Originally published: August 20, 2012
Last updated: August 20, 2012 - 10:03pm
[Commentary] A growing "spectrum gap" between Verizon and AT&T and the rest of the wireless industry is hobbling competition and harming consumers.
The problem isn't any one transaction. The problem is that the majority of spectrum that becomes available ends up in the hands of AT&T or Verizon. AT&T and Verizon are able to out-bid any other potential buyer, not merely because they have so much money. Apple has much more money than either of those companies and does not buy spectrum. So does Exxon. Rather, AT&T and Verizon are willing to pay more for spectrum, and do more to get it, because spectrum is more valuable to them. First, they already have large networks, so due to economies of scale they can put new spectrum to work more cheaply than their competitors. This makes them more willing to pay for spectrum than any competitor that would have to spend a lot more to get a network off the ground. And, of course, it's worth good money for them to corner the market for a basic input their competitors need to operate--imagine if McDonald's was able to buy up all of the hamburger buns in the country, or it Microsoft was able to corner the market on ones and zeros. As a given carrier has more and more spectrum the "foreclosure value" of buying up spectrum goes up. But this is a problem.
If policymakers in the US want to protect consumers they need to promote wireless competition. And to do that, they need to adopt spectrum policies that put spectrum in the hands of the providers that need it most, not just the providers that can pay the most.
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