Wednesday, May 13, 2015

New Report Shows That Consumers Demand More Licensed Spectrum

A new report released on May 11, 2015, by The Brattle Group in conjunction with CTIA - The Wireless Association entitled “Mobile Broadband Spectrum: A Vital Resource for the American Economy” found that spectrum licenses issued to U.S. wireless carriers generate $400 billion annually in economic activity. Spectrum licenses also have a very large positive multiplier effect on other parts of the economy. The $400 billion in directly attributable economic activity does not even include the value of mobile applications, which use licensed spectrum for their business platforms.
Due to a robust and competitive wireless market, the report says that the downward pressure on prices has saved wireless consumers somewhere between $5 - 10 trillion over time – the aggregated difference between what consumers are willing to pay and what they actually pay. This income effect has led to positive spillovers in many other parts of the economy because consumers have more money to spend on other goods and services. Additionally, licensed spectrum creates positive spillovers for job creation. According to the report, for every person employed in the wireless industry, an additional 6.5 people will be employed in other sectors.
There is no doubt that the wireless industry is growing quickly in the U.S. The FCC will need to auction off more spectrum in order to keep up with the demands of consumers and conduct the auctions in a way that does not encumber them with extraneous conditions. (See this blog for more on spectrum auctions.)