Corruption Responsible for 80% of Your Cell Phone Bill

[kpete]

Corruption Responsible for 80% of Your Cell Phone Bill
By Matt Stoller posted Apr 9th 2012 at 1:45PM

Last year, a new company called Lightsquared promised an innovative business model that would dramatically lower cell phone costs and improve the quality of service, threatening the incumbent phone operators like AT&T and Verizon. Lightsquared used a new technology involving satellites and spectrum, and was a textbook example of how markets can benefit the public through competition. The phone industry swung into motion, not by offering better products and services, but by going to Washington to ensure that its new competitor could be killed by its political friends. And sure enough, through three Congressmen that AT&T and Verizon had funded (Fred Upton (R-MI), Greg Walden (R-OR), and Cliff Stearns (R-FL)), Congress began demanding an investigation into this new company. Pretty soon, the Federal Communications Commission got into the game, revoking a critical waiver that had allowed it to proceed with its business plan.



Basically, what this chart shows is that in the 1990s, cell phone companies bought up other cell phone companies, and Congress and the FCC were happy to go along because of the power of industry lobbying. Once these companies had an effective cartel, their amount of investment dropped. If you didn’t like your cell phone company, you couldn’t really switch, because the other big cell phone company was just as bad. In 1997, the industry was putting 50 cents of every dollar of revenue into investing in more cell phone towers. By 2009, that number dropped 12.5 cents of every dollar. CTIA has made it much harder to find this data since 2004, but it is obscure filing comments at the FCC. Pretty soon, we should expect the public not to even be able to track why our cell phone’s usage is so bad.

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much more:
http://www.republicreport.org/2012/cell-phone-corruption-bill/

[ProgressiveProfessor]

1. You are defending Lightsquared?

A company that tried to get space based spectrum it bought cheap converted for use from ground stations (typical big business move)

A company that when it was discovered that its 'ground stations' on space based frequencies would destroy consumer and aviation GPS, blamed the GPS systems (blame others for their problems)

Comments #4 & #5 are correct.

http://www.saveourgps.org/

[uponit7771]

12. I understand the frequency tech, please link the forum...regards

[belcffub]

2. not to derail your whole article... but lightsquared failed of their own accord

Why LightSquared failed: It was science, not politics

Despite the FCC's glowing remarks about LightSquared, the conditional approval made it clear the plan would never gain final clearance unless it could be implemented without interfering with GPS devices. In a nutshell, LightSquared needed a special waiver because it is trying to use spectrum allocated for low-power space-to-ground transmissions for something it was not originally allocated for: high-power ground-only transmissions that could fuel a nationwide wireless mobile broadband network. The portion of L-Band spectrum controlled by LightSquared is adjacent to the spectrum used by GPS devices, and GPS devices, according to repeated tests, would be unable to receive the signals intended for them because the high-power LightSquared signals would overpower the GPS ones.
....
In the end, though, it was not politics, but the results of repeated tests which the FCC could not ignore, and thus doomed LightSquared. The ruling against the company seems to be grounded in science and common sense, coming swiftly after the NTIA reported to the FCC that months of analysis determined that "LightSquared's proposed mobile broadband network will impact GPS services and that there is no practical way to mitigate the potential interference at this time. Furthermore, while GPS equipment developers may be able to mitigate these issues via new technology in the future, the time and money required for federal, commercial, and private sector users to replace technology in the field and the marketplace, on aircraft, and in integrated national security systems cannot support the scheduled deployment of terrestrial services proposed by LightSquared." The NTIA further noted potential problems for air traffic navigation and NASA's "future space-based GPS receivers" that would be sensitive even to LightSquared's usage of signals in the lower 10MHz.

[uponit7771]

13. Unnnnn, LS has a point..the weak signal isn't their fault and GPS companies had ample time (as..

....mentioned by FCC chairman)

"it should be no surprise to anyone involved in the LightSquared matter that the company was planning for some time to deploy a major terrestrial network in the spectrum adjacent to GPS," and that "all interested parties had ample time to comment in advance of these orders

But for the greater good I'm glad this is on hold

Better safe than sorry no doubt.

Spectrum real estate will be worth a lot of money come near future

[belcffub]

14. sure... but to call this political...

is jumping the shark a bit...

and I am not that knowledgable in what the article talks about... I just remembered reading it on slashdot a while back... but from the article it sounded like the FCC put the onus on lightsquared to come up with the solutions... they did... the FCC tested them and found them lacking...

[ProgressiveProfessor]

19. It is their fault since they are trying to convert frequency from space use to ground use

Space based signals (read very low power) would not interfere with GPS. If they are allowed to use that same spectrum for ground based signals (much higher power) the interference has been demonstrated.

Ground based spectrum is already expensive. Space based spectrum not nearly so much. LS bought space based and then tried to get it converted.

[mojowork_n]

3. It's not unlike health care. We pay more for less.

And the difference goes in to the pockets of ALEC-supporters like
AT&T, Sprint and Verizon, who fund politicians who make sure that
we'll always get more of the same:

http://www.sourcewatch.org/index.php?title=ALEC_Corporations

I saw comparisons of the quality of service on Counterpunch, but
this Alternet article came up higher:

http://www.alternet.org/story/148397/how_the_phone_companies_are_screwing_america%3A_the_$320_billion_broadband_rip-off?page=entire

Since 1991, the telecom companies have pocketed an estimated $320 billion --- that's about $3,000 per household.

This is a conservative estimate of the wide-scale plunder that includes monies garnered from hidden rate hikes, depreciation allowances, write-offs and other schemes. Ironically, in 2009, the FCC's National Broadband plan claimed it will cost about $350 billion to fully upgrade America's infrastructure.

The principal consequence of the great broadband con is not only that Americans are stuck with an inferior and overpriced communications system, but the nation's global economic competitiveness has been undermined.

