Does America Need A Government-Run Cellular Network?

Posted by on September 15, 2011 at 4:52 pm

Let’s face it: wireless technology here in the US is kind of a mess. We have two largely different standards for cellular broadcast (CDMA and GSM) and with four carriers, we see a lot of duplicated phones across various providers. A company like Apple spent years developing a version of their iPhone that would work on Verizon (and soon, Sprint), but all of these variables conspire to make the job of a headset manufacturer a pain in the butt. On his podcast, and recently in editorial form, Joshua Topolsky suggests that we should socialize our wireless standards and let providers duke it out amongst exclusive phones and services. Is this the right way for America to go?

Topolsky argues that the lack of government regulation creates three hurdles:

– These carriers alone don’t have enough bandwidth to handle all the devices on their networks. This leads to things like data caps so people “overuse” their “unlimited data” plans. Currently, Sprint is the only American carrier that offers true unlimited bandwidth, but that might just be a competitive differentiator. If they got any bigger, they’d probably ditch that in a heartbeat.

– Despite the fact that carriers use similar broadcast tech, they wall off their garden from other users, perhaps because of the aforementioned bandwidth. This allows the carriers to control the entire vertical, from phones to towers and keep them locked in to their services. All four carriers are embracing LTE as their next-gen broadcast tech, but they’re all making their versions incompatible with others.

– Those two issues combined mean that prices are exorbitantly high compared to other countries, but there are some issues there, too…

Josh opens with an analogy that in travelling cross-country, the highways are locked away into privately-owned segments that can only be traversed in specific kinds of vehicles, but this doesn’t hold much water. Most anywhere in the country, you have choice. Aside from rural areas, you can choose any of the four carriers for cellular service. It’s not like grounded internet connections that are provided by either the regional cable monopoly or the regional telco monopoly because they’re the ones that actually built out the infrastructure where you live. Wireless transcends that. Right now, I could go from Sprint to AT&T, T-Mobile, or Verizon with no penalty except for activation charges. There are very few areas that are doomed to only one or two of those providers.

Now, I’m all for internal improvements to the nation’s infrastructure. It was a Republican, Dwight Eisenhower in the 50s, who suggested that we build an elaborate and high-bandwidth network of roads across the country, modeled off of Germany’s high-speed autobahn. Sure, there had been highways before that, but they simply weren’t built for the task (or placed logistically well) of ferrying an entire nation from coast to coast. So what if we were to create a nationwide network of wireless “roads” and carriers like Verizon would merely act as ‘Greyhounds’ on it, perhaps leasing the network from the taxpayer. Instead of four separate networks, you’d have one master network and you could simply pick up a phone and go. It’d liberate customers from various technical hurdles creating a lot more choice, while potentially drive down prices, among other things. The question from there is: does the government seek eminent domain on private equipment (the cell towers and the carriers’ networks) or do they build out a whole new network and buy back on the current network? Obviously, there’s going to be some interest in building out to rural areas, but how would that network be built?

There are many questions involved, but the idea is sound. Like net neutrality, the argument exists that the government shouldn’t be involved in what private routers (i.e., the ones your ISP uses to push packets) are screening and rejecting. Once a bureaucracy is built, it is very difficult to remove and for many, myself included, that can be a very scary thing. What do you guys think?

Source: The Washington Post/Bloomberg

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  • Are you nuts?  More government regulation? The market will take care of it. Leave it at that. 

    • Anonymous

      Sometimes regulation is necessary to make industry better. Neither the government nor the free market should exist in a vacuum or we end up with horrendous things like anti-trusts, malicious corporate activity, and things like Enron in which a deregulated energy industry almost destroyed California’s infrastructure because of some profit-happy creeps. You need a happy marriage of both.

    • “The market will take care of itself” is a nonsense argument when the number of players in the market is small. The carriers are an oligopoly. When you have only a few players — there are only four major wireless carriers — you need more regulation.

  • Market regulation? Maybe. 

    Government creation of a market? Absolutely not.