EXECUTIVE OFFICE OF THE PRESIDENT

COUNCIL OF ECONOMIC ADVISERS

THE ECONOMIC BENEFITS OF

NEW SPECTRUM FOR WIRELESS BROADBAND

FEBRUARY 2012 

 
THE ECONOMIC BENEFITS OF NEW SPECTRUM FOR WIRELESS BROADBAND

 EXECUTIVE SUMMARY

The surge in wireless data traffic has caused a “spectrum crunch.” 

With the proliferation of smartphones, tablets, and other mobile devices with internet access, 

wireless data traffic has grown tremendously, increasing by more than 100% between 2009 and 

2010. Industry forecasters expect that a rapid pace of growth in data traffic will continue for at 

least the next few years. For example, one industry forecaster projects that mobile data traffic 

will increase by a factor of 20 between 2010 and 2015. It is unlikely that wireless carriers will 

be able to accommodate this surging demand without additional spectrum. Other approaches to 

expanding the capacity of wireless networks, including improvements in spectral efficiency, 

increases in network density through cell site construction, and offloading traffic to wireline 

networks via Wi-Fi or other antenna systems, will likely be insufficient to allow capacity to keep 

up with demand. In short, the projected growth in data traffic can be achieved only by making 

more spectrum available for wireless use. In response to this “spectrum crunch,” the Obama 

Administration has proposed making an additional 500 MHz of spectrum available for wireless 

broadband. 

Wireless broadband can serve as a platform for innovation. 

Wireless broadband has the potential to transform many different areas of the American 

economy by providing a platform for new innovation. Areas where the innovations will likely 

have significant impact include consumer products and services, such as media-rich mobile apps 

and high definition streaming video; products to enhance business productivity, such as mobile 

video conferencing solutions and access to web-based business applications; health care, where 

the quality of care will be enhanced and costs reduced through products like patient-physician 

video conferencing and remote transmission of diagnostic information and images; and 

education, where digital classroom materials and educational applications are already enhancing 

learning. 

Wireless broadband will have significant benefits for public safety. 

Wireless broadband has a vital role to play in improving the ability of emergency personnel to 

communicate efficiently and to obtain necessary information quickly, including real-time videos, 

images, and other data. The creation of a state-of-the-art nationwide wireless broadband network 

for public safety communications will ensure that the public safety benefits of wireless 

broadband are available throughout the nation, and will also enable interoperability at the 

national level, making first responders more effective when they are called on to cross 

jurisdictional lines. With sufficient dedicated spectrum for public safety use, public safety 

personnel will have access to critical information even in emergency situations when commercial 

wireless networks are congested.

Wireless broadband is likely to have a substantial impact on jobs, growth, and investment. 

Like other information and communication technologies that have transformed the economy in 

the past, the spread of wireless broadband is likely to increase the rate of growth in per capita 

income; spur economic activity through new business investment; and support many new highquality jobs. Because these effects are difficult to quantify precisely, CEA does not endorse any 
specific numeric prediction. Nonetheless, the evidence is clear that the wireless industry is an 

important source of investment and employment, and that supporting the growth of this industry 

through new spectrum allocation is likely to generate substantial economic benefits. 

Other countries recognize the importance of wireless broadband. 

Japan and South Korea have been world leaders in rolling out high-speed broadband services, 

and enjoy high levels of wireless broadband adoption. Europe, too, is moving forward with 

efforts to improve wireless broadband. 

Voluntary incentive auctions and new unlicensed spectrum will promote economic benefits. 

For commercially held spectrum, voluntary incentive auctions will ensure that spectrum is 

repurposed from the lowest value uses to the highest; and that the economic benefits are widely 

shared among stakeholders, including broadcasters, wireless carriers, consumers, and taxpayers. 

The White House has projected that voluntary incentive auctions, along with other measures to 

enable more efficient spectrum management, could generate nearly $28 billion in revenue over 

ten years. Allocating spectrum with a mix of licensed and unlicensed use has the greatest 

potential to support future innovation. 

 
CONTENTS

 PAGE

I. INTRODUCTION 1 

II. THE SPECTRUM CRUNCH 2 

III. WIRELESS BROADBAND: A PLATFORM FOR INNOVATION 7 

IV. WIRELESS BROADBAND AND PUBLIC SAFETY 12 

V. THE OVERALL ECONOMIC IMPACT OF WIRELESS BROADBAND 14 

VI. WIRELESS BROADBAND IN OTHER COUNTRIES 16 

VII. THE BENEFITS OF VOLUNTARY INCENTIVE AUCTIONS AND UNLICENSED SPECTRUM 18 
1 

I. Introduction

Over the past twenty years, the growth of information and communication technology has 

transformed the global economy. Access to the internet has introduced new ways of searching 

for and sharing information, buying and selling goods and services, consuming media and 

entertainment, communicating with each other, and more. Wireless telecommunications have 

made instantaneous communications possible, allowing people to stay increasingly connected 

while enjoying unprecedented mobility. There is little doubt that these transformations have 

brought enormous economic and social benefits to people in the U.S. and around the world. 

Today, the latest transformative technology is the combination of wireless mobility with the 

interconnectedness of the web: wireless broadband. Already, the emergence of smartphones and 

tablet computers has begun to change the ways that we use mobile devices. Soon, a cellphone 

that does not allow web-browsing will seem as outdated as a phone booth is today. The 

hundreds of thousands of smartphone apps have only scratched the surface of potential 

innovation using wireless broadband as a platform. 

Thanks to the proliferation of mobile devices with wireless internet access, along with the 

growth of media-rich consumer applications, the volume of data traffic traveling over the 

wireless networks has been exploding. With the pace of innovation accelerating, this demand for 

wireless data services will undoubtedly continue to grow exponentially. And as the volume of 

wireless data traffic increases, the risk of congestion in the airwaves is increasing as well. 

