Federal Government to Receive $44 Billion from the Cell Phone Companies

News - United States

Federal Communications Commission chairman Tom Wheeler gave the federal government a good reason to be happy in holidays. In mid-December he announced that they have unexpectedly earned billions of dollars for the federal government. T-mobile, AT&T, Verizon Communications and others have paid forty four and half billion dollars for all important network airwaves.

Initially FCC was expecting to receive something between $10.6 billion to $22 billion. But they finally received was much more than their expectations, $44 billion. After the 700 MHz block, went up for auction in 2008, the AWS-3 bidding is one of the largest spectrum auction.

The reserve price was set at $10.6 billion by FCC, before the auction in November. According to Federal Communications Commission, “I think it is pretty safe to say that the auction is a success.”  The auction broke the former $19 billion record for a spectrum auction that was set in 2008. There were seventy companies taking part in the current auction, including AT&T, T-Mobile and Verizon. Ketchikan, Alaska and the Southeastern Indiana Rural Telephone Cooperative are not the big names but they qualified for the auction.

Anonymous bidding can be negative point about this auction. The Federal Communication Commission does not allow the companies to comment on it until it is closed. According to Walter Piecyk, an analyst with BTIG, “They are duking it out.”

Stopping competitors or new entrants from getting spectrum or to offer new services can be a possible reason of high bidding. T-Mobile and others complained to the Federal Communication Commission that Verizon was hoarding spectrum to keep other out of the market. High auction also puts barriers to entry for smaller wireless companies.


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