Monday, July 14, 2014

A Bipartisan Capitol Hill Effort That Could Pry Spectrum Out of Government Hands and Improve Consumer Welfare

by Gregory J. Vogt

In the midst of all the political wrangling in Washington, sometimes there is a breath of fresh air: new bipartisan spectrum policy proposals seek to allocate more spectrum for commercial mobile broadband use, which encourages private investment, grows the economy, and meets customer demands, all of which substantially improve consumer welfare. Senator Marco Rubio (R), together with some support from Senator Cory Booker (D), has advanced this effort in a big way, announcing two new bills promoting wireless communications.

To give credit where credit is due, the Senators’ recent moves are part of a key Administration goal that seeks to add 500 MHz of spectrum for mobile broadband use. The FCC is in the process of implementing congressionally mandated spectrum reallocations contained in 2012 legislation. But with the Administration’s more recent emphasis on commercial-government spectrum sharing, dark clouds are brewing over the attainability of this goal.

Senator Rubio’s package of legislation, however, with some bipartisan support, would serve as a swift kick in the government’s behind to make good on the Administration’s claimed policy goal.

The Wireless Innovation Act of 2014, S. 2473, mandates the reallocation to commercial wireless use at least 200 MHz of spectrum currently allocated for primary or exclusive government use.  At least 140 MHz of the spectrum must be licensed for exclusive commercial use, not more than 20 MHz would be for unlicensed use, and up to 40 MHz can be shared between government and non-government users if primarily allocated for commercial use and adequate sharing and non-interference protections are in place. The Act mandates auction deadlines, promotes government spectrum efficiency by encouraging use of commercial services, using updated technologies, and increases the transparency of government spectrum use and incentives to vacate spectrum.

The Wi-Fi Innovation Act, S. 2505, is co-sponsored by Senators Rubio and Booker, and would require co-allocation of the 5.8 GHz band, currently allocated for intelligent transportation services, to also include unlicensed wireless use. The co-allocation mandate is conditioned on FCC findings that dynamic sharing techniques are available so that the dual uses can coexist without harmful interference. The Act also requires a study to assess unlicensed spectrum use in low-income neighborhoods.

The spectrum Senator Rubio’s legislation would add for wireless use is unquestionably necessary. Cisco has recently estimated that global Internet use will triple over the next three years, with mobile broadband increasing 11-fold. The percent of Wi-Fi and mobile devices carrying Internet traffic will increase from 46 percent in 2013 to 61 percent by 2018. Mobile data traffic will reach 15.9 exabytes (one billion gigabytes) per month by 2018. Free State Foundation scholars have shown that the growth and substantial investment in broadband wireless networks in the United States far outstrips that of European counterparts.

The Rubio legislation seeks to enable the continuation of this American success story. The exclusive commercial wireless spectrum would add needed capacity for LTE systems. And, increasingly, Wi-Fi and its connection to high bandwidth wired connections will increase the flexibility of and accessibility to all broadband. The mobile nature of these advances is necessary to achieving the Internet of Things, transforming a multitude of ordinary devices into more intelligent and useful ones. By ensuring adequate spectrum capacity, investment incentives improve, helping to meet consumer demand and improve consumer welfare.

The proposed Wireless Innovation Act recognizes that government/non-government spectrum sharing is potentially inefficient and may undercut spectrum goals, as I have recognized in my recent FSF Perspectives. Senator Rubio would reassert the congressional preference for clearing and reallocating government spectrum, relying on sharing only where necessary to preserve essential public safety and national security spectrum uses. The Act laudably takes an initial step to improve government’s efficient use of spectrum by encouraging use of commercial spectrum, using efficient engineering technologies, and providing seed money in order to provide an incentive for government users to relinquish spectrum “beachfront property.”

Some potential disputes are arising, such as from the automotive industry that currently has exclusive allocation of the spectrum targeted for co-allocation in the Wi-Fi Innovation Act. The bill, however, relies on the FCC’s technical ability to resolve interference concerns, and speeds up this process, which has been very slow in the past. In addition, as to the Wi-Fi low-income study contained in the Wi-Fi Innovation Act, I must admit that I am not a fan of government-mandated studies. Such studies are often expensive, potentially burdensome to private enterprise, and frequently go nowhere.

I applaud Senators Rubio and Booker for attempting to advance the goal of more spectrum for mobile broadband use. This type of bipartisan Washington effort promises to improve consumer welfare by meeting consumer broadband demand, and achieving sustainable private economic growth that will add jobs and aid economic and social development.