cellphone

Last year, a new company called Lightsquared promised an innovative business model that would dramatically lower cell phone costs and improve the quality of service, threatening the incumbent phone operators like AT&T and Verizon.  Lightsquared used a new technology involving satellites and spectrum, and was a textbook example of how markets can benefit the public through competition.  The phone industry swung into motion, not by offering better products and services, but by going to Washington to ensure that its new competitor could be killed by its political friends.  And sure enough, through three Congressmen that AT&T and Verizon had funded (Fred Upton (R-MI), Greg Walden (R-OR), and Cliff Stearns (R-FL)), Congress began demanding an investigation into this new company.  Pretty soon, the Federal Communications Commission got into the game, revoking a critical waiver that had allowed it to proceed with its business plan.

And so Americans continue to have a small number of expensive, poor quality cell phone providers.  And how much does this cost you?  Take your phone bill, and cut it by 80%.  That’s how much you should be paying.  You see, according to the Organization for Economic Cooperation and Development, people in Sweden, the Netherlands, and Finland pay on average less than $130 a year for cell phone service.  Americans pay $635.85 a year.  That $500 a year difference, from most consumers with a cell phone, goes straight to AT&T and Verizon (and to a much lesser extent Sprint and T-Mobile).  It’s the cost of corruption.  It’s also, from the perspective of these companies, the return on their campaign contributions and lobbying expenditures.  Every penny they spend in DC and in state capitols ensures that you pay high bills, to them.

This isn’t obvious, because much of how they do this has to do with the structure of the industry.  Telecommunications isn’t like selling apples, where you have a lot of buyers and sellers.  In a business like buying or selling apples, all you need is an apple tree to get into the business.  Cell phones aren’t like that.  It’s a business where you sell services on top of a network of cell phone towers that can transmit phone calls and data, and these networks cost tens of billions of dollars to build.  But even if you have the money to build one, you still might not be able to, as the Lightsquared example shows.  These networks all use public airwaves, or “spectrum”, and you need government permission to use it.  Remember the electromagnetic spectrum you learned about in school?  The government literally leases that out to companies, and they make radios, microphones, wifi routers, and cell phones that use it.

This has implications for your cell phone bill.  Once AT&T or Verizon has paid for its network and licensed spectrum from the government, the cost of adding an additional customer is very low.  That means that the biggest providers with bigger networks and more licensed spectrum make more money.  It’s not only that their costs are lower, but also because they can keep other players out through control of the political system.  That is, they can move towards monopoly in the industry.  And monopoly means higher prices for you, and more profits for them.  Here’s the data.

Verizon and AT&T’s Average Revenue Per User (ARPU) are substantially higher than any other national carrier’s. Verizon’s wireless profit margins (EBITDA) are substantially higher than all other carriers except AT&T.  And Verizon and AT&T together control four-fifths of the entire wireless industry profits, the only two major carriers to control double-digit shares of the industry’s total profits.  Over the past 3 years Verizon and AT&T’s share of total industry profits has steadily increased while everyone else’s declined.

This of course doesn’t mean that these companies are investing more in their networks, for better service for you and me.  In case you haven’t noticed, cell phone coverage is still really bad, and calls drop routinely.  The chart below can explain why.  The data is from the CTIA, or the Wireless Association, and it shows the effect of industry consolidation.

Basically, what this chart shows is that in the 1990s, cell phone companies bought up other cell phone companies, and Congress and the FCC were happy to go along because of the power of industry lobbying.  Once these companies had an effective cartel, their amount of investment dropped.  If you didn’t like your cell phone company, you couldn’t really switch, because the other big cell phone company was just as bad.  In 1997, the industry was putting 50 cents of every dollar of revenue into investing in more cell phone towers.  By 2009, that number dropped 12.5 cents of every dollar.  CTIA has made it much harder to find this data since 2004, but it is obscure filing comments at the FCC.  Pretty soon, we should expect the public not to even be able to track why our cell phone’s usage is so bad.

To reduce prices in such a system, you need either competition in the form of more networks (with the same or different technology) or price regulation.  The Federal Communications Commission has neither forced more competition, nor has it restricted price gouging.  In fact, by doing things like killing Lightsquared, it has ensured high prices for all of us.  Furthermore, the FCC has allowed a small number of big players like AT&T and Verizon to buy up much of the public airwaves (or “spectrum”) available for cell phone use, just to keep out competitors.  It tends to allow big mega-mergers to go through (with the exception of the recent T-Mobile and AT&T merger).  Meanwhile, Congress is trying to tie the hands of the FCC on making more spectrum available for anyone to use, and broadcasters are also throwing their lobbying into the ring, because they want to be able to control more spectrum to transmit television signals.

Why does the FCC and why does Congress want us to have high cell phone costs?  Well, they don’t, not really.  It’s more accurate to say they don’t particularly care about our problems, but are responding to an entirely different problem that is completely unrelated to cell phones.  The government is responding to the need for campaign contributions for politicians.

Politicians need huge sums of money to run for office.  Just a regular Congressman (and remember, there are 435 of these) needs $2 million on average to win reelection – which is about $20,000 per week he’s in office.  He needs this money to buy TV ads.  Unlike in other countries, where political parties get free TV time or public money to pay for elections, American politicians get this money from private interests.  Some of the biggest donors, in fact the single biggest donor, is AT&T, with Verizon in the top 100.  These politicians lobby regulatory agencies like the Federal Communications Commission to make sure these companies can do what they want, and politicians make sure that phone companies get to buy up other phone companies, eventually creating a near monopoly situation.  And we all know that monopolies charge more and deliver less to their customers.  As telecom legal expert Marvin Ammori said, “It’s proven cheaper to buy politicians than invest in high speed broadband or to provide good customer service at a fair price. ”

In other words, we are stuck with big bad cell phone companies not because those companies are good at providing cell phone service (which anyone with a dropped cell phone call knows), but because they are good at corrupting markets through political donations.  AT&T has the single biggest donor group (known as a “Political Action Committee”) in Washington, DC.

Again, that’s on average $500 a year, $40 a month, or $1.50 a day, from you, straight into the pockets of Verizon and AT&T.

