Ensuring Only Established Business Can Play

The best thing about having a government is that it can protect the big players from small start ups. One of the biggest threats to established companies such as AT&T, Comcast, and Verizon are small start ups that develop innovating ways to offer superior services for less. Thankfully the state has established a great many regulatory roadblocks between start ups and their already established competitors. For example, the Federal Communications Commission (FCC) has a monopoly on wireless spectrum. In order to utilize any wireless spectrum you must obtain its permission and it has developed an auction model that ensures its permission is much too costly for anybody besides the already established companies:

(Reuters) – The U.S. Federal Communications Commission raised a record $44.9 billion in the auction of so-called AWS-3 airwaves that closed on Thursday, marking the highest point yet in the wireless industry’s appetite for more spectrum.

Wireless carriers Verizon Communications Inc, AT&T Inc and T-Mobile US Inc, satellite TV provider Dish Network Corp and others vied for new slices of airwaves to satisfy the growing consumer demand for streaming video and other data-guzzling applications.

$44.9 billion. While that’s a significant investment even for the likes of AT&T and Verizon it’s an impossible price for a stat up to meet. The auction model for wireless spectrum ensures only companies will billions of dollars to throw around can buy into the wireless game. Sure, the FCC periodically throws a few scraps to the little guy such as the 2.4 and 5.0GHz bands but those scraps aren’t suited for services such as cellular phone provision.

People always talk about how important government is to prevent monopolies. What they fail to see is that the government is a monopoly and it uses that status to favor specific market actors over others.