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Spectrum Fees May Preclude US Low-Cost Cellular
theodp writes "Not to apologize for an industry that charges $27,000 to catch a Chicago Bears game, but will the huge spectrum fees charged by the government block the emergence of low-cost cellular service? In the most recent FCC spectrum auction, carriers paid nearly $20 billion to grab a swath of the 700MHz spectrum. And now under President Obama's proposed budget, wireless carriers would be hit with huge annual fees — eventually reaching $550 million per carrier per year — for the right to hold a spectrum license. Critics say the carriers will simply pass these fees through to consumers."
> Critics say the carriers will simply pass these fees through to consumers."
Not only critics say that, anyone who has ever run a business will tell you that ALL costs are passed on to the customers in one way or another.
The only difference here, is that the carriers may be able to write these fees off of their taxes,
which is just that much less tax revenue, making the government's share zilch.
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> In an efficient business, service would be almost free after 12 months.
Perhaps in something like water or sewer where nothing changes.
But would you be happy with the cell phone service and coverage you had in the past? We demand new technology, better connections, faster data, unlimited calling, etc, etc, etc.
It seems the industry is in a constant state of rolling out new services.
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> Carriers cannot pass on ad valorem taxes like this
On what do you base that?
They pass on the cost of their own regulation, you can be sure they will pass this tax on to their customers.
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Actually, one reason I *don't* have a cellphone is because rather than basic service getting cheap, they keep adding useless shit (at least to me). Give me a $5/month phone (so it's competitive with the poverty rate) that's *nothing but a phone* and I'd be happy.
~REZ~ #43301. Who'd fake being me anyway?
But, if you auction it off, with the proceeds going to government, the price will have to be in line with what companies think they can afford. The market makes a balance between maximizing service income versus spectrum price.
Thereby enabling both low-cost cell service and some amount of income to govt while not forcing the prices up more than people find reasonable.
By contrast, Obama's new tax on the poor does not accept any feedback from the market. The companies have no choice.
In addition, it will provide a $550 million per year per spectrum stimulus to government to prohibit "general use" spectrum. So say bye-bye to UWB and maybe even to some wireless spectra.