CNN started a weeklong series today on the spectrum crunch. What I found interesting was the number of comments to the first post. In a way, I wanted to say, “I told you so.”

My cursory review of the comments found that consumers had no sympathy for disciples of 4G. Customers who swore that they only used their phones to (shudder) make phone calls were critical of consumers who spent too much time on the networks posting pictures, texting, and socially networking with friends that for half the monthly subscription price they could have lunch with.

I, along with one other commenter I read, raised the issue of this is what you get when you are afraid of consolidation. I repost my comment to CNN here for your review.

Slowing down inevitable price increases can only come about in one of two ways. The first way is unacceptable, which is to regulate prices. Wireless access to broadband, while increasingly important for commerce, is not a utility. Additional regulation in wireless will bring about greater inefficiencies in terms of service delivery. Wireless firms would have to create new service niches in order to subsidize rates for consumers who could otherwise not afford increased prices.

The second option is to allow more consolidation. Consolidation creates the economies of scale necessary for keeping rates down. Economies of scale means lower cost per unit of service provided. Bigger firms help to deliver this type of scale. This is why denying the AT&T, T-Mobile merger was a big mistake.

It looks like Congress may be headed to signing off on a payroll tax extension. Unfortunately for broadband consumers, the package includes allowing the Federal Communications Commission the flexibility to impose on large carriers, such as AT&T and Verizon, conditions designed to ensure competition should carriers win bids for broadcast spectrum.

Allowing larger companies to bid is the appropriate approach this legislation should take. I’m still not comfortable with a regulatory agency creating conditions that ensure competition. If those conditions were to give Sprint and T-Mobile, two companies that have taken mismanagement to a new level, some additional advantage, you may as well keep more efficient and better managed carriers from bidding for spectrum.

The Wall Street Journal reported today that some lawmakers would like to use proceeds from spectrum auctions to pay for portions of the payroll tax extension package. They would like to see some of the bid money going to offsetting the renewal of unemployment benefits and upward adjustments Medicare payments to health care providers.

The irony of the proposal is that some of these same lawmakers wish to draft legislation that would keep large wireless carriers such as AT&T and Verizon from participating in volunteer incentive auctions where carriers could bid on spectrum licenses given up by broadcasters. Keeping out the large carriers poses two problems.

First, like I’ve blogged about before, keeping out large carriers reduces the chance that spectrum is being put to its best use. Carriers willing and able to pay premium cash for the licenses would be left out.

Second, if you leave out the big guys with the deeper pockets, it means less money being used to offset Medicare payments and jobless benefits.

The notion that Congress would use these monies to fund welfare programs is not sound. Congress, who should be well aware of the limited availability of spectrum, should instead let these funds stay with the Federal Communications Commission. These funds could be used to leverage incentives for deploying more broadband infrastructure, a much better approach to growing the economy than funding jobless benefits.

A couple posts ago I shared the idea of Apple buying T-Mobile. What would really be an act of charity would be Google buying Sprint. Talk about putting a company out of its misery. Shares of Sprint have been falling for six months and this company needs a parachute. It waged a successful legal/regulatory campaign against the AT&T,T-Mobile merger, but looks like it may be in need of some help itself.

Here is a quote from an analysis by Morningstar:

“We believe this strategy is correct, but execution has failed thus far in one critical area: financing. That Sprint needs to raise capital isn’t a surprise, given the steady debt maturities it faces during the next few years. Sprint’s initial reluctance to clearly lay out its funding needs and continued uncertainty around Clearwire CLWR have caused the market to lose faith in management. Backed into a corner, the firm was forced to accept costly terms on its recent $4 billion debt offering. Sprint should now have the financial resources to work through Network Vision, but the firm still has little room for error.”

Google definitely has resources and could be Sprint’s white knight. In addition, keeping Sprint viable is good for public policy reasons because it keeps another choice for mobile broadband access in the game.

Sprint acting more like a regional carrier

Sprint and AT&T are at it again. AT&T is calling out Sprint on the Kansas City-based carrier’s use of roaming agreements versus building out a network to provide consumers with real facility-based services. Sprint alleges this is good for consumers because the practice allows the company to provide its nationwide service..

Sprint calls this good for consumers? When a consumer purchases the service of a national carrier, the consumer wants the certainty of knowing that her service is being provided point to point by the network of the wireless carrier to whom the consumer forks over its money. What Sprint is doing inefficiently pricing its services if that is the case.

Worse yet, this may also be indicative of Sprint’s continuous poor management; buying 30 million iPhones it apparently can’t build a network out to service the phones on. Hard to believe the FCC considers what Sprint is doing as optimal use of a scarce resource.

Is it really good for consumers and investors that a wireless carrier of Sprint’s size and stature is mismanaging itself into becoming a regional carrier?