Uncertainty: One of the greatest challenges facing today’s innovators, entrepreneurs and investors. Businesses have roughly $2 trillion idled on their balance sheets, capable of more productive immediate and long-term investment, but they lack visibility into future consumer demand and global growth. Given Europe’s ongoing sovereign debt crisis, China’s slowing growth, increasing protectionism in the developing world and immediate risks that the American economy will go “off the fiscal cliff,” potential employers are understandably reluctant to hire. Absent greater investment and new jobs, consumers are more cautious. A vicious economic cycle churns. Growth stalls.
Despite this lack of clarity, the mobile broadband marketplace has proved to be one of the greatest economic engines powering America’s current economic recovery efforts. Over the past three years, American smartphone adoption has increased from 16.9 percent to 54.9 percent. Americans have downloaded 35 billion Apple apps, watched more than 37 billion online content videos last month alone and signed up for social media by the hundreds of millions. Wireless network providers have invested an average of $65 billion each year over the past four years in capital equipment and network capacity, with billions more planned over the next four years. There is, however, no guarantee that this level of financial commitment will continue at current levels without regulatory certainty in the marketplace.
But investment in fast-growing broadband networks, notwithstanding their extraordinary success with consumers, is even being impacted. Network providers across all platforms must assess new regulations, both those adopted and those proposed, when considering how to deploy resources. The Telecommunications Act of 1996 – a legislative framework crafted in the pre-broadband era – provides scant guidance and all too often invites regulatory adventurism.
The shortage of spectrum, the airwaves that make mobile innovations possible, is also stunting investment decisions in the wireless industry. With exponentially-expanding mobile usage and ever-denser content threatening to swamp wireless network capacity, spectrum scarcity is the biggest single barrier to growth and proliferation of our broadband economy.
Fixed quantities of spectrum – resulting from insufficient allocations to commercial broadband and/or policy maker limits on wireless aggregation – directly challenge the growth of new applications and services that demand greater bandwidth. Rather than continuing to tweak the rules that govern how best to divide insufficient spectrum among an arbitrary number of market participants, policy makers should first focus on finding more spectrum for all carriers.
One of the reasons we have had such extraordinary growth in the broadband economy is thanks to investments and aggregations made in the 1990s and 2000s. Wireless carrier consolidation and repeated auction of public airwaves enabled the spectrum aggregation required to support increasingly robust nationwide wireless data services – and all the advantages delivered for consumers. Over the years, combinations in the wireless market enabled carriers to amass bigger footprints and gain the capacity to carry mobile apps, real-time social media and streaming video. These actions helped accelerate more investment, innovation, and new opportunities for start-ups across the country.
Our nation gained from this trend. During this decade of steady spectrum aggregation, prices per message, per minute and per megabit all fell substantially, while the number and sophistication of available wireless services has increased. Today consumers enjoy intense competition among device-makers, online retailers and wireless service providers, all without government direction, intervention or controls. Today’s wireless marketplace is highly competitive, with nine out of 10 consumers having a choice of five or more service providers in local markets across the nation.
Going forward, creating an open and predictable process for evaluating the amount of spectrum carriers can possess will be essential to protecting and promoting the growth in wireless services that benefit consumers. The existing arbitrary, non-public process for changing spectrum screens, for example, undermines economic growth by failing to provide investors with the transparency, predictability and flexibility needed to properly consider wireless broadband investments.
Mobile broadband networks are even more impactful than the service provider jobs they create and capital expenditures they make. Broadband makes businesses more productive and helps entrepreneurs reach new markets and invent new products. The mobile app economy today supports 466,000 jobs, up from zero in 2007. At a time when exit polls reveal three out of five Americans are most concerned about the economy, mobile broadband may be our nation’s strongest hope for future growth and stability.
Originally published at The Hill