Just a few weeks ago T-Mobile CEO John Legere in a blog he’d written publically voiced his concern in regards to how the FCC (The Federal Communications Commission) conducts it’s multi billion dollar auction of the now very limited wireless spectrum.Just at the close of 2014 the 13th of November the FCC kicked off the bidding for the AWS-3 wireless spectrum and raised a massive $44.8 billion in 341 rounds of bidding which finally ended in January. John Legere has condemned the practice of the FCC and the bidding which seems to unfairly favour the market monopoly leaders AT&T and Verizon. The FCC also allows non wireless companies to simply buy out a spectrum only to squat on it so nobody else can buy it from under them. This kind of immoral practice raises the price of the already limited available spectrum which the networks like T-Mobile have to pay to operate upon.
The important thing to take note about the situation is how it will effect the consumer. With the rise of the smartphone and the continued advancement and premium expense of manufacturing phone cost you’d assume the manufacturers would carry the burden and cost of building a more expensive powerful handset. It’s true, they do, yet they won’t be losing a penny. The manufacturer sells the handset off at a profit in truckloads to the networks. The network itself keeps your phone connected to the wireless spectrum. If the network is forced into paying a high price for its wireless spectrum they will have to recouporate the cost via hiking up the consumers line rental and call charges in order to make a profit and balance costs. Whatsoever happens in America will also have its knock on effect for us over here in the UK
Likewise back on home ground in the UK in October 2013 the government proposed hiking the price of the wireless licensing spectrum by an extra £245 million per year, complaints from inside the industry brought this figure down to £185 million in August 2014 and now recently this figure has dropped again to £159 million per year divided amongst all the networks. In a nutshell and depending on market share this means that EE (with the most spectrum band coverage) will have to pay £75.6 million per year in licencing fees Vodafone and o2 will both have to pay £61.2 million per year and Three £25.2 million as it currently stands today, this week.
A spokesman from EE voiced the networks dissapointment at Ofcom’s hike in spectrum licencing this week saying that EE were ‘disappointed’ and that the raise in licencing fee is likely to effect the networks future investments. For us here in the UK this could be a good thing, EE have already monopolised coverage of the UK and increasing the spectrum licencing fee may stop them from buying more up. Yet again it could be a double edged sword and like our American cousins the consumer will have to pay and bare the burden of rising cost as the networks compete to work and squeeze a pretty penny!