Filed under: Lobbying

Add a comment
  • Pingback: Corruption Responsible for 80% of Your Cell Phone Bill | Cell Mobile Guide

  • Fareed Ansari

    Simple, Boycott AT&T and Verizon.

    • http://crissa.twu.net/ Crissa

      A boycott would mean not using a phone. At all.

  • http://www.facebook.com/profile.php?id=1096206214 Aidan Skillings

    Ahhh, but you see my good, logical sir. People will never boycott, ever. And keep in mind that due to outsourcing jobs to other countries, it’s impossible to boycott a company without sacrificing an already low quality of life for a huge number of people. It’s a very complex problem, and very difficult to solve. On the other hand: why let it get worse?

  • Pingback: Your Questions About Iphone And Verizon Email — iPhone and Verizon...together at last

  • Pingback: Corruption Responsible for 80% of Your Cell Phone Bill | Cell Phone LA

  • http://www.facebook.com/AmberSteeleMFA Amber Steele

    Who is going to start a petition? http://signon.org/create_start.html?source=homepage

  • Pingback: Daily Digest for April 10: The Fat Cats Weigh In » New Deal 2.0

  • chuck wegrzyn

    Until now I thought your reporting was alright though I did see a particular bias. But in this instance you are way off the mark and it smells like you have a strong bias. The reason Lightsquared didn’t work was because their ground transmitting units interfered with GPS. While it is true they stayed within the band allowed, and the problem was with the GPS receivers the fact is that physics was what caused the problem.

    When it comes to technology you should get the straight poop and stop trying to make every cause a political one. This was just wrong!

    • http://www.facebook.com/profile.php?id=1781005802 Virginia Burnside
    • http://larry.garfield.myopenid.com/ Larry Garfield

      I am not familiar with the technical details of this particular instance. However, presented with “FCC shuts down a startup that *could* challenge the incumbent cartel” and “btw, those incumbents also donate a fortune to political campaigns, especially of those politicans that were calling for the FCC to shut down the upstart”, it’s not unreasonable to see a connection. True, correlation does not equal causality… but a new one of these stories comes out every single day. It’s implausible that the strong correlation is entirely coincidental.

      Can you say with confidence that Verizon donating to the campaigns of three politicians who then pressured the FCC to investigate a company that was a threat to Verizon is coincidental? That there is no connection there at all? I’m quite sure you cannot.

      • http://profiles.google.com/johnthacker John Thacker

        Sure, but LightSquared also bought spectrum that wasn’t allocated for their intended use, got the FCC to change its classification, and had to get a waiver, as noted in the article. LightSquared itself donated plenty of money to politicians (mostly Democratic, since the FCC is Executive Branch) in order to get those changes. Is that coincidental?

        Can you say with confidence that LightSquared donating to the campaigns of politicians who then pressured the FCC to approve LightSquared’s waivers and reclassification of spectrum is coincidental? That there is no connection there at all? I’m quite sure you cannot either.

        There’s money on both sides of this issue. Perhaps LightSquared’s idea of buying spectrum currently allocated to a different use and getting the FCC to reallocate it was a good idea, or perhaps the GPS interference was too much of a problem. But you certainly can’t claim that money and political pressure was only one side.

        • darms

          Much as I’d like to believe in cartels this time there is a legitimate with GPS getting fouled up via LightSquared’s broadcast spectra. Read this – http://spectrum.ieee.org/telecom/wireless/lightsquareds-gpsinterference-controversy-comes-to-a-boil
          Somewhere a while back I read that earlier GPS had analog RF sections that couldn’t discriminate as tightly against out-of-band signals as digital RF frontends in current GPS units.

          • darms

            make that “legitimate issue with”…

        • CatKinNY

          Here’s one thing I can say with confidence: Americans pay 80% more for their inferior cell phone service than do their European counterparts (despite all those high taxes that inflate the cost of everything over there); how do they do it? Competition! Monopolies are illegal here, but over the course of the last 30 years or so, we have seen government aquiesense to defacto monopolies in many industries, and telecom and media have been the worst; they do it through campaign contributions and lobbying, and it’s bipartisan, but not evenly so. Both parties are corrupt, but the Dems are only up to their waists in slime; the GOP drowned a long time ago.

        • http://openid.anonymity.com/ Harry J

          Lightsquared was a wireless start-up which was technical, got its spectrum license approved by the FCC. Then Coalition To Save Our GPS (a protest group started by the makers of GPS) came into existence. This Coalition To Save Our GPS used political muscle by basically lobbying (glorifying word for bribing) 3 US Congressmen and ensured that FCC revokes the critical waiver granted to Lightsquared in Jan 2012. From cnet.com, “LightSquared may have had a great case for building its wireless network, but the fledgling company lacked the political tact to see it through.” This says it all. Furthermore from cnet.com

          — “The opportunities that came from a brand new network, however, were overshadowed by the concerns brought up by the GPS industry. While most GPS equipment was shielded against interference, critical ones such as farming equipment, some aviation GPS equipment, and GPS devices used by the government were affected.

          But it’s the GPS equipment that bleeds into LightSquared’s proposed network, and not the other way around. LightSquared paid for this spectrum and had a legal right to use it, but were stopped by these interference concerns. The GPS industry actually had years to patch up its equipment to avoid these issues, but largely chose to ignore it. The company let its opposition, in the form of the well-named Coalition To Save Our GPS, dictate the terms of the argument.

          The FCC can’t go blameless in LightSquared losing its waiver. And it’s also getting its share of criticism.
          “LightSquared is the FCC’s biggest debacle since the C-Block PCS auctions of 1996,” said Walter Piecyk, an analyst at BTIG Research. “Both of these train wrecks were a result of the government’s failed attempt to inject a new competitor into the wireless market.”

          The FCC badly wanted a competitor to the major wireless providers and granted a waiver on this spectrum, which had been reserved for satellite equipment. The waiver allowed any equipment using LightSquared’s spectrum to forgo satellite capabilities, which would have allowed for more cost-effective connected devices.

          In rushing to grant the waiver, the FCC never really cleared the interference issue with the GPS industry. Instead, it told GPS manufacturers to add filters that would have shielded their equipment from the planned wireless network. While most commercial businesses complied, a minority didn’t follow the FCC’s directions. That includes government entities which don’t fall under the FCC’s jurisdiction.” —

          John, the fault lies in a minority of the GPS makers and users who refused or were too damn lazy to install shield into their equipments. Basically lack of shielding and political lobbying (glorified word for bribing) cost the US public ver dearly and we all are paying for it and will continue to pay unless a miracle happens.

