How to reignite the spectrum marketplace
A healthy exchange of spectrum licenses to satisfy demand is vital
Fifty years ago, Marty Cooper stepped onto a busy New York sidewalk to make the world’s first call on his new invention, the cellphone. The plucky entrepreneur made that call to his rival at AT&T’s Bell Labs to let him know he’d been bested. Cooper had created a revolutionary way for consumers to call anyone, wherever they may be.
In the half-century since, the cellular industry has unleashed an explosion of entrepreneurial brilliance that has helped to connect millions of Americans. Ninety-seven percent of American adults now own a cellphone. The near ubiquity of Cooper’s miracle was made possible because $635 billion of private risk capital has been spent in the U.S. building wireless infrastructure since its inception.
Cellular technology has not only allowed consumers to wield more than a hundred thousand times more computing power in their hands than the entire Apollo program, but also the 5G wireless ecosystem is projected to generate an estimated $2.7 trillion a year in increased American economic output through 2025.
But just as consumers are starting to enjoy 5G, a cloud of uncertainty looms overhead. The ability of our former agency, the Federal Communications Commission (FCC), to auction more spectrum expired on March 9 for the first time in history due to debates in Congress. This legislative hiccup makes it impossible to put new radio frequencies into the hands of data-hungry consumers. The government’s well of new spectrum to allocate to the private sector has run dry, and the normally bipartisan public policy process of refilling it has stalled.
For the sake of American global competitiveness, we encourage policymakers to resolve their differences quickly and get on with helping America maintain its international leadership in wireless.
In the meantime, wireless carriers have to rely on secondary markets to buy under-used spectrum licenses to satisfy consumer demand as they compete fiercely against one another. A marquee example of this type of transaction is the T-Mobile-Sprint merger, which closed three years ago. Combining the third- and fourth-leading carriers at the time brought more consumer choice and real competition to AT&T and Verizon — as well as the cable industry.
That’s right, including the cable industry. T-Mobile has become the fastest-growing in-home broadband provider through its 5G home internet offering, which competes head-to-head with cable providers. The innovation has spurred competitors to invest tens of billions of dollars to expand their own broadband networks. But fixed wireless can be deployed four times faster than other broadband technologies, and it can also be up to 80 percent more cost effective, making it easier to turn broadband “have nots” into “haves.”
While Congress works to refill the spectrum pipeline and restore the FCC’s auction authority, the FCC needs to continue creating pro-competition policies that nurture an unfettered secondary market for spectrum licenses.
One lesson we’ve learned is that a healthy exchange of spectrum licenses to satisfy demand will be especially vital to fuel the deployment of competitive fixed wireless facilities and close the digital divide. To accomplish these vital goals, however, internet service providers will need access to more spectrum. With no major spectrum auctions on the horizon for years, providers are turning to secondary markets to satisfy consumer demand. So here’s to hoping the FCC learned from its wise decision of three years ago and that it will preserve those pro-consumer policies.
Mignon L. Clyburn served as a commissioner of the FCC from 2009 to 2018 and served as acting chair from May 2013 to October 2013. Robert M. McDowell served as a commissioner of the FCC from 2006 to 2013, is a partner at Cooley LLP where he is co-chair of its global communications practice, and is a senior fellow at Hudson Institute.