Randy is a body on the tower crews of the wireless-infrastructure firm I own through two shells outside Amarillo. He climbs 200 feet in a full-body harness I bought in October of 2023 and have not inspected since the month I bought it. The harness costs $285. The carrier wrote inspection and replacement schedules into the subcontract. I do not comply with either. Across the 62 climbers I run on the Texas and Oklahoma routes, roughly half the harnesses reach their scheduled replacement in any given year — staggered purchase dates. I skip every one. The annual saving is $8,835. Randy’s hands are still steady and the harness is 32 months old and the stitching has not failed. God has not chosen this Tuesday to test it, and God, on the question of nylon fatigue, has my confidence. The bars on your phone right now came up a tower somebody climbed. Randy climbed it. I kept the $285 and the $8,835 and the autumn inspection, and I am going to keep them again in October.
Forbes and Moore wrote in Fox News this week that Chairman Carr’s Upper C-band auction is the market working as it was built to — spectrum allocated by competition to the firms that will put it to productive use, $264 billion in new GDP, 1.5 million jobs, no new taxes. The arithmetic is correct. I am one of the firms. Here is the part the arithmetic does not show you.
The carrier that wins the auction will need roughly 4,200 new sites across the next build-out. Every site requires a climber. Every climber is a body leased by a subcontractor to a subcontractor to the carrier, and at each link in the chain the climber is classified as an independent contractor whose fall is not a recordable injury because the man who falls is not an employee, and the carrier’s liability ends at the first contract and the subcontractor’s liability ends at the second and the climber, at 200 feet, is alone with a strap of nylon whose stitching I have not looked at since his grandson was born.
Slaves, be subject to your masters with all respect, not only to the good and gentle but also to the harsh. — 1 Peter 2:18. The apostle anticipated the contractor structure and blessed it. There is no carve-out for the subcontractor who skips the scheduled inspection, and I have read the verse several times looking for one. It is not there. The apostle did not write a grievance procedure for the harness.
A different address in the same chain now, because the principle travels. Harland is a ground hand on the same build-out — a different subcontractor identifier in the same carrier contract. He runs the mini-excavator that opens the trench from the tower to the roadside cabinet. The mini-excavator is leased by a staffing firm from an equipment firm that rents to a subcontractor that the tower contractor hired, and I own three of these four entities and the fourth reports to me through a management fee. Harland signs a 1099 at the staffing firm. The staffing firm is not the employer of record for workers’ compensation purposes in Texas because a 1099 is a contractor and a contractor is not a covered employee. The carrier requires the general contractor to carry coverage. The general contractor requires the tower contractor. The tower contractor requires the subcontractor. The subcontractor requires the staffing firm. The staffing firm, correctly, classifies Harland as a 1099. The 1099 is not an employee. His heat injury — when it comes — will not appear as a recordable incident on any of the four books I control. The structure I wrote is the expense I never incurred. The hand that opens the trench does not exist on my quarterly. That is the design.
Now lift your eyes off the two bodies.
The auction assigns spectrum to the firms whose bids reflect the highest expected return. The return is highest where the cost of the network build-out is lowest. The cost of the build-out is lowest where the bodies on the towers and the trenches are cheapest — where a man will climb for $19 an hour as a contractor without comp coverage, where the harness is old and the classification chain is deep and the heat stroke is folded into the turnover rate the spreadsheet already priced. The auction clears at the market-clearing price of spectrum. It does not clear at the market-clearing price of the climber, because the climber is not priced by the auction and never was. Cato listed the worn-out slave on the same page as the worn-out ox and the old wagon — servum senem, vendat — and the spectrum auction, in a cleaner century, runs on the same ledger, minus the Latin. The old climbing harness is the old wagon. Randy’s spine is the ox. The auction is the market, and the market is what is real. Forbes and Moore will publish this arithmetic again next quarter. The hands are not on their ledger. The hands have never been on their ledger.
This is where the op-ed stopped. Forbes and Moore see the auction clearing and the GDP rising and the jobs appearing and they do not follow the jobs to the body at the top of the mast. The GDP counts the call. It does not count the 200-foot fall that did not happen because the nylon held, or the fall that will happen when my arithmetic says the nylon has reached its cost-justified limit, and I will replace it then. I haven’t calculated that limit.
Let me put the number where you can see it. The carrier’s winning bid will be in the billions. The carrier will build out with subcontractors who bid against each other to supply the cheapest climbers. The cheapest climbers will climb in the cheapest harnesses, inspected on the cheapest schedule. A new harness costs $285 and an inspection costs a foreman’s time and a ladder and a clip and a checklist and the paperwork afterward. I skip all of it. The margin on skipping it — $8,835 a year across the staggered replacement cycle — does not show up in the $264 billion and never will. The auction is clean. The harness is not. The auction and the harness are the same transaction, seen from different heights.
Now the law the case was only an example of.
The public airwaves are a public asset sold to private firms at auction. The auction converts the asset into a bid, the bid into a build-out, the build-out into a network, the network into service, and the service into a monthly bill. At every stage but the first, a body is required, and the body, in the current regulatory architecture, is not supervised. Forbes and Moore write that the government should free the spectrum and then “get out of the way.” I own the layer one government gets out of the way of. The carrier wins the spectrum; the subcontractor wins the tower contract; the climber wins the climb; and the OSHA inspector, 23 counties away, wins exactly nothing, because the inspector does not know the climb happened and the climber is not on a payroll the inspector can audit. The airwaves are invisible and so is the fall and so is the man who almost fell and so is the man who will. That is not an accident of enforcement. That is the architecture, and it is producing exactly the margin it was designed to produce.
Drop back to the tower.
Randy’s grandson will start kindergarten in September. Randy will still be climbing when he starts, in the same harness, which I will inspect when the carrier writes an inspection into the contract with a penalty I cannot insure away. The carrier will not write that penalty. The carrier’s shareholders do not ask about the climbers on the towers that carry the spectrum the shareholders bid on, and the shareholders are correct not to ask. The climbing is the part of the network build-out that does not appear on the income statement. The falling is the same category, a line lower. The quarterly margin on the tower-services division was 22% last quarter, and I am going to read the number again this evening, and I am going to find it satisfying, and I am not going to look up whether the harness held through the afternoon.
Sterling A. Varice holds the Hayek-Friedman Chair and serves as Dean of Instruction at Warden University’s College of Business and Economics in Richmond, Virginia. He is the author of three textbooks: Divine Mandates for Labor Utilization, Social Obligations for Profit Maximization, and Calibrated Deprivation: A Manager’s Guide to Employee Motivation.