In On Going Smart Phone Battle, Government Holds Most Important Card

The smart phone battle is heating up in preparation for a major marketing blitz from four companies as they see who can outsell each other with their new smart phones.  According to uSwitch.com, “In recent weeks we’ve seen endless gossip about the iPhone 5S and budget iPhone 5C. On top of that, there’s also been plenty of speculation around HTC’s One Max phablet, Samsung’s Galaxy Note 3 and the now-official Moto X.  The next few weeks should see rumours about all these devices reach fever pitch, culminating in their launch either at Berlin’s IFA trade show, which starts on September 6th, or, in Apple’s case, at a special event later in the month.”  What many consumers may not realize is that even if they buy the most advanced (and cool) smartphone, the government, specifically the Federal Communications Commission (FCC), holds the trump card, wireless spectrum, in being able to enjoy the smart phone to its best ability.

The Taxpayers Protection Alliance (TPA) has been a key advocate of allowing the release of as much government held spectrum as is possible without endangering any abilities of the federal, state, and local agencies to their job. Currently, it is estimated that the amount of spectrum the government has is nearly 60% of what is available and this is something that has been the subject of Congressional inquiries over the last several months. The sale of this spectrum could bring in $20 billion.

A transfer of spectrum licenses will actually lead to increased competition and open doors to allow more players to enter game.  This in turn means customers’ needs are better met because consumers have the freedom to choose a company that best satisfies their needs. As anyone who has taken Econ 101 knows, when companies are forced to compete with each other in order to secure business, the consumer wins by enjoying the best service at the best price.  There’s good reason to understand that these same principles will apply to the spectrum transfer the FCC is currently considering.  As previous spectrum transfers and auctions have demonstrated, the resulting increase in competition in the mobile market provides consumers with a greater number of choices in wireless providers and expands access to affordable mobile services.

The issue of what will happen is not only up in the air with government held spectrum, but there is also some uncertainty as to exactly what will be happening when the latest incentive auctioning of spectrum takes place for the 600MHz band (used primarily for TV, Radio and Mobile Broadband). The Department of Justice has recommended to the Federal Communications Commission that they “ensure that the allocation of spectrum at auction does not enable carriers with high market shares to foreclose smaller carriers from improving their customers’ coverage.”

However, critics have said that the DOJ’s recommendations don’t match the facts and not only in this specific case but other recent proceedings as well and that the department had been “inconsistent” with their findings in their ex-parte communication to the FCC. TPA joined with other concerned groups who have been critical of the DOJ and continue to advocate for the increased sales of wireless spectrum. Incoming FCC Chair Tom Wheeler has yet to be confirmed but his nomination did clear a Senate committee last week and this issue has been something he has been pressed about by members who share the same concerns as TPA and other free-market oriented groups.

Many things in life are certain, and in this case we can be sure of a few. The battle for market share among smart phone companies will continue and wireless spectrum will continue to be an important component of what drives the market for consumers and businesses in the smartphone business.  It is clear that the FCC needs to sell more spectrum to the private sector so consumers can enjoy the full potential of their new gadgets.