T-Mobile US: 3 Billion Euros for Licenses, 2 Billion for the Network

Recently, T-Mobile USA has acquired the necessary frequencies to deploy their 3G UMTS/HSDPA network in the U.S. The cost for the licenses amounts to about 3.3 BILLION euros. Compare this to the costs for hardware and network deployment of about 2 billion euros. While thousands of engineers in companies have worked to build the hardware and software for the networks, less money goes to them than to the government which hasn’t really done a lot to earn that money. Or has it!? Please enlighten me… I know, it was an auction, but I just find that imbalance somewhat strange. Seen from a different point of view, over half of the money they will charge for network access and services later on do not go to the people who’ve worked on the technology but to a third party.

P.S.: I know the imbalance is much bigger in other countries, like for example in Germany where UMTS licenses have been bought for 12 BILLION euros per operator at the time…

2 thoughts on “T-Mobile US: 3 Billion Euros for Licenses, 2 Billion for the Network”

  1. I agree completely. How much faster/cheaper/better do you think mobile services could be today, if operators were able to spend their capital resources on developing services rather than paying governments for licenses?

    The right system here would be something along the lines of the “Homestead Act,” which governed the recognition of property rights in the unsettled American West–in essence by saying that if you use land productively for a certain period of time, it becomes yours.

    There’s a great article on this subject called “The Property Status of the Airwaves” in Ayn Rand’s book “Capitalism the Unknown Ideal.”

  2. You say “the government” here as if it were some unrelated foreign invader exacting tribute. Are the customers they’re planning to profit from someone other than the people represented by “the government”?

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