The US government raised $2.25 billion in an auction of wireless airwaves that ended on Tuesday. The process, which began January 26, was expected to draw between $3 billion and $3.5 billion in total bids. The FCC auctioned a total of 242 licenses in the 1.9 GHz spectrum that were returned by previous winners. The Los Angeles market received the highest bid, $374.5 million, offered by a partner of Metro PCS Communications, Royal Street Communications. That company was the single biggest bidder, offering $387.4 million for six licenses.
Verizon Wireless, the second-largest US wireless carrier and a joint venture of Verizon Communications and Vodafone Group, directly won 26 licenses with bids totaling $364.9 million. Another entity with ties to Verizon, Vista PCS, won another 37 licenses by bidding $332.4 million. A company with ties to Deutsche Telekom's T-Mobile USA unit, Cook Inlet, won 36 licenses with $255.5 million in bids.
Insight: Why is the government being anti-market development in wireless? While they certainly have the right to tax the airwaves, the FCC should be auctioning off the operational tax rate rather than requiring winners to pay up front. Why? Because the upfront tax takes capital from the winner that would be put into building out the market. Then, a tax would be placed on the use of the airwaves with the government getting paid after the infrastructure is built. The government should play along side private industry and incent the private sector to use their capital to build out the network and infrastructure and not displace the use of capital by putting it into their own coffers.