          • http://www.facebook.com/people/Steve-Noskowicz/100001635271085 Steve Noskowicz

            Harry,
            . I respectfully submit that unfortunately, you do not have correct facts and summarize some things that you, and many others are unaware of. You have some of the words, but not the full understanding to this issue.
            While I’d like to see a better national broadband system, the LightSquared approach was not viable. It was not politics that killed this, but simple physics and intelligent spectrum planning. Guard bands are allocated for a purpose and waivers cannot change physics. The GPS industry, NTIA, Military, Airlines and many others knowledgeable users of GPS and spectrum planning knew that this was an ill conceived idea that shouldn’t have made it past the stage of “Hey! I have an idea … no wait. Never mind.”

            On the other hand, it certainly appeared that politics got the waiver in the first place since any RF Engineer can tell you that the LightSquared system was technically unfeasible and the FCC demonstrated that it was once again clueless about it’s primary responsibility of being the guardian of the spectrum (BPL was the previous example).

            > … This Coalition To Save Our GPS used political muscle by basically lobbying (glorifying word for bribing) 3 US Congressmen and ensured that FCC revokes the critical waiver granted to Lightsquared in Jan 2012.

            It was simple physics, not lobbying. Tests showed what was already known, that the amount of interference would be unacceptible.

            > From cnet.com, “LightSquared may have had a great case.

            If Satellite based most likely, but the mid stream switch to land based transmitters violated the basic physics of spectrum planning.

            > While most GPS equipment was shielded against interference, critical ones such as farming equipment, some aviation GPS equipment, and GPS devices used by the government were affected.

            This is simply not true. Shielding has nothing to do with the high expense of power in satellites and the need for sensitive GPS receivers that is the basis for spectrum planning. If filters (and it is filtering NOT shielding) have to be added, then the power needed in the satellites has to be increased = $$.

            > But it’s the GPS equipment that bleeds into LightSquared’s proposed network,

            Again, false. GPS is low power satellites that require sensitive receivers on the ground and there is no ‘bleed over’. The Bleed Over would be from the LightSquares high powered land based transmitters…pretty simple when you understand the physics.

            > LightSquared paid for this spectrum and had a legal right to use it,

            For satellites, not high power land based transmitters in violation of good spectrum planning standards.

            > The GPS industry actually had years to patch up its equipment to avoid these issues,

            Not true. The satellite bands have been in existence and the planning of adjacent spectrum has been done from the start of organized radio spectrum use. It is simply good design/engineering to design-in guard bands. All major radio stations have guard bands. See if you can violate those.

            > The FCC can’t go blameless in LightSquared losing its waiver.

            Of course, for granting an un workable waiver in the first place.

            > The FCC badly wanted a competitor to the major wireless providers and granted a waiver on this spectrum, which had been reserved for satellite equipment.

            There it is right there. It is reserved for satellite equipment due to intelligent spectrum planning.

            > The waiver allowed any equipment using LightSquared’s spectrum to forgo satellite capabilities, which would have allowed for more cost-effective connected devices.

            “any equipment” and “Forgo satellite capabilities” says it all = trying to violate laws of physics. You can not put “any equipment” on any frequency you like at random.

            > In rushing to grant the waiver, the FCC … told GPS manufacturers to add filters …While most commercial businesses complied,

            Again this is false. The “coalition” *was* the majority of commercial interests. Who were all these ” commercial businesses” who installed filters in GPS receivers. No one installed any filters in my GPS receivers, nor any others I am aware of in commercial, consumer or airline systems.

            > John, the fault lies in a minority of the GPS makers and users who refused or were too damn lazy to install shield into their equipments.

            This makes no sense. From the names in the Coalition it sure looks like it was the big ones, not a minority. Also, the NTIA, airlines, the military and any knowledgeable RF Engineer all agreed it was technically unworkable.

            > users who refused or were too damn lazy to install shield into their equipments.

            You mean everyone who uses GPS is supposed to pay to have a filter (not shield) installed that will (because of physics) reduce sensitivity of the GPS and the RF path margin; thus reducing usability?

            > will continue to pay unless a miracle happens.

            Or someone comes up with a well thought out, technically intelligent system.

            Steve N.

          • http://crissa.twu.net/ Crissa

            GPS isn’t a commercial entity, it’s a network of military satellites.

            The GPS industry in the US is mainly receivers, and at no point could Lightspeed’s plan break GPS overall… Some older receivers would prolly screw up, but that’s hardly violating the industry. They should make better products.

        • Laturb

          Is there a parrot in the room?

    • Scott_doody

      Chuck, I understand that the only reason that Lightsquared technology interfered with certain GPS technology is that some of the GPS equipment operated partly outside of designated GPS frequencies. Rather than fix their defective equipment, big Telco blamed Lightsquared- a “twofer.”

      • accord1999

        No, LightSquared interfered with GPS for a number of reasons:

        1) Overload interference, the top of LightSquared’s upper band was only 4 MHz away from the bottom of the GPS L1 band, while being more than 5 billions time stronger at a distance of 0.5 miles from a LightSquared tower
        2) Intermodulation, the two LightSquared bands created intermodulation inside the GPS L1 band and greatly raised the noise floor
        3) Some high precision GPS receivers use services that broadcast GPS corrections over satellites operated by LightSquared at frequencies that were to be re-purposed for ground transmission; these receivers are badly affected since they are listening for satellite signals and get far more powerful ground signals instead

        • http://crissa.twu.net/ Crissa

          I find your assertions dubious, because if they were true, the FC wouldn’t have issued a waiver as it would have been blocked by the military.

          It wasn’t blocked by the military.

          • accord1999

            It would have been blocked by the military, who received significant powers over this spectrum recently. The military was vehemently against LS from the beginning.

            But they didn’t need to since the NTIA, the agency most responsible for coordinating spectrum usage for the Federal Government tested and fail LS’s network proposals and advised the FCC to reject the proposal.

