What’s the Multi-Billion Dollar Secret for Growing America’s Economy?

What’s the Multi-Billion Dollar Secret for Growing America’s Economy?

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This March, the Federal Communications Commission will hold what FCC Chairman Tom Wheeler has called, “the world’s largest spectrum auction that has ever taken place.”  With 600 MHz of low-band spectrum about to hit the market, the FCC expects to generate a financial windfall in exchange for this valuable “invisible infrastructure.”

For those not deeply embroiled in the policy wonkery of spectrum auctions, independent financial research firm Zacks did a primer for why this auction matters so much:

Low-band spectrum is crucial for wireless operators as the signals can be transmitted over longer distances and through brick-and-mortar walls in cities. These airwaves are being freed by TV broadcasters who have no productive use of the same. The 600 MHz broadcast TV spectrums will instead be utilized by wireless operators to expand and strengthen their 4G LTE (Long-Term Evolution) networks.

The TV broadcasters can either relinquish their license and monetize their spectrum holding that are no longer used by them or agree to move to a different frequency – by the end of Mar 2016. The FCC will resell the acquired spectrums to wireless operators, other cable MSOs (multi service operators) or tech firms through competitive bidding. Notably, the FCC had collected a substantial amount of nearly $45 billion from the AWS-3 spectrum auction that was concluded in Jan 2015.

So what could all this spectrum mean to average Americans? Telecom analysts and market research firm Recon Analytics, recently released a new report that projects the wireless industry will contribute more than $31 billion to U.S. GDP along with 1 million new jobs for every 10 MHz of spectrum.

Meredith Attwell Baker, President & CEO of CTIA – The Wireless Association, says “this Report provides an important reminder of the power of the wireless industry to help drive economic growth and recovery. We need to work collaboratively to find additional opportunities to unlock new spectrum for mobile broadband to support Americans’ mobile-first lives and to ensure that America’s wireless industry remains the global leader.”

The report lays out several indicators of how the American economy will benefit from new spectrum in the market, namely:

  • Every 10 MHz of spectrum provided to operators creates an increase of $24.3 billion in additional GDP per year, on average over that three-year span.
  • Every 10 MHz of spectrum creates more than 1.6 million jobs connected with the wireless industry.
  • Every 10 MHz that was put in the hands of wireless service providers generated $7.2 billion per year for the government [as tax revenue].

As noted by Roger Entner, the report’s author, “the astounding growth in employment will likely continue as the US economy becomes more competitive through the use of advanced wireless technology and services, with apps and the on-demand economy still primed for considerable growth.”

Even beyond the upcoming incentive auction, if Congress can work with the FCC to get more spectrum to market, we can expect continued improvements to the economy if Recon Analytics’ projections are on track.

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