Shapiro: Cut the Deficit, Add Jobs and Unleash Americas Spectrum Potential
There is no doubt the Congressional super committee tasked with cutting government spending has an unenviable assignment. Identifying $1.5 trillion in deficit reduction — whether through spending cuts, tax increases or a combination of both — won’t be easy.
It can kick-start the effort, however, with a noncontroversial move that would raise an estimated $33 billion for the federal government without raising taxes and have an enormous effect on spurring innovation in mobile device technology and creating hundreds of thousands of jobs.
Mobile devices — tablets, smartphones, e-readers, etc. — connect users to the Internet via the same spectrum that transmits “over-the-air” television.
Decades ago, when television and radio were the only information-broadcasting devices capable of using this spectrum, the government gave television broadcasters access for virtually nothing (all they pay is a small licensing fee). Today, most of it is vastly underutilized.
With cable, satellite and Internet options abundant, fewer than 10 percent of Americans households with TVs rely on broadcast television programming, according to research from the Consumer Electronics Association and Nielsen. To put that in context, that’s just 9 million households out of 114 million U.S. homes with a TV.
Until the rapid rise of mobile devices, having such a large amount of inefficiently used spectrum wasn’t a problem. But as Americans increasingly turn to smartphones, tablets and other mobile broadband-enabled devices, the demand for more wireless spectrum continues to explode.
And demand on mobile networks will only grow. International Data Corp. estimates that by 2015, more users will access the Internet through mobile devices than through personal computers or other wired devices.
With television broadcasters looking for new opportunities to monetize their underused spectrum, mobile carriers are dealing with surging use of wireless broadband and customers who demand faster Internet access with more capabilities. And they’re doing so with the same amount of spectrum. Every time you drop a call or wait on a slow Internet connection on your smartphone, you experience the spectrum crunch, or the World Wide Wait, as I like to call it.
We can’t create more spectrum, but spectrum auctions would reallocate our existing airwaves so they’re being used to their full potential. However, the Federal Communications Commission is prohibited from moving independently to hold auctions. The super committee should address this shortcoming and recommend Congress pass a voluntary incentive auction of television broadcast spectrum. In doing so, the government could raise revenues and enable innovation without any cost to taxpayers. In addition to direct revenue for the government, auctioning broadcast spectrum would spur investment, create jobs and further innovation.
A recent study by Mobile Future found that reassigning 300 megahertz of spectrum would spur $75 billion in new capital spending by mobile carriers, lead to $230 billion in addition gross domestic product and create more than 300,000 jobs. Releasing an additional 200 MHz, the study found, would create 200,000 more jobs and increase the GDP by an additional $155 billion.
Opening spectrum to wireless broadband would also eliminate the opportunity cost of not utilizing our spectrum to its full potential, currently estimated at more than $11 billion and growing by $14,000 every minute. More wireless broadband would fuel the growth and job creation that our economy needs to get back on track.
Mobile devices have already spawned incredible innovation. A few years ago no one had even heard of an app, but this year worldwide mobile application store downloads are expected to reach 17.7 billion, with revenue projected to surpass $15.1 billion. Networks with more capacity will allow these innovators to think even bigger and deliver more creative and more powerful apps.
Under a voluntary auction system, broadcasters would be paid for surrendering the over-the-air spectrum they hold. Wireless broadband providers would have more access to the spectrum they need to provide their services and continue innovating. American consumers would get better and more reliable mobile broadband access. The government would raise $33 billion in revenue. It’s the kind of win-win situation that is exceedingly rare in Washington these days.
The U.S. government didn’t create a $1.5 trillion deficit overnight, and the super committee won’t be able to eliminate the deficit with one spending cut or one tax increase. It will take a series of smart actions to rebuild our fiscal security. Raising $33 billion in revenues by auctioning underused broadband spectrum would be a great start and show that Washington is serious about finding creative ways to get our economy back on track.
Gary Shapiro is president and CEO of the Consumer Electronics Association and author of “The Comeback: How Innovation Will Restore the American Dream.”