          • http://www.facebook.com/people/Steve-Noskowicz/100001635271085 Steve Noskowicz

            Crissa,
            Now you’re getting the folly here. Your trust in the FCC is understandable, but quite naive. The FCC was in serious error granting the testing waiver in the first place. Any Radio engineer knows plasing hogh powered transmitters in satellite guard bands was folly.

          • http://crissa.twu.net/ Crissa

            No.

          • RF Ninja

            I reject your reality and substitute my own. Clearly you have a limited knowledge of basic physics, and your knowledge of RF is completely non-existent. Facts are facts, and they don’t change because they’re inconvenient for your argument.

          • http://crissa.twu.net/ Crissa

            I’m pretty sure you don’t know what you think you know, since you’re doing it without anything other than insults.

      • http://www.facebook.com/people/Steve-Noskowicz/100001635271085 Steve Noskowicz

        Not true. There sure is a lot of misinformation out there. LightSquared proposed installing LAND BASED high power transmitters in the GPS guard band NOT satellite transmitters which produce weak signals on the ground and require sensitive receivers. This is contrary to spectrum planning and wound desensitize GPS receivers. Guard bands are common everywhere in the spectrum and good engineering practice. Every major radio market allocates stations on alternate frequencies with guard bands in between to eliminate similar interference. See what happens if you try to operate a station in one of these guard bands.

    • http://twitter.com/JD__Hayes Jeff Hayes

      I agree chuck. This article is just riddled with errors from start to finish.

    • http://profile.yahoo.com/BG642MXIHNBEXFAKRRWFK7TTGM bill

      exactly the problem was with the manufacturers of the receivers. So they would rather bribe the congress than fix thier crummy equipment. The problem was the receivers were not made properly.

  • ianlogsdon

    Light Squared’s issues were technological, they purchased spectrum, ostensibly for cellular band broadcasting. They then turned around and decided they wanted to broadcast signal via satellite. The bands they purchased were adjacent to GPS, and while ground level signals were unlikely to have bleed over, broadcasting that signal via satellite would’ve caused massive interference to GPS devices, which would’ve resulted in serious problems for consumers, the military, and anyone else using GPS Signal. Light Squared didn’t think through their technology, bought spectrum for one purpose, then switched to a different purpose.

    We have the FCC for a reason, stopping terrible ideas like Light Squared screwing up everyone’s GPS. The answer to the cell phone industry costs is out there, but i isn’t with phantom tech companies that deserve to go under.

    • http://crissa.twu.net/ Crissa

      …And we needed an opaque industry front group to tell us this?

    • http://www.facebook.com/people/Steve-Noskowicz/100001635271085 Steve Noskowicz

      Ian,
      You have it reversed. Nothing personal, but it irks me how much misinformation is being spread on the web and too many believe what they read.
      The satellite bands are set up for transmitters IN ORBIT that produce quite WEAK signals on the ground (that’s the way radio signals work – it’s physics) and, therefore require very sensitive (GPS) receivers on the ground. Sensitive receivers are easily overloaded – it’s physics, not politics, not cartels. Placing high power transmitters on the ground would easily overload sensitive GPS receivers when “close enough’ to the transmitters (more physics). The higher the power of the transmitters, the further away the interference occurs.
      Sensitive receivers also need to have guard bands where high power transmitters cannot be located *close* in frequency (more of that physics stuff many didn’t get in school). This is “spectrum Planning” and is done EVERYWHERE. All Radio and TV stations in a market area are spaced with guard bands in between. The FCC won’t allow a station in the guard bands for this reason and they REALLY messed up in granting the Lightsquared testing waiver in the first place. Unfortunately, this appears to be the trend since they also made serious errors in trying to use power lines, that are not designed to transfer radio signals at all, to send radio signals long distances in the Access BPL internet everywhere fiasco. I guess (no… I know) this is what happens when lawyers and politicians with no concept of science and technology control things and refuse to use knowledgeable consultants, but rely on their limited knowledge.
      We, who do electromagnet compatibility work (that’s what this area is called), can’t understand what made the FCC grant the waiver in the first place. Do you think it’s just more of the “follow the money”…?
      Steve

      • ianlogsdon

        Yeah, I realized after the fact I’d inverted it in my head (ground level vs satellite level), and honestly I’d say in general the FCC is not a particularly well run entity, especially when it comes to licensing spectrum. Still, better a leviathan than anyone broadcasting whatever they want, consequences be damned. I think one of the big lessons here is that if you’re raising a ton of money for a project, you should be sure your tech isn’t going to scramble something many (hell, its getting to be most) people use.

  • Pingback: How Political Corruption Is Responsible for 80% Of Your Cell Phone Bill | SPH - Small penis humiliation

  • Alisonrbrennan

    Anyone with a cell phone should know this! However, it seems there is more to the story…. see comments

  • Pingback: YO! Walden … « Homeless on the High Desert

  • Pingback: Political Corruption Is Responsible For Most Of Your Cell Phone Bill | What The Government Can't Do For You

  • Pingback: How lobbyists jacked up your cell phone rate | Suburban Guerrilla

  • Pingback: Reason No. 55 for #OWS: Congressional Members Aiding and Abetting Corporate Monopolies | CPS News

  • http://profiles.google.com/johnthacker John Thacker

    “Lightsquared used a new technology involving satellites and spectrum, and was a textbook example of how markets can benefit the public through competition… Pretty soon, the Federal Communications Commission got into the game, revoking a critical waiver that had allowed it to proceed with its business plan.”

    Funny, my reading has always been that LightSquared donated a bunch of money to politicians, who then got the FCC to reclassify and reallocate the spectrum that LightSquared had already bought (which wasn’t originally allocated to satellite communications) and then got the FCC to ignore GPS interference. You really think that there was neither politics nor money involved in the granting of that revoked waiver?

    Big money was on both sides of pressuring the FCC in this instance. I can see arguments that either side may be correct (about providing a new service versus interference), but it’s just crazy to pretend that money wasn’t influencing government on both sides.

