US corporations have spent more than $25 billion on thin air this week

Someone has to pay for this.
Someone has to pay for this.
Image: AP Photo/Nati Harnik
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One of the most valuable assets owned by the US government and its people is completely invisible.

It’s called spectrum—and it’s the airspace used to transmit all wireless technologies, from broadcast television, to radio and, most importantly these days, mobile communications signals.

This week, the Federal Communications Commission has been auctioning off spectrum licenses for the first time since 2008, and the amount of money already spent by companies to buy it up ($25.8 billion) is far greater than analysts had expected. Fitch Ratings had been projecting $18 billion to be spent on the licenses, and the auction is not even over  yet.

Some 70 entities, including big wireless telecoms such as AT&T, Verizon, and T-Mobile, as well as private equity funds, have registered to bid. Nobody knows who has actually secured licenses yet; the process remains anonymous until it is completed, which likely will happen in another day or two.

The strong bidding thus far is yet another reflection of the insatiable demand among consumers for mobile connectivity. The frequencies being auctioned off are not even that desirable (not to get too technical, but the spectrum is in a higher frequency range; better penetration through walls and over long distances comes at lower frequencies), but with network quality becoming a major selling point with wireless customers, telecoms evidently feel the need to stock up on it to ensure the quality of their coverage over the long term. As the Wall Street Journal (paywall) points out, the spectrum being auctioned this week might not actually be used for years.

The auction’s heavy activity also reflects scarcity: the next spectrum, used by broadcast TV, won’t be auctioned until 2016.

The strong demand is good news for the federal coffers, although it won’t do much to move the dial on the deficit, which is projected to be around $500 billion this fiscal year.