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June 19, 2015

More Spectrum Needed to Avoid Wireless Traffic Jams


Traffic jams are no fun.

But traffic jams are more than just frustrating. When you’re stuck in traffic, you’re not productive, and you’re wasting time and (thus) money. Traffic jams are a deadweight loss to you, your family, and to society. That’s why there seems to be almost constant road, bridge, and interchange construction—at least in parts of the country that are experiencing growth.

Just as roads, highways and bridges are critical infrastructure for the transportation economy, spectrum is critical infrastructure for the communications economy. Roads and bridges are expensive to build, but at least you can always build more of them. With spectrum, however, the supply is limited by physics.  Innovation has allowed us to find more efficient ways to use available spectrum, but at the end of the day, spectrum is a finite resource and must be used efficiently.

Unfortunately, today the supply of spectrum is being artificially constrained. In some cases, this is just a matter of spectrum that has been licensed, or awarded, to companies that are making less efficient use of their spectrum. In other cases, spectrum is being hoarded and wasted, particularly by government agencies.

Spectrum availability is becoming a critical issue because of how much of our economic activity and productivity is moving to mobile devices. A recent Brattle Group study [pdf] estimates that more than $400 billion in economic activity and over 1.3 million jobs are generated directly by use of this licensed spectrum. But that doesn’t even tell the whole story. The “app economy,” which is also largely dependent on mobile wireless devices, is estimated to be responsible for 752,000 jobs and more than $20 billion in economic activity.

There’s also unlicensed spectrum—the spectrum you use in your home or office for a Wi-Fi network, for instance. Unlicensed spectrum is also growing in importance, and because equally important uses lend themselves to both licensed and unlicensed spectrum, we need more of both.

It’s crucial, therefore, that policy makers make it a priority to free up as much spectrum as possible, as soon as possible, to ensure that we don’t start experiencing the equivalent of traffic jams in the wireless space. Of course, this spectrum has to be released through rational means, which includes incentive auctions that fairly value spectrum being held by broadcasters and other spectrum holders. It includes forcing government agencies, especially the Defense Department, to review their spectrum needs and stop unnecessarily hoarding spectrum, or enter into spectrum sharing agreements.

As a bonus, spectrum auctions result in revenue to the government, so every dollar paid voluntarily to the government by a purchaser of spectrum is a dollar that doesn’t get added to budget deficits and the national debt. The Brattle Group estimates the value of the spectrum scheduled for release at $500 billion.

Releasing spectrum needs to be a priority, and the Federal Communications Commission (FCC) is behind on its promised pace of spectrum reallocation. If the FCC would reallocate more of its time and resources to releasing spectrum and less of it to micromanaging the broadband industry, that would be a win-win for the U.S. economy.


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