Telecoms in America: On the airwaves

TIMES are getting tougher for America’s mobile operators as they battle one another for business. On December 8th Verizon, which dominates the market together with AT&T, gave warning that its profits were being squeezed as it rolls out discounts to entice customers away from rivals. Telecoms firms are scrapping over something else too: the wireless spectrum needed to carry voice and data services.Every so often, America’s Federal Communications Commission puts up airwaves for auction. The latest sale began on November 13th. Before it started, analysts took stabs at guessing how high the bidding might go, with bullish estimates coming in at $22 billion. But that amount was blown past in just a few days and bids now total a whopping $43 billion (see chart).What explains this appetite for airwaves? Part of the answer is that the last big spectrum auction in America took place in 2008, at a time when smartphones were only just taking off. Bids totalled almost $20 billion. Since then, smartphones and tablet computers have proliferated, putting pressure on existing airwaves. “Carriers have consistently underestimated the demands on their data…

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