“Buy land,” Will Rogers is famous for having said, “They’re not making any more of it.” But the same constraint applies to a similar resource – electromagnetic spectrum, the real estate on which the economy’s future will be built. This week, the powerful Senate Commerce Committee will take steps in addressing this modern-day conundrum. And the end result could lead to a more competitive Internet while helping to meet the Obama Administration’s goal of closing the “digital divide.”
Spectrum is the range of radio waves that can carry mobile signals – voice, image, data, whatever you want, digitally morphed. And like the land that supports structures, spectrum supports our phones and their apps, remote education and healthcare, environmental monitoring, security and law enforcement, mobile entertainment, games, and other amusements, as well as the burgeoning “Internet of things,” from driverless cars to refrigerators that order groceries.
These innovations (which support 1.3 million jobs and $400 billion in annual economic activity, according to The Brattle Group) come so rapidly and pervasively that we often forget that it is spectrum that allows them to exist. Like land, there is only so much of it – the physical world provides only so wide a range of radio wave frequencies. But in the same way that skyscrapers make better use of land, technology that allows improvements in signal strength and compression make better use of spectrum over time.
But technology alone can’t meet the surging demand. Cisco estimates that consumers demand for mobile data will grow more than six-fold in the next four years. Cord cutters, “TV everywhere,” and the Internet of things will usher in millions of new connected devices and applications. According to the same Cisco report, the number of “wearables” and connected devices in the U.S. will be double the number of smartphones by 2019. And the U.S. industry, which led the world into “4G” LTE mobile technology, will be challenged by foreign competitors who seek to leap to the next step of “5G,” unless there’s enough spectrum to develop that technology and bring it to market. Experts predict the U.S. will need to increase its existing supply of licensed spectrum by 50 percent in the near-term.
We are failing to keep up with this demand due to the policies that govern spectrum supply and allocation. The Federal Communications Commission’s (FCC) main effort in this area has been auctions in which spectrum is purchased from current users, such as on-air broadcasters, and repackaged and sold to other users willing to pay far more. Companies bid with hopes of winning blocks of spectrum to build out their networks and provide faster, more reliable services for consumers increasingly reliant on wireless Internet. While these so-called “incentive auctions” – the next of which is scheduled for 2016 – will help, they won’t completely fill the void. In fact, after the much anticipated 2016 auction, there isn’t any new spectrum identified to meet near or long-term consumer needs.
The Bipartisan Budget Act of 2015 took a first step towards addressing this shortage. It requires The National Telecommunications and Information Administration (NTIA) to identify a small amount of federal spectrum held by the government by 2022 and make it available for commercial use by 2024.
But the Budget Act still doesn’t push hard enough. Government agencies have a great deal of spectrum – perhaps as much as 70 percent – and it’s not clear why they need it. The U.S. Mint, for example, has a slice of spectrum that is dedicated to connecting its Denver and Philadelphia centers, even though a multitude of private entities with equally important security needs have data systems that probably could fit the bill without a dedicated allocation of spectrum. And broadcasters now use digital television distribution which, coupled with mandatory “retransmission” by cable, is their new bread and butter.
Thankfully, there’s a roadmap beyond the Budget Act that could free up more of the spectrum we desperately need. The Senate’s MOBILE NOW Act – the subject of this week’s debate before the Senate Commerce Committee – would increase the spectrum called for in in the Budget Act by 66 percent. It would then codify President Obama’s 2010 commitment to make 500 MHz – double that which was available commercially at the time – of spectrum available for commercial use by 2020.
The end result could be a cash cow for the government. The most recent auction garnered $45 billion for treasury for only 65 MHz of spectrum. Imagine what future auctions will bring.
The resources we raise selling spectrum should be directed back to the Internet. They could link our schools and libraries to the high-speed Internet under the FCC’s E-Rate program, or used to supplement the FCC’s Universal Service Fund. Meanwhile, more abundant spectrum means wider and improved access for the remote communities underserved by wireline Internet, as well as lower-income households that disproportionately use wireless to access the Internet. More spectrum means helping them to empower themselves through better access to education, healthcare, the workforce, and other elements of citizenship.
More spectrum also opens the door for greater market competition. Just this week, mega-investor Chamath Palihapitiya said he is backing a startup that will bid as much as $10 billion in the 2016 auction to launch a new wireless carrier to compete with Verizon and AT&T.
Reallocating spectrum and deploying mobile broadband service is a long, technically complex process that takes on average 13 years. If Congress fails to pass spectrum pipeline legislation by the first half of next year, when will they? With so much at stake, so little historical partisanship in the area, and with so little effort needed to make it happen – it would be tragic if we failed.