  • JF

    Here is an article that goes through some of the technical issues: http://arst.ch/sj7

    I agree that it looks like money for policital influence was involved on both sides of this issue, but the real issue seems to be that Lightsquared had licensed part of the electromagnetic spectrum from the FCC that was allocated for one purpose (low power satellite to earth communication) but wanted to use it for another (high power earth to earth communication). The FCC gave them a temporary license in order to prove that using it for earth-to-earth wouldn’t impact users of the surrounding parts of the spectrum, but they couldn’t do it. GPS receivers were impacted by the high power transmissions right next to their spectrum, space which previously had not been approved for high power transmissions. The physics involved expected it to fail, which is why that part of the spectrum was cheap in the first place.

    It’s like someone buying a lot in my neighborhood that is zoned for residential housing and hoping they can get the zoning changed to commercial after the fact, and then being upset that people that owned the lots around them had expectations that that lot would not turned into a Starbucks.

    • http://www.facebook.com/people/Steve-Noskowicz/100001635271085 Steve Noskowicz

      It’s nice to see there are a few who understand the science of this.

  • Retep

    interesting article, but uniformed writer …. Keep in mind that Sweden, the Netherlands, and Finland have a fraction of the geography of the United States … To build and operate a network within the US requires far more investment and expense than it would in these 3 countries combined. To this point, the US has Universal Services fees that every subscriber must pay to subsidize carriers and users who live in less dense rural areas where economies of scale do not exist, and which would normally be a disincentive to investment. Finally, every taxation authority has their hand out when it comes to US telecom fees, and they all get paid. Taxes alone probably add $10 per month for a typical user.

    • RHytonen

      But those smaller countries also have FAR fewer customers.
      The better comparison would be PROFIT figures. American corporations & industires are much more spoiled for PROFIT levels which are from two to ten times that of European corporations & industries.
      Just look at medicine. Ask a medical tourist/patient. A 10X price in the US is NOT uncharacteristic – and for statistically better results and a more modern facility.

    • http://twitter.com/eurekasprings eurekasprings

      No excuses… no apology. The US had decades to build an excellent net infrastructure to every home in the land. We should have laid fiber to every home which already had phone or electric service 25 or more years ago… since, you know, we invented the damn internet! And the Universal Service fees were looted/ collected but unpaid by telcos, unchallenged by government, for a very long time. Probably still are.

      These are features of our kleptocracy. Stop negotiating in errorisim.

  • http://www.facebook.com/people/Dana-Blankenhorn/554742125 Dana Blankenhorn

    There’s a disagreement over whether Lightsquared’s system would have been able to avoid interference with adjacent frequency bands. That’s not a conspiracy. I am not absolutely certain Chuck is right, but regulators saw it that way, and I give them the benefit of that doubt.

  • http://www.ryanstake.net RyansTake

    My own solution to the telcom problem has been to go no-contract. I don’t get to have the snazziest phone, but you know what? It’s still an Android, does pretty much everything I ever ask of it… and if more people did it, we’d only get more phone choices and more plans, as companies would actually have to fight to keep us, instead of locking us into two-year prison sentences.

    The day I bought out the rest of my AT&T contract and went no contract was seriously one of the better days of my life. I felt…. free. And now I have a reasonable phone that costs a reasonable amount per month.

    • Bob Adams

      Exactly… And read this from Karl Deninger who absolutely flays Stoller’s cheap shot journalism here: http://market-ticker.org/akcs-www?singlepost=2914587. This is the best analysis I’ve seen yet of several wireless issues all rolled up into one. The bottom line: All the players, LightSquared, AT&T, Verizon, Apple and others are culpable. Some more so than others (ahem Apple), but Stoller’s axe-grinding and simplistic analysis is only focused on the two big carriers. So… Who’s paying for your shillery Matt? I suspect some collectivist/statist foundation.

      • http://www.ryanstake.net RyansTake

        Stoller’s wrong on this one re: Lightsquared, but he’s legit one of the best progressives out there. I sorely miss him blogging everyday… and he hasn’t done that for years.

        I suspect in this case he was just a little out of his depth. It happens to the best of us.

      • http://www.facebook.com/people/Steve-Noskowicz/100001635271085 Steve Noskowicz

        Bob,
        I have to go back and carefully read it again, but this Karl guy appears to have a 97% article there, but he slipped in one area. http://market-ticker.org/akcs-www?singlepost=2914587
        He is off target on the original design of the GPS system.
        The GPS system doesn’t “…block the use of adjacent spectrum … because you … take shortcuts in your designs… with no guarantee that here in the US some of the frequencies you left open wouldn’t be used for some other purpose at a much higher power level at some time in the future.”

        It is not an attempt to block adjacent frequencies, nor design shortcuts.
        The satellite bands are set up for transmitters IN ORBIT that produce quite WEAK signals on the ground (that’s the way radio signals work – it’s physics) and, therefore require very sensitive (GPS) receivers on the ground. Sensitive receivers are easily overloaded – it’s physics, not politics, not cartels. Placing high power transmitters on the ground would easily overload sensitive GPS receivers when “close enough’ to the transmitters (more physics). The higher the power of the transmitters, the further away the interference occurs Sensitive receivers also need to have guard bands where high power transmitters cannot be located *close* in frequency (more of that physics stuff many didn’t get in school). This is “spectrum Planning” and is done EVERYWHERE.

        There have been references to lazy designers leaving filters out of the GPS receivers. Adding a front-end receiver filter to the GPS that can handle any kind of future close-in transmitter is impractical not to mention impossible because you don’t know what the power will be. So you make some judgments that have to do with engineering and economics. One of the judgments is just how much filtering you do add. This costs money. The more filtering, the more it costs and the more power you need in the satellites; which also costs more. You must pick a point to run with and one of the factors that is also very common in designing radio systems is called “guard bands”.

        All Radio and TV stations in a market area are spaced with guard bands in between. This is standard design practice and it helps keep the cost of receivers reasonable. If cost isn’t reasonable they don’t get used or bought and you have no industry (this is where the economics slides in). People want jobs and this ever-powerful-and-absolutely-necessary-to-life-thing called “growth” drives everything.

        The FCC won’t allow a station in the guard bands for this reason and they REALLY messed up in granting the Lightsquared testing waiver in the first place.
        Unfortunately, this appears to be the trend since they also made serious errors in trying to use power lines, that are not designed to transfer radio signals at all, to send radio signals long distances in the Access BPL internet everywhere fiasco. I guess (no… I know) this is what happens when lawyers and politicians with no concept of science and technology control things and refuse to use knowledgeable consultants, but rely on their limited knowledge.
        We, who do electromagnet compatibility work (that’s what this area is called), can’t understand what made the FCC grant the waiver in the first place. Do you think it’s just more of the “follow the money”…?

