New Study Reinforces Value of Wireless Spectrum

The Taxpayers Protection Alliance (TPA) has been a proponent of releasing as much government held wireless spectrum as possible without hindering the abilities of the federal, state, and local agencies to do their job. To understand spectrum and why it’s important, is to think of spectrum like lanes on a highway system with wireless devices being the vehicles using that highway.  The more cars on the highway the more crowded the highway is. The government owns large amounts of spectrum and while they need to keep some for security purposes and other operating needs, there is no doubt that more spectrum is needed in marketplace so that consumers can benefit from businesses who can use it to provide better and more efficient wireless service.

Selling spectrum to the private sector could make wireless devices quicker and bring in billions of dollars toward deficit reduction. The issue of making spectrum more available has been addressed in Congressional inquiries, but now there is more recent information just recently released that provides greater proof as to just how key spectrum is to telecommunications.

The Federal Communications Commission (FCC), the entity responsible for selling the spectrum, was asleep at the switch when it allowed satellite provider Dish Network, a $30 billion company, to take advantage of a program designed to help small business win coveted spectrum in a recent auction. Dish has an 85-percent financial interest in Northstar Wireless and SNR Wireless, two companies that didn’t exist until a few months before the auction. Because they have little to no revenue, they qualified as small businesses under the FCC’s Designated Entity (DE) program and got a 25-percent bidding credit. They outbid major competitors on countless occasions, and Dish ultimately won about half of the licenses up for grabs – more than $13 billion worth, with a more than $3 billion discount, courtesy of taxpayers.

A new study (click here) released by CTIA, The Wireless Association, analyzed the value that spectrum in direct and indirect impacts on the economy:

Over the past 30 years, the Federal Communications Commission (FCC), often working in conjunction with the National Telecommunications and Information Administration (NTIA) and sometimes at the behest of Congress, has made an estimated 645.5 MHz of licensed spectrum available for the mobile wireless industry. On net, 98.5 of those megahertz have come since the FCC released its National Broadband Plan in 2010 that evaluated the nation’s spectrum needs. The value of this spectrum is driven by the economic profits and consumer welfare it creates. After taking into account approximate differences in band values, we estimate that the economic value of the 645.5 MHz of licensed spectrum is almost $500 billion.

The report takes into account the impact spectrum has on the to the economy. According to the study:

• Employing 1 person in the wireless industry results in an additional 6.5 people gaining employment
• Mobile entertainment revenues were valued at an estimated $9 billion in 2014
• One analyst estimated that the “app economy” generated an estimated 752,000 jobs in 2013
• An analyst at IHS, a market research firm, stated that the U.S. telehealth market is expected to grow from $240 million in 2013 to $1.9 billion by 2018

Wireless Week Editor in Chief, Andrew Berg, provided additional details on the study’s findings regarding the economic impact of wireless spectrum.  According to Berg, “Spectrum devoted to wireless networks goes for a premium at auction because it’s generating over $400 billion in economic activity annually.” The $400 billion figure comes from the direct and indirect impact that wireless spectrum has had and continues to have on the economy.  This effect reaches beyond the telecom industry and into other areas like manufacturing and healthcare.

There is no doubt that wireless spectrum is becoming more valuable.  What is in doubt is if government understands the need to sell spectrum and to make sure that taxpayers get the biggest bank for their buck.