In a June 2010 report, Organization for Economic Co-operation and Development (OECD) ranked the U.S. 15th on broadband subscribers with 24.6 percent penetration; the consulting group, Strategy Analytics, is even more pessimistic, ranking the U.S. 20th with a "broadband" penetration rate of 67 percent compared to South Korea (95 percent), Netherlands (85 percent) and Canada (76 percent). Making matters worse, Strategy Analytics projects the U.S. ranking falling to 23rd by year-end 2010.

The article suggests that too many politicians are being paid too much cash by too many lobbyists to have any concern at all for their constituents' phone bills.

[leftyohiolib]

4. uh oh youre taking a swipe the sacred cow called cell phone. this will not go over well

[mojowork_n]

5. The phones are useful, convenient and sometimes even fun to use.

But the payment options suck, with all the rigged charges and the broken promises --
and the woefully weak supporting infrastructure (compared to other countries) --
is just terrible. So there's a lot of room for improvement.

[leftyohiolib]

10. add to that the profit margin is so high that users are gouged

its amazing that people would put up with being ripped off to that extent

[saras]

6. The " interference" is with cheap defective GPS units ONLY. Why should Lightsquared pay to fix them?

EVERY properly operating, spec-meeting GPS unit was largely unaffected by Lightsquared's operation. I suppose you could blame them for designing to spec instead of allowing for how much the GPS makers had already cheated. Too bad their businesspeople weren't anywhere near as smart as their techies.

[ProgressiveProfessor]

15. The real issue is the attempt to reclassify the band from low power space based signals to

land based. A blatant attempt to avoid prior regulation and greatly inflate the value of the that spectrum.

If Lightsquared had not tried to go with powerful land based transmitters, none of this would have happened.

Lightsquared is classic 1%er crap.

[accord99]

17. Interference

Actually, it's the opposite, it is the cheap, relatively inaccurate and/or old GPS devices that are less affected by LightSquared.

Though comprehensive testing clearly showed that LightSquared's original proposed network configuration caused widespread GPS interference across virtually all range of GPS devices, essentially rendering accurate GPS unavailable in virtually the whole of the populated United States.

Even LightSquared's hastily conceived second configuration failed miserably, causing measurable interference to consumer GPS devices and allowing the government to conclude that it will cause unacceptable interference to the more senstiive high precision GPS receivers used in industry, science and aviation.

[Egalitarian Thug]

7. This is the American business model. It was once called monopolistic and was unlawful.

Collude and bribe, stifle innovation, and put it in a pretty box.

[ProgressiveProfessor]

16. Pretty good description of Lightsquared

[marshall gaines]

8. fascist

we are in a corporate fascist state that can buy any politician and spin any argument to make the corp. the victim. INNOVATION, unless you not averse to ass kissing the corps., IS DEAD in america and i daresay the world. it's about profit and power.

[usrname]

9. The graph and interpretation is misleading

Cost to put up cell towers has dropped as manufacturing and operations costs have dropped, so it's not so hard to put up a cell tower as before. The towers are now smaller and easier to erect. Also, there's less demand for towers are many places are already well saturated with towers. I mean, eventually, there should be no need to add any more towers, and perhaps just maintenance of existing towers would be enough. Also, revenue has gone up exponentially, so the percentage cost allocated to capital expenditures shouldn't stay at the same rate. Capital expenditures should always decrease over time, as a percentage of revenue. Otherwise, you have capital expenditures as a variable cost growing comparably to the rise in revenue. That would be a bad business model. Cell phone companies don't even make their phones, so even the manufacture of phones, which is a variable cost, is not included as a capital expenditure.

The graph is correct, but the interpretation is completely wrong and misleading.

[mojowork_n]

11. I think your response is misleading.

Trying to do an accounting of capital expenditures for the cell phone industry
involves so much more than the cost of building towers. (And to even mention
that they don't manufacture the phones that use their networks is like suggesting
that because oil companies don't manufacture automobiles or trucks, there is a
'variable cost' penalty that Exxon or Mobile must constantly monitor, as if it were
a part of their own operations.)

The reality is that between deregulation and lax compliance enforcement from
government, the return on investment has never been higher for cell phone companies:

Here are 4 paragraphs from an Alternet article that lay out more of the real
picture:

http://www.alternet.org/story/148397/how_the_phone_companies_are_screwing_america%3A_the_$320_billion_broadband_rip-off?page=entire

In order to understand how the broadband con works, it is useful to examine how it has played out in one state and extrapolate this to the other 49 states. In this case, we will examine New Jersey as representative of a nationwide policy.

New Jersey state law requires that by 2010, 100 percent of the state is to be rewired with 45-mbps, bi-directional service. To meet this goal, Verizon collected approximately $13 billion in approved rate increases, tax break and other incentives related to upgrading the Public Switched Telephone Networks. To cover its tracks, Verizon submitted false statements year after year, claiming that it was close to fulfilling its obligations. For example, in its 2000 Annual Report, it claimed that 52 percent of the state could receive "45-mbps in both directions or higher."

Based on such false claims, Verizon has benefited for significant pricing increases for essentially inexpensive computerized services. For example, Call Waiting and Call Forwarding cost less then $.01 cent to offer yet the company charges $4-$7 for such features. In addition, fees for inside wiring went up to $7.00 from $1.25.

The company also benefited from more invisible perks. It secured massive write-offs on its network even though it wasn't being replaced; it actually secured a write-off of over 105 percent above the amount of construction. These write-offs helped save it billions in taxes. These factors have helped significantly heighten the company's Return on Equity, the standard measurement of profits, jump from 12-14 percent before deregulation to 30-40 percent.

[facultyandstaffshow]

18. i hate my cell phone

[link:

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