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Perspectives from FSF Scholars
July 10, 2015

Keeping Up with the Market:

The Urgent Need for More Spectrum

 

by

 

Gregory J. Vogt *


[Below are portions of this latest FSF Perspectives. A PDF version of the complete Perspectives is here.]
   

 

Introduction

 

The time to locate and begin reallocating more spectrum for mobile broadband use is now. It is laudatory that the Administration has been moving forward with its own plan to allocate 500 MHz for mobile broadband use. But the plan is already out of date, and the reallocation efforts are lagging.

 

Demand for spectrum is exploding, driven by the market, representing business and individual consumer interests in more information, efficiency, entertainment, and social interaction. Mobility draws our nation and the world closer together. Indeed, the continuing emergence of the Internet of Things (IoT) will only accelerate this demand. But reallocating spectrum takes time, a lot of it, and therefore the government needs to redouble its efforts now to find more spectrum for commercial mobile broadband use. Because government is sluggish to respond to the market, the need should be classified and considered "urgent."

 

350 MHz of Spectrum Is Needed by 2019

 

A recent report published by the Brattle Group estimates that by 2019 the United States will need to reallocate an additional 350 MHz of spectrum for high power dedicated mobile broadband use. The report notes that the Federal Communications Commission (FCC) is lagging in addressing its 2010 prediction that there would be a 300 MHz deficit of spectrum for mobile broadband use by 2014. Based on these two separate assessments according to the Brattle Group report, by 2019 the U.S. will need about 650 MHz total of spectrum for high powered mobile broadband use.

 

The Brattle Group based its additional 350 MHz estimate on the same methodology the FCC used to make its own 300 MHz prediction in 2010. The estimate includes assumptions based on both increased efficiency of technology and off-loading of traffic to Wi-Fi. The Brattle Group's estimation notes that in hindsight, the FCC estimates were fairly accurate as a historical trend, even though certain peaks and troughs occurred within the timeline. Although all estimates are going to be off to some extent, on the whole, there is a good basis on which to rely on the reasonableness of these predictions. Introduction of the IoT, or harnessing the technological capabilities of mobility and the Internet to a whole host of different machinery and appliance applications, along with the ever-increasing demand for video applications, is only going to accelerate these existing demand curves.

 

More Spectrum Is Good for the Economy and Consumers

 

This latest demand prediction represents both good news and bad news for consumers. The good news is that consumers want and continue to use mobile broadband for new services as well as existing uses that require more bandwidth. This represents positive consumer welfare advances. The bad news is that the increased consumer demand stands as a warning that these new services are going to suffer both in terms of reliability and the pace of innovation if bandwidth demand is not met.

 

A number of econometric studies, for example, here and here, have demonstrated the enormous economic value that wireless services produce for the American economy. These estimated values simply identify the value associated with direct and indirect employment, and the consequent increase to GDP. But even these reports fail to identify the difficult-to-quantify revolutionary value of changing the way we interact and communicate with each other or the way wireless improves the efficiency in our business and individual lives. No longer are we chained to our homes and offices in order to communicate, but we can interact, take care of business, or access entertainment options, wherever we happen to be.

 

The ability to access the Internet almost anywhere represents a quantum leap forward in the value that the Internet alone can provide. That value is about to skyrocket even further as interest grows in the IoT, which relies in large part on both mobility and the Internet.


*  *  *

Conclusion

 

As the Brattle Group reports, by 2019 the government will need to re-allocate 350 MHz of spectrum on top of the previously identified need of 300 MHz. This is 150 MHz above what the Administration set as a goal in 2010. While I applaud the Administration for its spectrum reallocation decisions over the last five years, I believe it is premature to conclude that it has made "substantial progress" in meeting its 500 MHz policy goal. Implementation of those goals has been exceedingly slow, and still of uncertain value due to sharing issues and other uncertainties.

 

In order to meet demonstrable consumer needs for fast, reliable advanced wireless broadband services, the government has to get its act together. Instead of taking time to celebrate, it is time to double down on the work and respond to market needs.

 

* Gregory J. Vogt is a Visiting Fellow of the Free State Foundation, an independent, nonpartisan free market-oriented think tank located in Rockville, Maryland.

 

Read the complete Perspectives here.

 

 

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