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back to article Mobe industry quails as Ofcom floats idea of QUADRUPLING 2G spectrum prices

The GSM Association has castigated Ofcom for wanting to quadruple the price of the mobile phone spectrum mostly used for 2G. The price hike, which will hit the 900MHz and 1800MHz bands, was proposed in an Ofcom document issued in October. John Giusti, head of spectrum at the GSMA, said: “We focused on the relative impact that a …

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"this sum multiplies by the time it's passed down onto consumers"

In a competitive market, it shouldn't multiply at all.

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Agreed. But then the market for spectrum isn't competitively priced and becomes a monopoly if OFCOM start setting price policies as opposed to continue to honour contracts/put for auction.

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quote: "as opposed to continue to honour contracts"

What, unexpected mid-contract price rises? I'm not sure how the mobile phone companies are going to deal with such an unfamiliar concept...

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Upvoted for pointing out the fact I missed the glaring irony in my own statement. My own irritation with OFCOM in general blinded me to my irritation with the telcos.

*hangs head in shame and irritation with self*

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We shouldn't give away spectrum in the first place, we should instead offer spectrum in leases, cost varying in proportion to how much spectrum you already lease.

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Of course costs multiply

The spectrum is what the company sells, the raw ingredient. Crisps cost a multiple of what potatoes do. If the cost of a potato goes up 1p the cost of one potatoes worth of crisps doesn't go up 1p it takes into acount the other costs - such as sales, marketing and the like and goes up by a multiple.

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WTF?

Re: Of course costs multiply

Are you trying to say Gary Lineker's appearance fees are index linked to the price of spuds?

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Re: Of course costs multiply

Nope, not at all. If you're a crisp company and the cost of one of your inputs (potatoes) rises, why should the cost of your other inputs (sunflower oil, marketing) also rise? If anything, the CEO tells everyone we've had a tough year and there'll be no salary increase for marketing this year because the rising cost of potatoes wiped out our profits.

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Re: Of course costs multiply

"Crisps cost a multiple of what potatoes do"

They do insofar as total price is always a multiple of cost of sales, but I think you mean the sale price varies with what you think is the primary input. And in that respect you'd be wrong. Walkers use 800 tonnes of potatoes to produce 11m bags a day, if the average price they pay is £400 a tonne (which I doubt) then that's 3 pence per bag that goes on tatties.

Production process, distribution, marketing and packaging are where the costs are. Anything other than Stackers is expensive to transport (because you're paying to deliver a bag of air, and high ratios of packaging to product). Any brand spends a fortune on advertising (shop at Aldi, you know it makes sense). And anything in a nice packet will see far more spent on the quality plastic/foil and high grade printing than what goes inside.

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Paris Hilton

Have you ever noticed that when UK income taxes go down every other Guvmint tax or Guvmint duty goes up?

It's a bit like the UK Treasury needs its cash whatever the income stream is called and however contrary to Guvmint policy it becomes?

(and oh! the irony of it?)

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There is one problem with a government, the insatiable need for more and more money. If every election you have to promise more this and that for everyone then you have to get the money from somewhere, you can't cut things out because that annoys people and so you just have to find ways to get more and more money to pay for it all. Ultimately this just leads to less and less money in your own pockets, you would be better off asking the government not to promise anything and in return keep more of your money.

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You're finally getting this?

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Ultimately this just leads to less and less money in your own pockets, you would be better off asking the government not to promise anything and in return keep more of your money.

This argument plays very well to people who have some money in their pocket and are aggrieved they don't get to keep more of it. It doesn't play well to people who have no money in their pocket and need some help.

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No, not quite.

The biggest danger is to fall into modes of thinking that accepts and permits taxation as the primary means of procurement and the only form of provisioning.

There are other ways but I'd guess that Whitehall does not seek to acknowledge potential alternatives exist (a self interest event?)

What would be nice is to see total gross income (unadjusted) to UK Treasury over last 10 years with emphasis on greatest increaser and greatest decreaser

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