Spectrum Fees May Preclude US Low-Cost Cellular 246
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."
Cirtics say... (Score:3, Interesting)
> 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.
Re:Do the math... (Score:5, Interesting)
> 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.
Re:Georgism 101 (Score:3, Interesting)
> 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.
These are TV frequencies (Score:1, Interesting)
Remember that these are analog TV frequencies, which the Obama administration has now kept from the cellular use longer than promised. The purchasers are not being allowed to use their new equipment when scheduled.
And Obama's adviser who promoted the delay is involved with several wireless companies who are already offering services similar to what the competitors will offer on 700MHz. Obama's advisor profits from the delay. Tsk.
Re:Simply pass the fees? (Score:1, Interesting)
I work for a small business owner who's cheering Obama on. He wants gubermint paying for his kids college. He wants 'free' healthcare. He wants this stuff so bad that he is willing to accept whatever 'hidden' taxes appear; he won't have a word of complaint about those.
This country has crossed a threshold; there are enough voters that either currently depend or are are willing to become dependent on government that no other position politically viable. You either buy your voters or you don't get elected.
So, keep your criticism anonymous and steal what you can. Everyone else is.
Re:Do the math... (Score:3, Interesting)
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.
Re:Stimulate economy? (Score:2, Interesting)
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.
Re:Stimulate economy? (Score:1, Interesting)
No, spectrum is not "public land". It's just there.
A while back, a local news magazine printed an essay by some kid who argued that capitalism was good because it rewarded people according to how much they worked. I was like, "Wow, this kid really doesn't understand the basic theory of capitalism."
Capitalism is based on the idea that production is facilitated by "capital" (e.g. machines in a factory)). Further, the owner of the capital owns (a part of) what is produced through the use of the capital.
Under capitalism, if you are lucky enough to own capital (e.g. you inherited it from your parents), you sit around and do nothing all day and still "earn" all kinds of money. That's not an unintended consequence of capitalism - that's how capitalism is supposed to work.
There are some things like ideas where use is not inherently exclusive - everyone can benefit from the design of an electric motor simultaneously. There are other things, like land and the wireless spectrum, where use is inherently exclusive - we can't all build a house on the same plot of land and we can't all use the same wireless frequency at the same time.
The inherent properties of these resources are such that someone benefits from the use of these resources and someone else doesn't (specifically, is not allowed to by the government).
It doesn't seem inherently unfair to me that since the government is not allowing me to use the wireless spectrum for my own benefit that those who are using it (e.g. people with cell phones) should compensate me for the restrictions that have been placed on me for their benefit.
I suppose that in the ideal world all government programs (the military, social security, etc.) would be funded entirely by private donations. I would develop a great deal of respect for the Republicans if they took the lead on this and proposed that, from now on, the military will only spend what it collects in private donations - it will no longer be a burden on unwilling taxpayers.
If this happened and the government was entirely funded by private donations then the government could rent out the spectrum and give me the money directly. Until that time, the government has racked up huge debts on my behalf and the honorable thing to do seems to be for the government to use the rent to pay off the debts before giving me the rent directly to spend on myself.