Economics and common sense deprecates the common argument for lower spectrum prices

Outside of China, very few governments would expect a saving in spectrum costs would mostly go to investment. Corporations have other priorities, including advertising and executive salaries. Stockholders come above everything at most companies.

Rarely would even 1/3rd of the saving go to capital spending. The U.S. under Trump had a massive tax cut, worth literally billions to Verizon and AT&T. Verizon actually cut investment. AT&T’s increase in capex was far lower than the tax saving. Investment levels in telecom are primarily based on technical improvements and competitive need. Only a modest amount of an increased profit will go to capital spending. 

Thomas Noren, Ericsson’s respected chief of 5G, should not have said, “Operators need to be allocated spectrum on friendly terms. It needs to be allocated, not for the benefit of the taxman, but for the benefit of building out and supporting the network,” unless he had a plan to make sure it would be spent on “building out and supporting the network.” Noren can be expected to echo the ideas of customers spending billions with Ericsson. 

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