Washington’s Push To Stop Corporate Welfare And Cronyism Must Extend To T-Mobile

Drew Johnson National Director, Protect Internet Freedom
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Presidential candidate and Texas Senator Ted Cruz’s rallying cry for his 2016 bid is one all Americans should support: “it is time to break the Washington cartel” of special interests and career politicians who “on a daily basis are conspiring against the American people.” Because, as Senator Mike Lee (R-UT) argues, “Big government isn’t just inefficient it’s fundamentally unfair.”

Corporate cronyism and welfare in the nation’s capital is alive and well. Cruz and Lee are right. But through the darkness there is sometimes light, even in the D.C. cesspool.

The Ex-Im Bank, a loan and insurance provider for American corporations looking for assistance in foreign markets, lost its Congressional charter on June 30. While its biggest beneficiaries decry the likely-short term closing as a threat to American business, it is in reality a positive development, the ending of what Heritage Foundation expert Stephen Moore described as “food stamps for corporations.”

As Tim Carney, a vocal critic of the bank, wrote, the Ex-Im is merely a means to, “[empower] government to ladle out subsidies to companies empowers the big-government politicians to extract money — and policy concessions — from business.”

Perhaps feeling bullish about the crony takedown, many of Washington’s most influential power brokers are now turning their attention to sugar subsidies, as well.

“Defeating the sugar lobby is the next campaign after Ex-Im,” Grover Norquist of Americans for Tax Reform said in the Washington Post. “Both are cronyism in its undiluted, inexcusable majesty. Both have survived because they perfected the skills to control Congress for their own profit. If they go down, no political subsidy will be safe.”

Americans and lawmakers hoping to continue this positive trend of combatting the Washington cartel should direct their attention towards the FCC. The agency is uniquely positioned to stop a blatant case of cronyism by wireless carrier T-Mobile right in its tracks.

Unsatisfied with the rules governing an auction of spectrum – the invisible resource that fuels wireless communications – the self-dubbed “uncarrier” has been anything but, launching an all-out assault on decision makers inside the Beltway. Through a phony coalition, public appearances by its outlandish CEO John Legere, meetings with members of Congress and the Federal Communications Commission (FCC), calls to consumers for action, and a misleading video, T-Mobile alleges it needs special treatment to compete.

Nothing could be further from the truth.

By way of background, the FCC will oversee a pivotal process in 2016 where broadcast television providers will auction top-grade spectrum to wireless bidders. In the name of “competition,” the FCC has set aside spectrum for supposedly smaller carriers, such as U.S. Cellular.

Somehow Sprint and T-Mobile, the third and fourth largest wireless companies in market share, have managed to convince the FCC that they are small and should receive a handout of this cheap set-aside spectrum, too. Now T-Mobile wants an even larger set-aside than it was already granted. It is corporate welfare at its worst.

Such an outcome could cost the U.S. Treasury billions of dollars in spectrum auction revenue that could be used to reduce our nation’s massive debt or fund important programs.

Adopting a set-aside in the first place was bad public policy, but increasing it would only add to the idea that the FCC plays favorites. It would further violate the public trust, robbing taxpayers of the value of the spectrum by allowing wealthy corporations to pay less for the spectrum than it is actually worth. These entities can afford to pay fair market value for spectrum. The last thing they need is a government handout.

Moreover, T-Mobile already maintains a timing advantage. Because of massive investments by its competitors in a 2014 auction that dwarfed the bids of T-Mobile, the boys in pink should have more readily-available capital to snatch up spectrum this time around than other carriers.

The FCC must stick to its principles and deny T-Mobile’s pleas for handouts when it finalizes its set-aside rules on Thursday. “[The FCC] may be holding firm right now but that’s also something you can say of Jell-O right after it comes out of the fridge,” columnist Holman Jenkins writes in the Wall Street Journal.

Most Americans may not realize it, but the sale of spectrum holds great ramifications for the future of an information economy increasingly reliant on wireless communications. Determining who owns the spectrum that allows people to use wireless devices is integral to this nation’s growth.

To move forward, the FCC must follow the lead of Congress and begin to weed out cronyism that harms both taxpayers and consumers.

Drew Johnson is a Senior Fellow at the Taxpayers Protection Alliance, a nonpartisan, nonprofit organization committed to limited, responsible government.