So what did you do during the blizzard? Besides shoveling, I mean?
I’m betting you also plowed through some bandwidth: Netflix, Amazon Prime Video, and online gaming—if your home is anything like most homes. Down time is on-line time.
We didn’t get snow where I live, but traveling over the holidays we got our share of bandwidth. Our family listened to podcasts while using Google Maps for navigation and for finding restaurants and gas stations. When it was time to stop for the night, out came the Marriott app. My wife was updating Facebook with pictures and streaming Pandora. In the back seat, my teenage son was apparently outdoing all of us, as my wireless bill later revealed.
I can’t help but marvel at how much we’ve transitioned away from having to be tethered to walls and desks. Wireless is king. And consuming wireless bandwidth means using spectrum.
Spectrum is the most unappreciated and underrated of our natural resources. In economic terms, spectrum is particularly scarce, since there is an absolutely fixed amount of spectrum available.
You want to wake up some morning and find the American people really out-of-sorts? Start running out of available spectrum. The only option then will be to allocate use through higher prices—which is obviously not a good solution, because spectrum isn’t just a convenience. It makes us more productive, creates jobs, and contributes significantly to GDP.
In fact, according to a recent study by the Brattle Group, the economic value of licensed spectrum in 2013 was almost $500 billion. In addition, that spectrum contributes about $200 billion annually to GDP.
And that’s only the value of licensed spectrum used by the wireless phone companies. It doesn’t include the value of unlicensed spectrum used for Wi-Fi and other applications, which in 2014 was estimated to have a total economic value of $222.4 billion and contribute $6.7 billion to annual GDP. The economic value of both licensed and unlicensed spectrum will only increase over time, as we become even more dependent on the constant innovations rolling out from the network companies and app developers.
The federal government, as the administrator and grantor of spectrum, must ensure that spectrum is being freed-up and made available for use on a regular basis in order to keep this critical wireless economy going and growing. Some of this spectrum can come from licensees who aren’t making efficient use of the spectrum granted to them, or who can be persuaded to relinquish it. But we’re reaching the point where the largest, most inefficient holder of spectrum is in fact the federal government.
That’s why last year’s mammoth budget deal included a provision requiring the federal government to identify additional spectrum to be auctioned for use in the private sector. Such action is urgent thanks to the glacial pace of government. It takes, on average, 13 years to reallocate spectrum so it can be made available for use.
But it’s also important to make sure abundant spectrum is available for unlicensed uses, where demand continues to increase for ever-more and ever-faster Wi-Fi. In fact, innovative use of Wi-Fi is inevitably part of the solution to spectrum scarcity in the licensed bands.
Politicians often overstate their impact on economic growth and job creation. However, in the case of ensuring a steady pipeline of spectrum, the difference between moving promptly or slowly in freeing up spectrum could be the difference between a growing or stagnating wireless economy.