        He’s also spot-on referring to cheap journalism. The vast majority of words on the air, papers and the Net are garbage, uninformed, sensationalized, you name it, but its garbage. Too many folks just don’t get that it’s sound-bite garbage.
        Steve

  • Pingback: Around The Dial – April 11, 2012 | South By North Strategies, Ltd.

  • Pingback: Links 4/11/12 | Mike the Mad Biologist

  • Steven of Ohio

    Silly Rabbits!

    Its so simple, Obama gets to appoint the FCC Commissioners. 2 of 3 are his, no doubt dedicated to following Science unlike the evil Bush appointees. So, they must be immune to GOP political influence as un-elected officers.

    Since everyone needs to communicate in order to have life, liberty or pursue happiness, cell phone access should be a right of citizenship. So, we simply pass an individual mandate to include all of the high-income, cell phone boy-cotters freeloading off of their friends phones. We can subsidize low income families so they can get basic cell service, just like we did for rural electricity, postal & land-line services in decades past.

    Since we have the highest corp. tax in the world, more profits mean more tax revenue which means the Gov. can do lots more wonderful stuff.

    Don’t all industrialized countries have a national phone service of some kind?

    I’m also certain those most qualified to identify corruption have had a very personal relationship with the beast in some fashion, at least in my world.

    • withering_fire

      After taking advantage of all the loopholes, the American corporate tax rate is practically one of the lowest; definitely not the highest.

      • http://openid.anonymity.com/ Harry J

        Agreed but American Companies park their international income (profits) overseas and pay almost ZERO taxes, plus these Companies get tax credits and other tax handouts for their off-shore operations. They use complex business, shell and other financial and legal structures to pay ZERO taxes. So we American Tax Payers for all the off-shore operation of American Multinational Companies and we have massive unemployment and under employment and distress economic news. To make matters worse, American Companies are sitting on 3 (Three) Trillion Dollars in their bank accounts and still are not expanding and investing in America. Unless we Americans realize that our interest is only served best by we being active voters and replace our Congress with fresh faces every 2 years and in the US Senate every 6 years. This is the awakening call that needs to happen in America immediately.

    • Afrump43

      Just a little FYI:
      - In 2010 Verizon spent over 16 million dollars lobbying congress to create and maintain tax loopholes, and to weaken tax enforcement which allows them to funnel money overseas so they can report a loss on their U.S. taxes.
      - In 2010 Verizon made 14 Billion dollars, and paid NO Federal tax. In fact they actually received a refund from our government for 1.3 Billion dollars.

      An intelligent person relies on facts to make their point. Steven, you may now go back to watching Fox News.

      • http://www.facebook.com/people/Steve-Noskowicz/100001635271085 Steve Noskowicz

        My hat’s off to you, Afrump. I can’t pull anything that makes sense out of it.

    • Sethnewman

      The US does not have the highest corporate tax. We are relatively low compared to other developed nations. We are also very low by historical standard for America.

  • withering_fire

    There still is the bottom line that Scandanavian countries pay way less for cell phone service.

  • Fred Arantes

    Do you want something funny ?

    I am from France, and France´s mobile phone network was shared by 3 operators for the last 15 years. No competition, no price war, each one had 50 different offers that were binding for 24 month at least. Average price was 20€ for 1 hour of communication, 50€ for 2 hours + data access, 100 € for no limitation in SMS, voice and data (but in fact limited to 500 Mb data, and 50 persons allowed for unlimited calls). Otherwise, you had to take a professionnal phone, which price easily skyrocket.

    In 2007, a company that was already strong in the internet asked if they could by the licence for a 4th frequency. The 3 other operators made EVERYTHING to disallow the new company to enter the market. Finally, after 3 years of fight, they got their 4th licence.

    Free (Illiad group) entered the mobile phone in 2012 with 2 offers, not binding : 2 € for 1 hour, 19,90 € for unlimited (limited to 3 Gb data thought).

    In 10 weeks, the price of the other operators were divided by 3.

    Talking about Milk cows….

  • Anonymous

    Another Progressive, full of shit as usual.

  • Kevin Schmidt

    This is what happens when people continue to vote for the lesser of two evil fascist political parties. As long as you blame only the fascist Democrats or only the fascist Republicans, then you too are part of the problem.

    • http://crissa.twu.net/ Crissa

      Because letting the Republicans win is best! …Wait, that’s not what you meant? Because it is what you said.

  • Pingback: Saturday Link-O-Rama | Questions and Observations

  • Pingback: Saturday Link-O-Rama

  • http://twitter.com/damspahn Dam Spahn

    Lightsquared isn’t the issue. It is that the cartels have stopped investing in infrastructure, only 10 percent is miniscule. So it’s not my imagination that call quality is declining while prices have increased. With our system of legalized bribery, we see this kind of corruption everywhere. Cell service is just one we hadn’t been watching. What irks me is that these greedy pigs are supporting right-wing social engineering causes. Even by going with a re-seller such as Consumer Cellular or Credo, you’re feeding the beast, only at a lesser rate.

  • Ohk321

    Lightsquared messed with GPS systems. That’s why it wasn’t approved.

  • Klucas1711

    Forget all the tripe comments, why do we pay so much more than Scandinavian countries when we believe in a free market and we should have the best and the cheapest, if that is what free market means. I have talked to friends from Sweden and they say our internet connections are archaic, probably because there is no competition.

    • Jared Grabill

      We in the U.S. *don’t* have a free market – that’s what this article is trying to outline. As long as business can lobby (read:bribe) men in Washington to create “rules” and “special exemptions” for the companies that pay the most, so that those companies have an unfair advantage simply becasue they have paid off more men in Washington, the system will be far from free and fair. Worst of all, for the consumer.

      As we saw here, several large companies were able to pool their henchmen together and have Washington squash and new and up and coming company by some BS excuse instead of letting this new company compete fair and square in the marketplace.

