Wondering Why Your Phone Bill Keeps Going Up? Thank the Government

Are you wondering why the cost of your smartphone plan keeps going up? Remember last year when AT&T hiked rates and Verizon switched from offering individual plans to a Share Everything plan? Unlimited data used to be the norm, but today people are fortunate if 1GB of data is included in their plan. On top of that, nearly every carrier has introduced some sort of data throttling, which slows down access speeds after you hit a data cap.

What gives?

Demand for data among cell phone users is greater than the phone carriers can supply-because a huge chunk of the electromagnetic spectrum in America-the system needed to carry the data-is owned by the federal government. Brent Skorup at the Technology Liberation Front points out that the government owns around 1500 Mhz of the spectrum. In 2010, President Obama directed government agencies to free up a third of that spectrum for consumers to use instead.

So far, that hasn't happened. The Pentagon believes it must have all of its spectrum in the name of national security, and other agencies have been digging in their heels as well.

Skorup suggests we take one of two proposals: either implement a GSA-like entity that would lease the spectrum to government agencies, forcing them to economize by actually having to pay for using the spectrum, or a BRAC-style agency that would clear out the spectrum for use by consumers. The second option is better. The GAO pointed out that the government is using its spectrum inefficiently, surprise, surprise, so its unlikely that the GSA would function any better than the original.

Congress instructed the FCC to conduct incentive auctions, buying out private broadcasters to free up spectrum, then selling it again. (Note, this isn't the digital version of eminent domain; the government will only buy the spectrum at rates the broadcasters agree to.) The idea is that the spectrum will be more valuable for mobile data than for TV broadcasts, which seems likely.

However, the FCC is going about it the wrong way, contemplating banning Verizon and AT&T from participating in the auction of certain spectrum blocks. That's exactly the wrong thing to do. Freezing out the two largest carriers is, first, not fair, and second, gets the government involved in picking winners and losers.

Supposedly, the argument is that if Verizon and AT&T expand their spectrum holdings, T-Mobile, Sprint and other small carriers won't be able to expand their networks.

That doesn't seem right.

If AT&T and Verizon manage their networks terribly and fail to provide their customers with the services they want, their customers will switch to other networks, bringing increased revenue to the smaller players. A free market system allows T-Mobile, Sprint and others to build out their networks, even potentially buying spectrum licenses from the bigger players. And if AT&T and Verizon treat their customers well, then they will be glad to have the extra spectrum to handle their data traffic.

The FCC should let everyone participate to make sure consumers get their money's worth.

It's obvious that demand is gradually outstripping supply in the spectrum market. In order to avoid sky-high mobile plan costs, the government needs to free up as much spectrum as possible.

Jeremy Kolassa is assistant editor of the website United Liberty.org and an associate fellow with the R Street Institute.