This is post #2 in Engine’s broadband solutions series where we explore telecommunications policies that encourage entrepreneurial activity. For post #1, click here.
In recent months, Congress has doubled down on efforts to make more wireless spectrum available for commercial use. Committees in both chambers have held hearings, members have introduced bills, the recently passed budget included a spectrum provision, and just last week, the Senate Commerce Committee floated draft legislation that would pay federal agencies to give up their airwaves.
But before we delve too deeply into recent activities, let’s take a step back. The average person likely isn’t worrying about the impending “spectrum crunch.” In fact, most people probably couldn’t even explain what spectrum is. But spectrum—the invisible waves that carry the data for wireless products and services—is essential to our increasingly mobile world.
Spectrum enables everything from mobile phones and wi-fi networks to wearable devices and garage door openers. Demand for these products and services is increasing exponentially. In the U.S., 97 percent of households now have a mobile phone and Ericsson estimates that mobile data traffic will increase more than seven-fold by 2020. The Internet of Things is expected to grow to 50 billion connected "things" by 2020, creating $19 trillion in economic value during that same time period.
All of this growth relies on access to spectrum. And as it currently stands, we are going to need a lot more spectrum to meet this increasing demand and ensure that a number of competitive players can thrive in the mobile marketplace. There’s just one small issue—spectrum is a finite resource, the vast majority of which is held (and often underutilized) by the government.
It is estimated that federal agencies hold between 60 and 70 percent of the spectrum best suited for broadband technologies. In an effort to free up some of this spectrum for commercial use, the National Broadband Plan, published in 2010, called for 500 MHz of spectrum to be made available by 2020. While some progress has been made towards this goal—the AWS-3 auction in March, an agreement in April to allow sharing between the Department of Defense and commercial operations in the 3.5 GHz “innovation band,” and next year’s broadcast incentive auction—there is still a long way to go. By some estimates, the U.S. will need an additional 350 MHz by 2020 to satisfy commercial needs.
If we don’t meet growing demand, consumers and businesses will suffer. When spectrum is limited, phone bills increase, data caps become more stringent, and innovation is hampered. But when spectrum is plentiful, more players can participate in the market and there are improved opportunities for technological innovation.
That’s why Congress should create a comprehensive plan that ensures spectrum needs are met over the coming decades. A strong plan would include a balanced mix of both clearing and sharing, and make available both licensed and unlicensed spectrum. In October, Congress passed a budget that included provisions to require 30 MHz of federal spectrum to be freed up for auction by 2024. While this is a step in the right direction, it is certainly not enough for the long term.
Fortunately, the Senate Commerce Committee has floated draft legislation, the MOBILE NOW Act, that would flesh out and expand on the budget provisions. The bill requires the government to relinquish a larger amount of spectrum (50 Mhz) over a shorter time period (the spectrum would have to be auctioned by 2020). Additionally, the bill would incentivize agency participation by promising agencies up to 25% of any auction proceeds.
It is our hope that even in today’s partisan climate, adopting a plan to free up federal spectrum for innovation is something that both sides of the aisle can unite behind. High tech startups—particularly those that develop mobile applications—depend on customers being able to access their products via mobile devices and networks quickly and affordably. And spectrum has enabled innovative applications and products like Wi-Fi, Bluetooth, and connected devices to flourish. Finally, increased spectrum and the higher quality service it facilitates allow wireless broadband providers to more effectively compete with their wired counterparts, improving competition in the overall broadband market.
American leadership in the wireless space and the health of our broadband ecosystem depend on a reliable supply of commercial spectrum. Congress should redouble its efforts to provide sufficient access to this fundamental input to mobile innovation.
