Spectrum of Greed

The real question is, “Why not in the US?”  Some might blame the lack of US sales on the crappy network service that has plagued the iPhone lately, or suggest that at it’s very high price the market for people that want to shell out that kind of dough for a phone is saturated, but the reason isn’t so simple. 

According to market data by Brian Marshall of Broadpoint AmTech in a CompuerWorld article, less than 30% of the subscriber base in the 90 countries that the iPhone is now sold are post service billed.  The US is one of a shrinking minority that has most of it’s mobile phone subscribers billed after they use minutes.  Most of the world has moved to pre-paid.  In Apple’s 90 country global market, there are over 140 carriers that currently offer the iPhone.  In the US there is only one.  The rest of the world has a very open mobile broadband market compared to the US demonstrated by these numbers.  Because of artificial barriers to entry we have in our wireless space, Apple will sell less of their coveted devices than they could, and the American people will have less bandwidth to use and pay more for it than their neighbors in other countries.

There are a few reasons this situation exists in our country and not in others.  In the US, we believe it is good politics to take wireless spectrum that belongs to US citizens, auction it off (it is very valuable, after all) to the highest corporate bidder, then take that non-tax revenue (over $20 Billion from the last auction a couple years ago) and spend it on traditional Washington pork.

The beauty for legislators is they don’t have to raise taxes to get this money.  The bummer for the American people is that the billions paid by the few companies willing to shell that kind of money out for the bandwidth is billed back to their subscribers, raising everyone’s monthly bills and creating a self-preserving market place in which the wireless providers have to maximize their revenue out of minimal network investment because of their high taxation rate by our government via the FCC.

While there are several viable models around the globe that would provide the US a more open market place and lower prices than our current model while simultaneously improving bandwidth availability, we won’t be heading there any time soon.  We are dug in deep, and this is just one of several federal government messes that is way overdue for cleanup.  Let’s take care of healthcare and our financial markets first, then we can swing around to this one.