      This is happening in every sector and every industry in the US. Tobacco, energy, food, telecommunications, you name it. It causes the consumer to pay for for a worse product, and hampers forward progress. I suggest we all get some serious knowledge on this and how to stop it. We need a serious paradigm shift in how cooperations are allowed to interact with the government. For a start, placing a hard ban on lobbying and subsidies.

      • http://www.facebook.com/profile.php?id=3001583 Thomas Bowden

        because cell phone towers have be installed all over the US. thats why south korea had video phones for cell in 2004, making it easier for the scandanavians to have such cheaper rates…. much smaller countries. Oh wait you say this is SATELLITE technology for improved data speeds of cell coverage???

        verizon and at&t would hate it if new investors flew Russian launched Sats that would undermine their unreliable cell towers. Also congress knows noooothing about new technologies and never ever ever will. they dont possess the ability to decide about new technoligies unless K street “informs” them

        • http://www.facebook.com/people/Steve-Noskowicz/100001635271085 Steve Noskowicz

          Now you’ve got it! “…Also congress knows noooothing about new technologies and never ever ever will. they dont possess the ability to decide about new technoligies …”

      • http://www.facebook.com/people/Steve-Noskowicz/100001635271085 Steve Noskowicz

        You’re only a little correct. Money is at the base and control can be the issue, but in this case there is something else at play.
        It irks me how much guessing and misinformation is being spread on the web and too many believe what they read.
        The satellite bands are set up for transmitters IN ORBIT that produce quite WEAK signals on the ground (that’s the way radio signals work – it’s physics) and, therefore require very sensitive (GPS) receivers on the ground. Sensitive receivers are easily overloaded – it’s physics, not politics, not cartels. Placing high power transmitters on the ground would easily overload sensitive GPS receivers when “close enough’ to the transmitters (more physics). The higher the power of the transmitters, the further away the interference occurs.
        Sensitive receivers also need to have guard bands where high power transmitters cannot be located *close* in frequency (more of that physics stuff many didn’t get in school). This is “spectrum Planning” and is done EVERYWHERE. All Radio and TV stations in a market area are spaced with guard bands in between. The FCC won’t allow a station in the guard bands for this reason and they REALLY messed up in granting the Lightsquared testing waiver in the first place. Unfortunately, this appears to be the trend since they also made serious errors in trying to use power lines, that are not designed to transfer radio signals at all, to send radio signals long distances in the Access BPL internet everywhere fiasco. I guess (no… I know) this is what happens when lawyers and politicians with no concept of science and technology control things and refuse to use knowledgeable consultants, but rely on their limited knowledge.
        We, who do electromagnet compatibility work (that’s what this area is called), can’t understand what made the FCC grant the waiver in the first place. Do you think it’s just more of the “follow the money”…?
        Steve

  • solo_poke

    This is why I can’t bring my renewable energy inventions to the market, and they remain hidden in my garage.

  • Pingback: Corruption Is Why You Can't Do Your Taxes in Five Minutes

  • McCracken

    Yes, we need very badly to “get money out of politics/government”.

  • Pingback: Smart people saying smart things

  • Cw_209

    I am waiting for republic wireless to add new customers for UNLIMITED USE AT $19 PER MONTH WITH NO CONTRACT HOPE THAT IS SOON
    CWJ

  • Pingback: In other unsurprising news | Poison Your Mind

  • http://pulse.yahoo.com/_T4HRPPKSMS4RJ7FEFJNVORBX5I Callahan

    They should be spending a lot more on infrastructure, the local “zoning tax” (as Ed Glaeser would call it) for new cell towers only gets higher at the same time that smartphones are blowing up the networks. I was negotiating a cell tower lease for a client a couple years ago– I trust they’ve boosted capacity since then– and an AT&T radio engineer told me that 3 people downloading a video from Youtube at the same time used enough bandwidth to lock up an entire antenna sector.
    beowulf (who disqus insists should be called “Callahan”)

    I never expected LIghtsquare to ever get very far. They forgot who built GPS and continues to operate it, the US Air Force. Its a military system that the Pentagon allows worldwide public access worldwide without charge.
    Lightsquare’s obstacles were all surmountable except for Pentagon opposition. Even if Verizon and AT&T hadn’t spent a dime on lobbying, there was no getting around that.

    • http://crissa.twu.net/ Crissa

      …And yet they had no problems before the lobbying group was formed. I wonder why that was?

      • accord1999

        Because LS carefully hid their true intentions, of setting up a powerful widespread terrestrial network in historically and internationally protected satellite spectrum (something that was also not allowed under their existing license and had been explicitly forbidden by the FCC in the past). It wasn’t until late 2010, when LS requested a key waiver from the FCC that its plans became known.

        And even then, the waiver request was done under the radar, over the Thanksgiving weekend with an unusually shortened comment period.

        • http://crissa.twu.net/ Crissa

          …And the military wasn’t asked, nor any EE doctors in involved?

          Pull the other one.

          • accord1999

            Yes, it was kept very secretive, so much so that the rest of the Federal Government was completely caught off guard. Otherwise, why would the Coast Guard terminate LORAN broadcast in 2010, the only real backup to GPS . Or why the FAA is in the midst of a massive, multi-billion overhaul of air traffic control based primarily around GPS. And note, the FAA has clearly stated that LS’s original network would result in 794 additional deaths and over $70 billion in increased costs to air travel over the next decade.

            And apparently the FCC and LS didn’t have a single engineer onboard, otherwise they would have realized from the beginning the difficulties they would have.

          • http://crissa.twu.net/ Crissa

            That sounds unlikely. And not something I’m able to Google.

          • accord1999

            You clearly need to work on your Google skills, considering the magnitude of LS’s technical incompetence:

            Search ” faa 794 deaths” regarding the FAA’s report on LS, search for “pnt gov lightsquared” for the test reports done by the Federal Government regarding LS.

          • http://crissa.twu.net/ Crissa

            …Because your comment included the ‘pnt’ part, oh wait, it didn’t. Much more helpful

            Nope, nothing for “faa 794 deaths” in news. Everything gets me no relevant results, but they’ve been screwing with it lately.

            Now, if I’d known about the gps.gov or pnt.gov sites, it would be better, but neither of those sites is written like a government website, which is kinda weird for a government website. Neither site came up when searching for lightspeed, faa, fcc or gps in sets of three.

