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The podcast attached to the article talks about it in more depth.

by ProAm 6y ago

jsnell 6y ago
The transcript of the podcast is exactly what I was talking about. As far as I can tell it is pure human interest fluff, it does not explain how the auction worked nor how this hack worked (understandable, since it's probably impossible to describe to people who don't understand the auction). Here's the entirety of their explanation: > SMITH: We've been using this metaphor of a superhighway in the sky. And you know how whenever someone wants to build a superhighway in the real world, there's always some run-down farmhouse in the way that the government has to pay way too much money for? The private equity firms had essentially bought all these key farmhouses blocking the new spectrum highway. > ROMER: But the plan was not to stop the highway, to block the auction altogether. It was just to make it more expensive. Private equity and their consultants figured out which frequencies the FCC's computers valued the most, the frequencies you really needed to make the whole reorganization work. Once you had those, you could drive up the prices for all the TV stations, which private equity happened to own a lot of. What reorganization? That's the first time it was mentioned. Why are some frequencies more valuable? (Or alternatively, why is it surprising and non-obvious that some are more valuable). Why would owning stations at these specific frequencies allow you to drive up the other prices?
- ProAm 6y ago
  Let me see if I can find the podcast I listened to (or I can read this transcript) because it went into detail about the auction (the science behind it), how they knew about the flaws before but had spent too much time and money to not use it, it talked about how the private equity ultimately gamed it and made a bucketful of money. And ultimately how the public who owns the spectrum at the end of the day did not make any money off of it. I'll update here if I can find it. It was very interesting. Edit: you could probably also read the publications on two-sided simultaneous incentive auction and the associated nobel prize that was awarded for this.
  - jsnell 6y ago
    I think I got most of the answers I needed from the publication I linked above. The goal of the auction was to convert the same frequencies across the country, rather than end up with a patchwork. To make this possible, there were three basic possible outcomes for a TV station. 1. Get bought out at a price you are happy with. 2. Keep your frequency. 3. Have your frequency replaced with something equivalent (capable of teaching 99.5% of your current potential audience) With that last point being the key. Even if you happened to own a bit of frequency that was needed for mobile networks, it should not allow you to extract any extra money from the system since you'd just get another frequency slice instead. How do you game this? Obviously if you own all, or almost all, of the frequencies in one geography you can just set your own price, and the third option will not trigger since there is no equivalent frequency for them to swap you with. But that's just a run of the mill market cornering scenario, and the narrative was selling this as something a lot more interesting, so there is probably more to the story than that.

The podcast attached to the article talks about it in more depth.

by ProAm 6y ago

The podcast attached to the article talks about it in more depth.

The transcript of the podcast is exactly what I was talking about. As far as I can tell it is pure human interest fluff, it does not explain how the auction worked nor how this hack worked (understandable, since it's probably impossible to describe to people who don't understand the auction). Here's the entirety of their explanation: > SMITH: We've been using this metaphor of a superhighway in the sky. And you know how whenever someone wants to build a superhighway in the real world, there's always some run-down farmhouse in the way that the government has to pay way too much money for? The private equity firms had essentially bought all these key farmhouses blocking the new spectrum highway. > ROMER: But the plan was not to stop the highway, to block the auction altogether. It was just to make it more expensive. Private equity and their consultants figured out which frequencies the FCC's computers valued the most, the frequencies you really needed to make the whole reorganization work. Once you had those, you could drive up the prices for all the TV stations, which private equity happened to own a lot of. What reorganization? That's the first time it was mentioned. Why are some frequencies more valuable? (Or alternatively, why is it surprising and non-obvious that some are more valuable). Why would owning stations at these specific frequencies allow you to drive up the other prices?

ProAm 6y ago
Let me see if I can find the podcast I listened to (or I can read this transcript) because it went into detail about the auction (the science behind it), how they knew about the flaws before but had spent too much time and money to not use it, it talked about how the private equity ultimately gamed it and made a bucketful of money. And ultimately how the public who owns the spectrum at the end of the day did not make any money off of it. I'll update here if I can find it. It was very interesting. Edit: you could probably also read the publications on two-sided simultaneous incentive auction and the associated nobel prize that was awarded for this.
- jsnell 6y ago
  I think I got most of the answers I needed from the publication I linked above. The goal of the auction was to convert the same frequencies across the country, rather than end up with a patchwork. To make this possible, there were three basic possible outcomes for a TV station. 1. Get bought out at a price you are happy with. 2. Keep your frequency. 3. Have your frequency replaced with something equivalent (capable of teaching 99.5% of your current potential audience) With that last point being the key. Even if you happened to own a bit of frequency that was needed for mobile networks, it should not allow you to extract any extra money from the system since you'd just get another frequency slice instead. How do you game this? Obviously if you own all, or almost all, of the frequencies in one geography you can just set your own price, and the third option will not trigger since there is no equivalent frequency for them to swap you with. But that's just a run of the mill market cornering scenario, and the narrative was selling this as something a lot more interesting, so there is probably more to the story than that.