Mo' money, mo' internet

$41B auction shows net neutrality is no threat to investment

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

When President Obama called for net neutrality this month, AT&T said the sky would fall. It warned that a policy banning internet providers from giving special treatment to some websites over others would lead companies to stop investing in new network capacity. So much for that.

As of Tuesday morning, an airwave auction by the FCC is still going gangbusters as companies scramble for a series of spectrum licenses that will let them deliver more data and stream more video to consumer cellphones. While most people expected the bidding to exceed the $10 billion reserve price set by the agency, the FCC has already raked in more than triple that — bids have exceeded $36 billion, and the auction is still going. Companies like [company]T-Mobile[/company], [company]Dish[/company] and, yes, [company]AT&T[/company] are all participating in the bidding. (Update: at close, the auction raised over $41 billion).

Here’s a screenshot from the FCC’s auction website that shows Round 32 of the bidding, and the eye-popping figures at stake:

FCC auction screenshot

Meanwhile, the auction is proving to be a rare bipartisan hit in Washington: Democrats are glad that it will help build a new national emergency communication infrastructure, while Republicans are cheering that the rest of the proceeds — more than $20 billion — will be used to pay down the national debt.

All of this is occurring despite the fact that the airwaves in question could and (in Gigaom’s view) should be subject to so-called Title II regulation, a type of net neutrality that would ban companies from providing fast lanes for some websites, while slowing down others.

In other words, contrary to AT&T’s warning that the specter of Title II would chill investment, what we’re seeing instead is wireless companies — who have long fought net neutrality tooth and nail — falling over themselves to buy up resources that will let them offer consumers more internet.

To be fair to AT&T, its comments were about the company’s plans for a home fiber network, and not about the airwave auction. But that doesn’t change the fact that net neutrality, in this case, has proved no deterrent to investment.

What’s more, the auction process shows again how competition is important to expanding the country’s internet capacity — a lesson that will not be lost of FCC Chairman Tom Wheeler, who is currently mulling another crucial internet policy decision, in the form of a proposed merger between broadband giants [company]Comcast[/company] and [company]Time Warner Cable[/company].

7 Responses to “$41B auction shows net neutrality is no threat to investment”

  1. Telephone calls over the mobile network are already regulated under Title II, and always have been. The “to be fair” part of this article is the only truthful sentence in it.

    Bidders are betting that the toxic effects of Title II (which doesn’t actually ban fast lanes) can be mitigated. Business people have to make hard choices like this all the time.

  2. This auction is for wireless, which has all the things we on the net neutrality side hate.

    They cap out data, make us pay for extra data, do prioritization of data, they have “fast lanes” for companies who pay extra, etc. I think this auction proves just the opposite of your points.

    • Thanks for the comment, kl, but I disagree: while wireless has so far been exempt from NN rules, Wheeler’s been pretty clear that he no longer wishes to treat this as a separate, exempt category. The people diving into the auction did so under the very real possibility that the spectrum they’re buying will be subject to Title II.

      • Despite all the voices shilling for their big content providers, people in the industry know that logic will prevail. The Internet is one giant success story for decentralized control and innovation. They won’t bust it.

        • And with ‘fast lanes’, blocking traffic and websites or ‘slowing’ down traffic by ISP (to be more precise: Consumer Internet access providers) is moving away from decentralized control and innovation.
          Moreover, the concept of ‘fast lanes’ are based on wrong assumptions on how broadband actually works (at the physical layer (see Ofcom Infrastructure report 2014: broadband quality of experience suggests that broadband performance
          is influenced by a much wider set of issues than simply the speed of the access
          network. )