How to Fix the Cellular Industry

by Colin Berkshire

We made a big, big mistake a few years ago. It resulted in crappy cellular service throughout America. But, fortunately, we can fix it.

The mistake was to take the bandwidth from several hundred television stations and bundle it all together and sell it to a handful of cellular companies for a lump-sum. Companies like Verizon paid something like only $10 Billion for an asset worth 50 times that much.

The problem was that we granted monopolies (or technically “Oligopolies”). When we did that we took away competition and took away any incentive to build out the telephone network.

If a city has poor cellular service from Verizon, there is no incentive for them to fix it if the service is also poor from AT&T and the others. All of the companies want to minimize their investments. Serving Kellogg Idaho or West Yellowstone Wyoming or Purdy Washington just isn’t on anybody’s radar.

I am sure that some entrepreneur in these areas would love to built a tower and start making a profit.

The solution, I think, is to make the tower business a stand-alone, profitable business.

1) Carriers should have to provide a certain minimal level of coverage in an area. Say, two megabit speeds in any area where there is a population density of 15 per square mile.
2) Where a carrier doesn’t serve an area adequately, they should forfeit their airwave rights and an entrepreneur should be allowed to build a tower.
3) Every tower from every carrier should be required to accept any technically compatible cell phone. The new “SIM-free” iPhone from Apple just happens to be compatible with every technology from every carrier worldwide.
4) Tower operators should be paid for the usage on their towers at a regulated and fair rate of return.

Is this a preposterous idea? No. It is precisely how we allocated areas to the wireline carriers 100 years ago. A wireline carrier had to interconnect to every other wireline carrier without any discrimination. And area that wasn’t served by a carrier could appoint a carrier that would serve them. Basically, you could just file a tariff and start up a telephone company.

I would love to see this happen in America. My guess is that within 5 years time you would be hard pressed to find some hard-scrabble city that did’t have good coverage.

The cost to build a cellular tower has never been less.

So let’s go back to the capitalist system and use what worked for us 100 years ago. Let’s build out the cellular network and let the towers compete for our calls!