by the rev-share in the same way as a upfront payment. If the rev share is too high so using the spectrum isn't economical, the telco could simply not build out (and probably lose their license, which is OK for them, it wasn't economical). If the prepaid price was too high, they still have to pay it from spectrum activities and other activities; but they probably can't sell the spectrum to retire the debt, because the price was too high.
        marcinzm 6y ago
        Isn't that incentivizing companies without much existing market share in the area to just bid high revenue shares? At best they get some money and at worst they close up shop thus coming back close to neutral. Maybe they even get to screw a competitor for a few years as they stall build out. Of course the population gets hurt if the latter happens since they get no infrastructure.
        toast0 6y ago
        You can adjust the auction terms to try to avoid bad outcomes. A) bid out smaller alocations to allow more networks B) require a deployment plan to bid, and progress on the plan to keep the allocation C) some equitable way to periodically rebid in absence of abandoned spectrum D) some sort of open access provisions (maybe spring this on the market after it's largely built out) Of course, some of that requires a competetent regulator with clear authority, as well as not too much corruption and reasonably swift court systems to handle disputes. But a point in time, single payment auction works better with those things too.
- colinmhayes 6y ago
  Revenue sharing should be implemented via auction. Otherwise how do we discover the efficient percentage to be shared? All of the problems you pointed out have little to do with auctions, which are just a way for markets to discover prices when supply is very limited, and everything to do with poorly implemented auctions.
Spooky23 6y ago
It's a loss because a big, capitalized winner takes all auction benefits a small number of entities with big pockets. As a society in the US, for example, we're burdened with 3 giant telcos controlling the most productive public airwaves. Plenty has been written about the negative affects of these types of arrangements with respect to 19th century railroads. Auctions happen at a point in time and leave alot of value on the table. Spectrum purchased in 1999 is worth much more today. If the government retained title to spectrum and allowed for smaller chunks, smaller players could participate and compete in the market -- look at how dial up ISPs in the 90s drove prices for internet from $40/mo in the early 90s to <$10 in 1999 or so. The mobile market is very different -- we pay more for a commodity that gets cheaper to deliver over time; AT&T wireless margins are >50% for a commodity service as a result of the limited competition.
- creddit 6y ago
  I think you may have misread what was written when you claim > It's a loss because a big, capitalized winner takes all auction benefits a small number of entities with big pockets. This is the exact opposite of what the parent poster was arguing against which was the claim that the TelCos had poor returns (ie they were NOT particularly beneficial to those entities).
bluedevil2k 6y ago
Spectrum is generally sold on 15Mhz blocks. 10 for download, 5 for upload.

KorematsuFred 6y ago

OP suggested markets work. HN folks downvoted without presenting arguments.

donavanm 6y ago

Its a statement, not an argument, as I read it. Theyre ignoring other confounding factors, the agency of both telecoms and policy makers, and basing the lose-lose-lose on a limited subset of auction markets. Additionally theres no other suggested mechanism besides a vague wave at “revenue sharing” where you have the same problem of determining what the appropriate rate is.