Google’s Wireless Auction Play

The Federal Communications Commission (FCC) is currently auctioning the rights to build a new wireless network. The current frontrunners in the bidding, which began on January 24th and will end soon, are AT&T and Verizon. Google was previously in contention, but withdrew after its bid of 4.7 billion was surpassed. While the bidding is kept anonymous, the FCC anounces the latest offers several times a day.

The auction has already raised a record 19.4 billion dollars; however, the efficiency of this method has still been brought into question. The FCC has blocked the licenses into various regions and implicated the rule that once a corporation bids for a license, it cannot bid for a larger license in later stages of the auction.  This has caused a lack of competition for some of the larger blocks and an abundance of competition for the smaller ones.  As a result the larger blocks are selling at rockbottom pices while some of the smaller blocks are grossly over priced.  It is estimated that if different rules the licenses could sell for billions more.

 This relates to our studies because  not only is Google (which we are currently studying) involve, but an auction is used to sell the licenses for the new wireless networks.  If no restrictions were placed on this auction then the FCC would undoubtedly make more revenue and social welfare would be increased.  Therefore, because this auction has a restriction it cannot be profit maximizing.