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Upgrading the Economy

There are more cellphones in America today than citizens and 13 times more text messages sent annually than pieces of mail.  The wireless revolution has transformed the way relationships and business works and resulted in one of the most successful and innovative sectors of the U.S. economy.

While the overall economy lost millions of jobs during the ongoing recession, the wireless industry exploded, leading to the creation of more than 1.5 million jobs from 2007 to 2011 and contributing $200 billion to the U.S. GDP in 2011 alone.  Today, the wireless industry is larger than the auto industry, hotels and lodging, and agriculture, rivaling computer system design and the oil industry.

The sector’s continued expansion, however, is threatened by the looming spectrum crunch, as intensifying consumer demand for wireless broadband and data will soon exceed supply.  In fact, by year-end 2017, global data traffic will grow 1,500 percent according to a recent Traffic and Market Report by communications research group Ericsson.  Additionally, data from the Federal Communications Commission (FCC) suggests there could be a spectrum deficit as early as next year.

With good policies and free-market transactions, however, the ominous data shortage could be averted.

Spectrum is primarily regulated and allocated by the federal government.  With such power over the wireless industry, the government must work to efficiently distribute spectrum and continually work to identify bands of spectrum that can be repurposed for consumer use.

Earlier this year, Congress passed legislation authorizing the FCC to hold incentive auctions of broadcast spectrum.  Other incentives are also underway to identify spectrum that can be repurposed.  Unfortunately, however, neither of these tracks is moving quickly enough to keep up with the wireless industry’s increasing demands.

To bridge the supply-demand gap in the short-term, secondary market transactions are extremely important.  These deals – also known as spectrum sales or swaps – are critical to putting the finite amount of spectrum we have to its best and most efficient use.

One such proposal has been put forth by Verizon, which is purchasing a 20-megahertz chunk of completely unused spectrum from cable companies.  While Verizon has pledged to deploy the unused spectrum to further build out its 4G wireless company, the FCC has delayed the transaction – and the numerous economic benefits that would accompany such a deal.

America is on the cusp of a 4G LTE transition that could grow the U.S. GDP by as much as $151 billion and create up to 750,000 jobs.  To make that transition and other technological advancements, however, companies need more access to spectrum today.

Mobile technologies have transformed the way we interact with the world, accelerated the rate of communication, and cut the wire, allowing users to be ceaselessly connected – no matter the time, no matter the place.

Upon this technological advancement, we have built a thriving $195.5 billion industry that employs 3.8 million Americans.  In this economy, we can’t afford to slow down the wireless revolution.  Fortunately, the formula for success is simple.   More spectrum means more innovation, American jobs and economic growth.

Stephen DeMaura is the President of Americans for Job Security.

 

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