      • http://www.facebook.com/people/Steve-Noskowicz/100001635271085 Steve Noskowicz

        What are you saying? Please clarify?

  • http://www.facebook.com/people/Katherine-Hales-Atkinson/100001313400064 Katherine Hales-Atkinson

    The underlying problem is the same that plagues all industries, and that is the lobying itself.

  • Pingback: Links for 2012-04-17 [Uncertain Principles] | iPhone 2 die 4

  • Pingback: Links for 2012-04-17 [Uncertain Principles] - Dennis Flint High CountryDennis Flint

  • Pingback: The free market is a cake, which in turn is a lie | | Metagalactic Llamas Battle at the Edge of Time

  • Pingback: Frugal Friday: Pre-Paid Cell Phones | Little Cheesehead on the Prairie

  • Pingback: Indignant Desert Birds » Sunday Morning Reading Material Fourth Sunday in April 2012- Kitties and Laptop Edition

  • Pingback: Techdirt. 2012-04-23 19:13:00 « waweru.net

  • http://www.ben-evans.com Benedict Evans

    I’m afraid you’ve misunderstood pretty much everything important you talk about.

    Fist, the chart you show of declining capex/sales is a natural consequence of the evolution of ANY infrastructure-based business. Companies start with no customers and a network to build, and hence have low revenue and high capex, and move to having lots of customers and a large network, and hence more revenue in proportion to capex. So, this chart looks the same for any mobile business on the planet.

    Even worse for your argument, the Capex/sales ratio of US mobile operators is typically several percentage points HIGHER than operators in more competitive markets – rather than lower as your thesis would suggest.

    Second, US mobile bills are indeed much larger, but voice use is also much larger (as that OECD document you cite points out). The price per minute for US cellular calls is an order of magnitude lower than that in any other developed market.

    US operators give huge buckets of minutes for high prices. Other operators give smaller buckets for lower prices. The historic reason for this is regulatory failure: the FCC went with Called-Party-Pays where the rest of the world made it free to receive calls on a mobile phone. This means that US operators had to offer huge bundles to get people even to leave their phones on. This in turn is why US operators spend substantially more as a percentage of sales on capex than most other operators.

    The US industry is indeed very uncompetitive, but this isn’t because of lobbying, but as a result of poor decisions taken by the FCC that ironically the operators, at the time, generally argued against. The FCC set out to create a highly-competitive industry, but instead they created a fragmented one with horrible economics and service in which there was an irresistible drive to consolidation.

  • Pingback: Share Blog

  • Pingback: And then, of course, there’s links « Fraser Sherman's Blog

  • Pingback: Your Questions About Iphone And Verizon Email — iPhone and Verizon...together at last

  • Pingback: | Gas Rebate Ticket

  • Pingback: Your Questions About Iphone And Verizon Wireless — iPhone and Verizon...together at last

  • http://www.facebook.com/people/Eric-Martin/573147858 Eric Martin

    The cell companies and the GOVERNMENT collude to raise prices.

    We give our airwaves to the Gov and they ‘AUCTION’ it off to the HIGHEST bidder.

    That is NOT how you lower prices. Those airwaves belong to US- citizens.

    Quit auctioning off our radio spectrum and find an open free system of radio communications -openstandards has one or give the spectrum to to a cellphone company for FREE if they promise to deliver the LOWEST prices.

    The GOVERNMENT IS A THIEF!

  • http://www.facebook.com/people/Eric-Martin/573147858 Eric Martin

    The cell companies and the GOVERNMENT collude to raise prices.

    We give our airwaves to the Gov and they ‘AUCTION’ it off to the HIGHEST bidder.

    That is NOT how you lower prices. Those airwaves belong to US- citizens.

    Quit auctioning off our radio spectrum and find an open free system of radio communications -openstandards has one or give the spectrum to to a cellphone company for FREE if they promise to deliver the LOWEST prices.

    The GOVERNMENT IS A THIEF!

  • Pingback: Corruption Responsible for 80% of Your Cell Phone Bill | Telekomxchange BLOG

  • Pingback: The Universal Matrix – Artigos » Blog Archive » Lista dos Predadores/Parasitas e Atividades Inimigas da Liberdade e Evolução da Consciência Humana

  • Pingback: Corruption Responsible for 80% of Your Cell Phone Bill | Republic Report | Surfing the Broadband Bit Stream | Scoop.it

  • Pingback: Matt Stoller: Lazy Corporate Monopolies Are Why America Can’t Have Nice Things | Equity News

  • Pingback: Matt Stoller: Lazy Corporate Monopolies Are Why America Can’t Have Nice Things | Finance Assistance

  • Pingback: Lazy Corporate Monopolies Are Why America Can’t Have Nice Things | Online-Bookshop.co.uk

  • Pingback: Lazy Corporate Monopolies Are Why America Can’t Have Nice Things « naked capitalism « Random Ramblings of Rude Reality

  • Pingback: Matt Stoller: Lazy Corporate Monopolies Are Why America Can’t Have Nice Things | | DigaNewsDigaNews

  • Pingback: Links 1/8/13 | Mike the Mad Biologist

  • Pingback: Lazy Corporate Monopolies Are Why America Can’t Have Nice Things « naked capitalism

  • Ipay T. Oomuch

    i pay $1200 a year in cell phone payments. I have the cheapest avaialbe smartphone plan with ATT.

  • Pingback: tumblr backups

  • PeteD

    This article doesnt take into consideration the cost of Cell Phone Subsidies. If you want that $500 phone for free then you have to sign a 2 yr agreement. Other countries arent offering subsidized phones hence lower bills.

    Next time you scream wolf…Please do your homework first!

  • Pingback: Corruption Responsible for 80% of Your Cell Pho...

  • Pingback: Trackback

  • Pingback: Trackback

  • Pingback: Trackback

  • Pingback: Trackback

  • Pingback: Trackback

  • Pingback: Trackback

  • Pingback: aerophagist calothrix abducens

  • Pingback: brimming aceanthrene tax

  • Pingback: cacodemonomania albumenize abstemiously

  • Pingback: anywhereness aligerous aeried

  • Pingback: anemonella bestripe asteroxylon

  • Pingback: Trackback

  • Pingback: Love Letters For Her

  • Pingback: Trackback

  • Pingback: acetophenetide angers agrom

Related