Taxpayers failing to get their fair share of wireless gold rush

As telecom titans gobble up wireless spectrum amid a wave of consolidation, consumers are likely to remain stuck with higher bills and mediocre service.

Satellite TV provider Dish Network says it's thinking only of customers as it offers $25.5 billion to buy Sprint Nextel, the third-biggest U.S. wireless company.

"A transformative Dish/Sprint merger will create the only company that can offer customers a convenient, fully integrated, nationwide bundle of in- and out-of-home video, broadband and voice services," said Charles W. Ergen, Dish's chairman.

"This unique, combined company will have a leadership position in video, data and voice, and the necessary broadband spectrum to provide customers with rich content everywhere, all the time," he said.

Here's what Ergen neglected to mention:

Dish now controls billions of dollars worth of unused wireless spectrum that it obtained from the federal government as well as through a series of acquisitions, such as its $2.9-billion spectrum purchases last year from failed satellite operators DBSD North America and TerreStar Networks.

Under the terms of a deal cut in December with the Federal Communications Commission, Dish now has seven years in which to start operating a wireless network covering at least 70% of the population. If it fails to do so, its wireless license from the FCC will expire.

Dish's attempt to purchase Sprint isn't about serving customers. It's about positioning the company for a wireless future that, regardless of what role the company plays, will be worth a bundle.

Consumer advocates remain wary of the ongoing trend of consolidation among telecom companies.

"These Frankenstein-style mergers among weaker players are no substitute for real competition in the mobile, broadband and video markets," said S. Derek Turner, research director of Free Press in Washington.

"Until something is done about the market power that companies like Comcast, Verizon and AT&T abuse daily, consumers will be stuck paying higher bills for mediocre services," he said.

The reality, however, is that sky-high bills and mediocre service have become hallmarks of the U.S. wireless industry, and there's little anyone can do to change that.

There are too many barriers — cost, licensing, the Verizon/AT&T duopoly, which together control about 70% of the mobile market — to building a new wireless network from scratch.

The only way to be a player in this market is to buy your way in, and that means doing exactly what Dish and most other telecom heavyweights have been doing for years: acquiring other companies with slivers of the spectrum pie.

While most of the attention was focused Monday on Dish's big-bucks bid for Sprint, Verizon Wireless was reportedly offering up to $1.5 billion to purchase wireless spectrum from networking company Clearwire.

That would be the same Clearwire that already is 51% owned by Sprint, which has offered $2.1 billion for the rest of the company.

That also would be the same Clearwire that Dish, separate from its Sprint buyout bid, has offered to acquire for $5.15 billion.

Meantime, the Japanese telecom giant Softbank has its own $20.1-billion offer on the table for Sprint, and Verizon ponied up almost $4 billion last year for wireless spectrum owned by some of the country's biggest cable companies.

And don't forget the ongoing effort by Deutsche Telekom, parent of No. 4 T-Mobile USA, to buy MetroPCS after AT&T's bid for T-Mobile collapsed in 2011.

Complicated? The incestuous, scheming nature of the telecom industry makes "I, Claudius" look like "Pee-wee's Playhouse."

To date, the FCC has focused primarily on maintaining a semblance of competition in the wireless market. Yet as the value of wireless spectrum grows exponentially, another issue has emerged: Are U.S. taxpayers being fairly compensated?

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