Wednesday, February 01, 2017

An Infusion of Support for 5G Spectrum Allocation

By Gregory J. Vogt Visiting Fellow, Free State Foundation

A fresh infusion of political capital is quickly taking shape to support broadband infrastructure development, including wireless spectrum needs. The next generation of wireless broadband, often-termed 5G, promises enormous consumer welfare and societal benefits, as Free State Foundation’s Michael Horney detailed here. Congress, new Federal Communications Commission Chairman Ajit Pai, and Secretary of Commerce nominee Wilbur Ross all have expressed commitments to locate and reallocate more spectrum for 5G wireless networks.

These efforts appear to be in tune with President Trump’s stated interest in substantially enhancing American infrastructure investment. Providing the government with market-oriented incentives to relinquish inefficiently used spectrum would jumpstart the ongoing reallocation efforts. And at the same time the FCC should continue its recent efforts to allocate more spectrum to accommodate new 5G wireless networks. 

Commerce, Science & Transportation Committee Senators John Thune (Chairman, R-SD) and Bill Nelson (Ranking Member, D-FL), quickly reintroduced a slightly revised bipartisan MOBILE NOW Act, which passed the Committee on January 24, 2017. Although MOBILE NOW could still be further strengthened, as I point out here, this legislative effort is very important to advancing prospects for build-out of 5G wireless passage without undue delay.

Newly appointed FCC Chairman Ajit Pai has touted the need to promote broadband throughout America, particularly in unserved and rural areas of the country. Encouraging provision of broadband to digital have-nots and the establishment of "Gigabit Opportunity Zones" are key aspects of the developing policy. Chairman Pai recognizes that there are a number of technological, financial, and regulatory facets to achieving his policy goal of advancing 5G deployment. For example, the FCC will need to work with state and local governments to remove or minimize existing impediments to infrastructure build-out such as unduly restrictive rights-of-way policies or the imposition of unreasonably high permitting fees.

Secretary of Commerce nominee Ross at his January 18 confirmation hearing before the Senate Commerce Committee stated that the government needs to do more to ensure that government uses spectrum more efficiently and that sufficient spectrum be allocated for commercial wireless systems. He displayed a knowledge of government spectrum use, the need for more commercial mobile wireless spectrum, and the difficulties of prying underutilized spectrum from government users. He opined that the government needs to be provided with incentives to give up spectrum where it is not needed or is used inefficiently. He recognized how important broadband deployment is to overall infrastructure development.

Most certainly, all these efforts are moving forward from a base provided by the Obama Administration’s plan to reallocate 500 MHz of spectrum for private mobile wireless broadband use. And the Wheeler FCC commendably took strides to reallocate and repurpose spectrum in efforts to move towards achievement of the goal. But as Free State Foundation President Randolph May and I said here, these efforts lagged in the waning days of the Obama Administration.

A rededicated effort to find more spectrum for wireless use, particularly to support 5G services and equipment, would be welcome news for enhancing American infrastructure development and consumer welfare. For example, a January 2017 study by Deloitte demonstrates the very real benefits to be achieved by the spectrum reallocation effort:

·         Energy. Wireless-enabled smart grids will create $1.8 trillion to the U.S. economy –saving consumers hundreds of dollars per year.

·         Health. Wireless devices will create $305 billion in annual health system savings from decreased costs and mortality due to chronic illnesses.

·         Public Safety. Improvements made by wireless connectivity can save lives and reduce crime. A one-minute improvement in emergency response time translates to a reduction of 8% in mortality.

·         Transportation. Wireless powered self-driving cars will reduce emissions by 40-90%, travel times by nearly 40% and delays by 20%. This translates to $447 billion per year in savings, and, more important, 21,700 lives saved.

I have detailed here numerous other sources that address the very real consumer welfare benefits that wireless broadband, including developing 5G capabilities and technology, can reap for American and worldwide consumers.

Providing market-oriented incentives for government to voluntarily relinquish unneeded or inefficiently used spectrum is critical to the spectrum reallocation effort as I detail here. FCC Commissioner O’Rielly has written about the need for government systematically to account for and value the spectrum it uses. Former Commissioner Jessica Rosenworcel also spoke in favor of increasing government incentives, akin to the incentive auction currently being conducted to repurpose over-the-air broadcasting spectrum for private mobile use, to relinquish spectrum. MOBILE NOW, as presently configured, is important, but it can be further improved during the legislative process with regard to mechanisms to incent government reallocation efforts.

5G wireless deployment – that is, 5G infrastructure development – is critical to the future growth prospects of the American economy. Encouragingly, it appears that real political capital may be applied to reinvigorate the 5G spectrum effort. The consumer demand and benefits are palpable. The Administration, Congress, and the FCC appear willing. They should move ahead with dispatch.