A colleague who worked on the auction design for the ELSE Centre at UCL ran some test auctions on student subjects with the premise that buyers were bidding for the rights to operate a diamond mine, with a guaranteed (and astronomically large) return. In experiments, bidders were explicitly warned to save some of their budget over for picks and shovels so they could actually extract the diamonds, should they win.
When it came time to bid, the students did not heed this advice... and nor did the telcos.
I wouldn't be proud of this. I would rather have seen the spectrum given to the cell phone providers the way that spectrum was originally given to radio and TV broadcasters in the US.
And it's not as if taxing the spectrum changes how much more money cell phone companies would get at different prices.
When Google Fiber comes to a city, the prices of competitors drop and the data speeds increase. The spectrum auction which is passed on as an invisible tax creates the opposite effect of that desire.
It is an essential resource in today's world, so this tax is not only implicit and invisible, it is also regressive, adversely affecting the poorest the most.
> And it's not as if taxing the spectrum changes how much more money cell phone companies would get at different prices.
Actually, cell phone providers could make more revenues through increased use of spectrum at lower prices. Consumer, cell phone provider both win when there is no auction and the spectrum is given out as it originally was in the US with radio and TV spectrum.