Consumers — The Biggest Loser from Government-Induced Spectrum Shortages

Over the course of our lifetimes, we’ve witnessed an incredible surge in technological innovation.  We have televisions as thin as a dime store novel, computers that weigh under two pounds and communication devices (cell phones, to the lay person) that would make the crew of the USS Enterprise jealous.  One constant in these examples has been a relatively hands-free approach from any regulatory body.  Innovators were free to create without having to jump through many hoops or get approval from a panel of academics.

We’re at the precipice of a new technological surge.  By 2016, 1 billion people will own a smartphone.  These technological marvels can check out webpages, give you a map of your location, check movie times, give you the weather, and even track your heartbeat.  Smartphones are nearly useless, however, without wireless broadband.  As the spectrum crunch gets worse, so will service and our ability to use our smartphones more effectively.  For the past several years, the government has had a lot to say about how the wireless broadband companies operate.  Internet providers and wireless broadband companies saw government come in and regulate how they would provide services to their customers.  Just last year, AT&T saw its merger with T-Mobile blocked by the FCC over anti-trust concerns.  This blocked merger has arguably resulted in higher prices and less investment into wireless broadband infrastructure, and combined with the fast approaching spectrum crunch, is ensuring that customers will get less coverage and slower Internet than if the merger had taken place.  Instead of hiring as AT&T promised, T-Mobile is laying off employees.

Net neutrality is another issue where the government decided that consumers can’t decide for themselves on their Internet service.  It’s estimated that net neutrality regulations could cause the loss of over 500,000 jobs and prevented Internet providers from investing millions into their infrastructure, something that’s desperately needed if we’re to meet the goals of President Obama’s National Broadband Plan.

Now, the government is stepping in to regulate the sale of much needed spectrum from a group of cable operators to a wireless Internet provider.  Verizon is attempting to purchase $3.9 billion worth of spectrum from cable operators, which would give it room to roll out its LTE network, which promises to increase wireless broadband speed and better service to its customers.  The FCC is investigating the purchase and may throw up some regulatory roadblocks that could scuttle the deal or increase its costs for consumers.

When government regulates industry, consumers are hit hardest.  Businesses can’t innovate, innovators can’t produce, and consumers don’t get the products that they demand.  Consumers lose because they’re left with poor choices and shoddy services.  When facing shortages, consumers will always pay more for goods and services, and facing government-induced spectrum shortages will be no different for wireless services.  That is what we have to look forward to – higher prices.  Ironically, higher prices may justify further government intervention.

As we move forward into the future, government could learn a thing or two from the hands-off business environment that brought us the technological boom we’re enjoying.

Zack Christenson writes on digital tech issues for the American Consumer Institute

 

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