Obama proposes new wireless-spectrum fee
Faced with a whopping $1.7 trillion deficit, President Obama is proposing tacking on a spectrum license fee to wireless operators to help generate revenue for the government.
The Obama administration's proposal was loosely outlined in the new budget plan for 2009 and 2010 submitted Thursday. In that plan, the administration proposes adding a new fee to be paid by wireless carriers that license wireless spectrum from the government.
These annual fees would start at $50 million in 2009 and jump to $200 million in 2010, Reuters reported. The fees will gradually increase over the next 10 years to $550 million per user per year, generating an estimated total of $4.8 billion over the next decade.
The proposed fees are in addition to license fees that operators have already paid the federal government as part of its wireless auctions. The Federal Communications Commission has been auctioning off wireless spectrum to phone companies and other entities since the 1990s. These auctions grant license holders exclusive rights to the spectrum in exchange for cash.
Over the years, these auctions have generated billions of dollars for the federal government. The most recent auction, which ended in March 2008, was for the 700 MHz block of spectrum that is being vacated by television broadcasters after the mandated digital TV transition. This valuable spectrum generated a record $19.6 billion.
But wireless spectrum is a limited resource. And the government is running out of airwaves to auction. In fact, the Obama administration predicts that it will only be able to generate about $4.8 billion in revenue from wireless auctions over the next 10 years.
Even though the additional fees could help the government halve the deficit by 2013 as well as help it fund several new spending initiatives, it's likely to be met with a great deal of resistance from mobile operators.
So far, none of the big four wireless carriers in the U.S.--AT&T, Sprint Nextel, T-Mobile USA and Verizon Wireless--has been willing to comment on the proposal. And the CTIA wireless-industry association said it's still looking into the matter.
"We are currently reviewing the details of the proposal and look forward to participating in the next stages of this issue," CTIA said in a statement.
Previous spectrum fee proposals have been strongly opposed by the wireless industry, and there's little reason to suggest that the industry would support them now. The big difference this time around is that a Democrat-controlled Congress could be more willing to support President Obama's plans.
More details about the proposal are expected later this spring when the administration releases a more detailed budget package. But any changes to the fee structure would require legislation. And my guess is that the wireless industry would fight hard against it.
Marguerite Reardon has been a CNET News reporter since 2004, covering cell phone services, broadband, citywide Wi-Fi, the Net neutrality debate, as well as the ongoing consolidation of the phone companies. E-mail Maggie. 
Obama is not "Faced with a whopping $1.7 trillion deficit." Obama created a whopping $1.7 trillion deficit.
We don't need anymore apologists for why Obama is hiking taxes.
@zizzybaloobah This is not the kind of change I believe in, but it's the kind of change I expected ...
At $50 million, that's $0.20 per customer, average, per month, or $2.40 / month, or one grande latte a year.
Of course, the cost might just be absorbed by wireless companies.
1) That it's $50 million per carrier, per spectrum licensed, and that figure increases to $200 million next year.
and
2) Not everyone uses the same carrier.
So, even if we're just looking at the big 4, AT&T and Verizon customers are going to have less of a per-user cost increase then T-Mobile or Sprint. In the end, this kind of fee is going to make it harder for new companies to enter into the market, and it's going to squeeze the smaller carriers right out of the industry until we're left with just two competitors.
See? It's not a tax- it's just ... a small service fee from your cell phone provider. Blame them, not the government, really. Yeah, thats' it. Uh huh.
Pardon me while I bend over for what I see is coming down the line in the absence of taxes to pay for the huge budget spending.
However, I don't see how a drop here and there can offset a $1.7 trillion deficit.
What about all of these companies that have been bailed out by tax payer's money, yet big fat cat bosses are still rolling around laughing in our faces with their big fat bonuses? Okay, so Obama has put a cap on that in the US, but here in the UK the greedy little men are free to walk away with whatever they want. It's outrageous!
http://mobile-broadband-onthemove.co.uk
In my opinion, any increase should be re-invested in developing rural services and targeted ICT initiatives... similar to investing in bridges and highways..
That's already being handled with current legislation there's absolutely no reason to do anymore about it with this money.
This is a FEE, aka political double talk.
Yea, our cell plan is 79.99, yet I have to cut a check for 110+ ????
- by yak2718 May 4, 2009 9:46 AM PDT
- Why do people insist on confusing fees with taxes? The wireless spectrum is a LIMITED resource that belongs to the people of the US. Our way of charging private companies for its use is through the government. What's hard to understand about that? When the companies pay the government, they're paying us. It's the government's job to charge the fair market price for each public good. Now, if you don't like what the government does with your money that's a different story. Why should certain individuals be able to take for free that which belongs to all?
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(25 Comments)Now of course they did already pay the fees at the auction, so I don't know if this particular fee is all that fair, maybe it depends on the details...