AUCTION FEE REBATES SUGGESTED AT CTIA CONVENTION
LAS VEGAS - Govt. should consider rebates or other restructuring of spectrum auction fees in order to create available capital to continue buildout of wireless networks, Motorola CEO Chris Galvin said in keynote session at CTIA convention here Wed. Galvin said rebates could be as large as 50% of auction fees paid by wireless carriers, and govt. also should restructure way future spectrum was allocated: “As any new technology is created, the rules and regulations need to be modified.”
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Promoting development of wireless would “create a way for the government to collect an enormous amount of revenue” in long term through higher income taxes and capital gains both from wireless companies themselves and from higher productivity of wireless users, Galvin said. He said govt. in U.S. and elsewhere needed to think about long term instead of short.
Spectrum fee rebates are only one option to be considered, Galvin said. Another could be spreading auction fee payments over time, he said. He said auction prices were inflated both because of “frothy” market that made artificially high amount of capital available and because govt. was able to extract “monopoly rents” because of fears that no other new spectrum might be available for long time. One improvement, he said, would be at least 10-year plan for spectrum allocation so wireless companies and others would have better idea of when other spectrum would become available. He also said again that portion of auction proceeds be used to help encourage govt. agencies and others to make spectrum available.
Finding way to make more capital available through rebates or other mechanisms won’t be easy, Galvin conceded: “It will take a collegial set of people to find new rules.” He compared situation with that when railroads first were being built to open West, saying railroads never would have been built if they had to pay for rights-of-way, and long-term benefits had been enormous. He said if spectrum changes were made, “the wealth created for society and the productivity benefits would be huge.”
CTIA Pres. Thomas Wheeler compared current spectrum auctions with financial equivalent of Survivor, in which wireless companies “keep paying cash until everyone else leaves the island.” He said rebates were one possible solution, as were paying auction fees over time and removing spectrum caps. At convention itself, Wheeler said, there isn’t enough spectrum for all attendees to use wireless phones and for exhibitors to conduct demonstrations.
Wheeler said convention indicated there was no “slowdown” in wireless industry because preregistration for convention was higher than entire attendance last year, and more exhibit space already had been booked for next year than was used this year. Convergence means “this is a happening industry,” he said.
Making more spectrum available for wireless “certainly makes a lot of sense,” Nokia Chmn. Jorma Ollila said, since he expects wireless revenue to treble in next 5 years: “There’s a tremendous need for new capacity.” Ollila said Nokia would make GPRS-based 2.5-G available in 3rd quarter and expected to have “tens of millions” of 2.5-G users in 4th quarter.
Despite new technologies, wireless voice will be dominant for next few years, Orange CEO Hans Snook said, with data and wireless Internet “the topping on the cake.” He said new services eventually would include a music or entertainment “library in the sky” that wireless users could access, as well as such things as services to help customers find and pay for parking space. Orange also has invested in Wildfire, voice activation service that’s designed to operate such things as home appliances as well as wireless devices. Wireless devices eventually will function as “personal electronic servant,” Snook said, and wireless networks eventually will be connected with wired, satellite and broadband networks into “global super network.”
One key to wireless success is moving beyond networks and encouraging new service providers that can create products customers want, Snook said. That could mean “in effect sublicensing spectrum well into the future” to companies that would become “mobile virtual network operators,” he said.
RadioShack CEO Leonard Roberts, who also participated in keynote, said his company was largest vendor of wireless services, signing up more new wireless customers than all competitors combined. He said RadioShack was particularly valuable because 50% of its new wireless signups were customers that actually weren’t shopping for wireless.