As television broadcasters move to digital transmission systems, mandated by Congress through legislation signed into law on February 8, 2006 (known as the Digital Television Transition and Public Safety Act), frequency space that was previously used for television signals will be made available for other purposes. Analog broadcasters will have to stop transmitting their legacy signals by February 17, 2009. In addition to broadcasters, who are required to upgrade their infrastructure to meet these requirements, consumers will also be affected by this change. According to the site DTV Facts, approximately 60 percent of the consumers who are cable subscribers are paying for analog service, and will have to upgrade to digital at their own expense. The intent of this legislation, at least partially, is to make more efficient use of the frequency spectrum and make space for additional wireless broadband services. This will occur in the 700 MHz band, previously used by UHF channels 52 through 69. This frequency space is especially attractive due to its propagation characteristics, in that it has the ability to travel through buildings as well as poor weather.
As discussed in class, Google utilizes an auction method to price the ads it places with the search results it provides (AdWords). Google also uses auctions for other purposes. For example, according to an article on Engadget (see link below), Google decided to participate in an FCC auction for the 700 MHz band mentioned previously. Interestingly, the FCC uses a Simultaneous Multiple-Round (SMR) auction in which licenses for the frequency space are made available. The auctions are composed of individual rounds, between which participants may evaluate their strategy and adjust accordingly. Also, during the time between rounds, the results of the previous round are made public and bidders are made aware of the bids of other participants. This allows participants to determine who places the highest value on the licenses, and increases the probability that the licenses will go to those who place the highest value on them. The bidding continues in this fashion, through multiple rounds, until all bidding activity stops. Although not specifically stated, the information provided on the FCC website infers that the winning bidder will have the highest bid, and will pay that price. Google has not state specifically how they would utilize these frequencies, but in a press release, encouraged the FCC to utilize practices that serve customer interests, regardless of the auction winner. According to a recent Information Week article, $19.6 billion has already been bid for the 700 MHz band, and bidding is expected to conclude by next week. Ericsson has developed chips to be used in broadband devices that would utilize this band, and is likely to be one of the strong contenders in the auction process.
Sources:
* You can follow any responses to this entry through the RSS 2.0 feed.