Slashdot Mirror
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."
"According to the OMB (Office of Management and Budget), the fees would generate $4.8 billion over the next 10 years."
So, that's (on average) 480 million dollars per year for all carriers in the US. Assuming there are 180 million active cell phones in the US (accurate as of 2005), this is $2.70 per phone per year, or 23 cents a month. I think the total of hidden (read: fake) subcharges added to my bill are well over 23 cents a month. In other words, this charge really isn't noteworthy.
I don't know the specifics, but my only concern is that it will prevent small carrier from entering the market.
It is not surprising that the carriers are paying so much for a license. People that have studied wireless technologies know that the wireless spectrum is arguably one of the most valuable resources on earth. There is simply not enough space in the spectrum for us to do everything that we want to do.
If you look at the FCC frequency allocations chart (warning: PDF), you'll notice how many different industries and applications that are trying to use the wireless spectrum. And this chart is deceiving because much of the spectrum isn't usable for modern applications. Lower frequencies don't provide enough bandwidth, and high frequencies require very rare materials for the electronic components, so they are too expensive for most purposes.
There has been an explosion in research for wireless communication over the last several years because the demand for more capabilities has increased. This has led to incredibly complex encoding schemes and manipulation of the physical radio waves, and is now leading into cognitive radio.
The sad part is that most of the usable spectrum, even though allocated, remains underutilized. I am a researcher studying the spectral usage in Chicago, and we have calculated that the most heavily used parts of the spectrum are still only occupied about 11% of the time. There are also many parts of the spectrum that have been allocated, but are only used in certain geographical locations. The big TV Whitespace movement promises to introduce technologies that can potentially help us better utilize unused parts of the spectrum where available.
Am I surprised that the cellphone carriers paid $20 billion for the license? No. The survival of their company depends on them being able to transmit wireless signals. Just like an airline has to pay fees at an airport in order to be able to land their planes. There is no other option.
Of course they're going to pass the fees on to customers. What else are they going to do, hold a bake sale?
Right.
I think it's a fine idea. the spectrum is public land. You rent it you don't give it away. This is a point that both conservatives and socialists totally agree upon. It's the bought off congressmen who were out to sell it.
There have been exceptions to this of course. When you want a resource exploited you do sell it. For example, getting railroads built wiht land grants. Or the 1872 mining law.
But now a century later the 1872 mining law seems like a huge mistake to continue. And yet that's pretty much exactly what the "drill now" folks want to do.
The secret is to lease it and price it right. It's not that hard to do.
Some drink at the fountain of knowledge. Others just gargle.
Maybe Obama is banking on them passing it on to the customers. It means more money into the economy through increased charges.
I certainly hope Obama's grand plan for the economy doesn't whittle down to a governmental implementation of the broken window fallacy.
Increased customer fees will hurt the economy, not help it. By increasing fees, it means more money going to the government not out into the economy where it might help smaller businesses from shutting down. It also means more people might cancel their service, or opt not to sign up in the first place, both of which hurt the cell providers.
They could just put th [CARRIER LOST]
Oh, the irony! :)
"What do you despise? By this are you truly known." --Princess Irulan, Manual of Muad'Dib
/)
No, spectrum is not "public land". It's just there. Next the government will ban the sun because it's infringing on the visible spectrum that it rented/sold/leased to someone else.
All you are renting/selling is a monopoly to use said spectrum. In fact, it's an active deprivation of others who could put that spectrum in within their private lands.
Now, I know the practical reality and the reasons for it. But it would seem to me when the government uses eminent domain of something, to grant someone a monopoly on said resource, it should be for the public good. The public good does not mean filling government coffers. This is the heart of the dispute of the Kelo decision, where local governments took it to heart that anything that bought them more tax money was for the "public good", and thus the logic that farmers could be deprived of their farms simply because a developer swooped in and his construction would bring in more property taxes. It used to mean land was taken for a road or utility.
The same thing is happening here: filling government coffers is equated with "for the public good." This is not the case, because America was built on the principle of limited Government, not more of it. Filling public coffers only supports bureacracies the same way the PA Turnpike (now being given I-80 even though that was built with Federal Funds, pushed by the crook Rendell) monopolizes it's route, and the only thing is does (given the crappy generally 2 lane roads) is become a bigger and bigger bureacracy. You should see the public administration building dedicated to this one highway.
Monopolizing a section bandwidth in exchange of free national wireless internet would be for the public good. Monopolizing a section of bandwidth in exchange for money grows this insatiable government, just makes the system the domain of the highest bidder, raises the costs to the end consumers, and is not for the public good.