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Craig Mathias has a couple of interesting articles in Computer World, explaining the FCC's auction process. Spectrum, auctions and you: Part 1 and Spectrum, auctions and you: Part 2:
I had a long discussion on just this point with an economist from the Federal Communications Commission during the PCS auctions about 10 years ago. He felt, as any good economist would, that the burden of the auctions falls equally on the bidders, and thus should have no ultimate effect on prices, which are set by competition and not by costs.
 But he didn’t seem to take into account that the industry would ultimately consolidate for reasons of marketing, branding and operating economies of scale, reducing the number of players and thus allowing higher prices to prevail and reducing the effects of competition.
And that’s what we’re seeing today. The average monthly cellular bill in the U.S. is around $50, based on a variety of market research reports. How much lower these bills might be if the carriers didn’t pay for spectrum is anyone’s guess.
As an aside, I might also argue that the U.S. government has no right to auction the airwaves, based on the ninth and 10th amendments to the U.S. Constitution. But I’m no constitutional scholar or a lawyer, although I was originally a political science major before switching to technology.
The AWS auction covers two bands, 1,710 to 1,755 MHz and 2,110 to 2,155-MHz, with six blocks of frequencies (a block consists of a pair of frequencies, one from each band) and a total of 1,122 licenses across the country.
Most of the controversy in the latest auctions has been over "designated entities" (DE), which allow set-asides for certain classes of bidders, most notably small businesses and businesses owned by minorities and women.
One company is proposing this for a band of AWS frequencies not part of the current auctions. Menlo Park, Calif.-based M2Z Networks Inc. has reportedly proposed that it receive exclusive access to the 2,155-to-2,175-MHz band in exchange for a 5% annual royalty on sales (See "Start-up seeks spectrum for free U.S. network" ).
It’s unclear why M2Z feels it is qualified for this special treatment other than it was founded by John Muleta, who formerly headed the FCC’s wireless bureau.
 One could argue, it's not fair that radio and television broadcasters get everything from 54 MHz to 700 MHz -- FREE! Why? Public service provisions.
Oh, please.
 Most group owners squeeze 40-50% profit margins out of our airwaves and contribute very little public service. That was not always the case. But today we are media saturated - cable, satellite, cell, internet - but broadcasters still get special treatment. It's unfair competition. It's so 1950s, it's funny.
The FCC provided unlicensed (free) use of 85 MHz in the 2.4GHz band -- only because they thought it was "junk". And look what happened.
Why not open up the 2155-2170 (AWS) band for "free", national broadband wireless services?
 There might be 2-3 bidders for each region. The rules would be adopted from M2Z; "free" service for everyone (at restricted speeds) and premium service for anyone who wanted to pay $20-$40/month. The Treasury gets 5% off the top.
Making the United States a leader in broadband should be the FCC's top priority, not providing AT&T with 3G spectrum.
The FCC should provide a level playing field. One that's competitive. One that pays dividends to The Treasury, to the American people, and to the future of the country.
Just like it did with WiFi.
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