Telecom Consumers Demand

To support consumer demand, more spectrum necessary for wireless devices
Hance Haney
The Aspen Times
August 19, 2012
Link to Original Article

Earlier this month, the Pew Research Center reported that, of the 55 percent of cellphone owners who use their phones to go online, 77 percent say they experience slow download speeds that prevent things from loading as quickly as they would like. The survey also showed that 72 percent of cellphone users experience dropped calls.

Mobile-service providers are deploying more efficient technology that allows digital bits to travel faster. But as wireless devices become more useful, usage increases. High-quality video, for example, consumes hundreds of times the bandwidth of a voice call. According to Cisco, global mobile data traffic will increase 18-fold between 2011 and 2016.

Technology is only part of the solution. As Chairman Julius Genochowski, of the Federal Communications Commission, has noted, the “explosion in demand for mobile services places unsustainable demands on our invisible infrastructure — spectrum.”

The FCC acknowledges that mobile-service providers soon will require double the number of airwaves they now have to work with. The agency is in the process of reassigning underutilized spectrum currently in the hands of broadcasters and federal agencies, a process that typically requires seven to 11 years.

Without more spectrum, congestion will either worsen or there will be policies to curb use. This is slowly getting under way now, which is why unlimited data plans are disappearing.

Many of the leading policy experts who are grappling with this issue are meeting this week in Aspen.

Some of the policymakers, inspired by the economist's ideal of perfect competition in commodity markets, don't like the fact that AT&T and Verizon Wireless have attracted more customers than Sprint or T-Mobile. This camp wants to restrict AT&T and Verizon Wireless access, in one form or another, to more spectrum even though the spectrum shortage affects all providers.

The best way to allocate spectrum is to the highest bidder. Spectrum auctioning has been the norm since 1993. Allowing regulators to rig auctions in favor of particular contenders can reduce revenue for the Treasury and lead to corruption.

Wireless services have shown dramatic improvement and price reduction since 1993 in the near absence of any regulation. The average price of a voice minute has declined from nearly 60 cents in 1993 to 5 cents today, and wireless analyst Peter Rysavy estimates that the price of a gigabyte of data has declined from $100,000 in the mid 1990s to $10 today.

This performance beats nearly every sector of the economy. There is certainly no market failure in wireless, and now is not the time to substitute regulated rivalry for the free market.


Hance Haney is a senior fellow at the Discovery Institute.