Wireless broadband needs radio spectrum to function, and the spectrum currently allocated to 

wireless is not sufficient to handle the projected growth in demand, even with technological 

improvements allowing for more efficient use of existing spectrum and significant investment in 

new facilities. 

The only feasible way to realize the full potential of wireless broadband is to make new spectrum 

available for wireless services. Fortunately, there is considerable spectrum that is currently 

underused or used in less economically valuable ways, and that could be repurposed for use in 

wireless broadband. The public challenge is to bring about a dramatic change in the way we use 

spectrum as rapidly and as efficiently as possible, with widely shared economic benefits. 

In early 2011, President Obama introduced a National Wireless Initiative. An important element 

of this proposal is the President’s goal of nearly doubling the amount of spectrum available for 

wireless broadband in the next ten years, by freeing up 500 Megahertz (MHz) of spectrum 

currently allocated for other uses. Some of this spectrum will be repurposed from federal 

government uses. The National Telecommunications and Information Administration (NTIA) 

has been working to identify portions of federal spectrum, and shared federal/commercial 

spectrum, that can usefully be repurposed, in part by finding ways to make more efficient use of 

the remaining federal and shared spectrum. In October 2010, NTIA recommended that 115 MHz 

of spectrum used by federal agencies be made available for wireless broadband use within five 

years. Since then, NTIA has continued to evaluate possible opportunities for repurposing federal 

spectrum. When necessary, repurposing of federal spectrum will be subject to conditions to 

ensure that there is no harmful interference with public safety needs or other critical public uses 

of the spectrum. For example, the federal spectrum that NTIA identified for repurposing in 
2 

October 2010, whose prior uses include satellite-based meteorological services and naval radar 

systems, would be shared between commercial broadband and federal uses by requiring 

geographic limitations on the wireless broadband operations using the spectrum. 

 

In addition to making portions of federal spectrum available for wireless broadband, meeting the 

President’s goal will require a substantial amount of commercially licensed spectrum to be 

repurposed. In particular, a portion of the spectrum that is currently licensed for over-the-air 

television broadcasting would yield substantially greater economic value if used for wireless 

broadband. With the passage of the Middle Class Tax Relief and Job Creation Act of 2012, 

Congress has now authorized the Federal Communications Commission (FCC) to use “voluntary 

incentive auctions” to reallocate commercially licensed spectrum. These auctions will be an 

innovative addition to the tools available to the FCC, and will promote widely shared economic 

benefits by allowing existing licensees to receive a portion of the auction proceeds in exchange 

for voluntarily making their spectrum available for wireless broadband. Moreover, the auctions 

are expected to generate substantial revenues for the U.S. Treasury, providing support for 

important public goals, including deficit reduction, research and development on emerging 

wireless technologies to advance public safety communications, and investment in a nationwide, 

interoperable wireless network for public safety. 

This report describes the substantial economic benefits that will result from making new 

spectrum available for wireless broadband. Section II summarizes the compelling evidence that 

the surging demand for wireless data traffic is unlikely to be accommodated without additional 

spectrum for wireless broadband – the “Spectrum Crunch.” Section III discusses the potential 

for wireless broadband to play a transformative role as a platform for innovation in many areas 

of the economy, ranging from consumer products to business applications, from health care to 

education. Section IV describes the critical role that wireless broadband plays in improving 

public safety communications. Section V summarizes the existing economic literature that seeks 

to quantify the overall economic impact of innovative information and communication 

technologies, including wireless broadband. Section VI discusses wireless broadband policies in 

other countries. Finally, Section VII turns to a brief discussion of two key issues: the benefits of 

voluntary incentive auctions as a mechanism for repurposing commercially licensed spectrum; 

and the benefits of allocating spectrum for a mix of licensed and unlicensed uses. 

II. The Spectrum Crunch 

Wireless data traffic has increased dramatically in recent years 

Smartphones, tablets, and other mobile devices with wireless internet access have surged in 

popularity in recent years. A June 2011 survey reports that more than half of the Americans who 

purchased a new wireless handset in a three-month period chose a smartphone instead of a 

traditional “feature phone” with no web access.1

 The proliferation of these mobile devices has 

led to tremendous growth in wireless data traffic. According to a 2011 report, overall U.S. 

mobile data traffic was 110% higher in the last half of 2010, compared to one year earlier. (see 

 

1 “In US, Smartphones Now Majority of New Cellphone Purchases,” NielsenWire, June 30, 2011. 

http://blog.nielsen.com/nielsenwire/online_mobile/in-us-smartphones-now-majority-of-new-cellphone-purchases/
3 

Figure 1). Similarly, AT&T has reported that its mobile data volumes have increased 30-fold 

since the introduction of the iPhone in 2007, as illustrated in Figure 2. 

Figure 1: Total Reported U.S. Data Traffic: 6-month Measures 

Source: CTIA Semi-Annual Wireless Survey 

Figure 2: AT&T Mobile Data Volumes 

Source: “Acquisition of T-Mobile USA, Inc. by AT&T Inc.: Description of Transaction, Public Interest Showing 

and Related Demonstrations,” filed with the Federal Communications Commission, April 21, 2011. 

This growth in data traffic can be partially attributed to growth in the number of wireless 

subscriptions, but primarily stems from the dramatic growth in data usage by the average user. 

The number of mobile wireless connections in the U.S. (with speeds over 200 kilobits per 

second) grew by over 160% from the end of 2008 through June 2010 (see Figure 3), while the 

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average data used per line increased almost fivefold from the first quarter of 2009 through the 

second quarter of 2010 (see Figure 4). 

Figure 3: The Number of U.S. Mobile Wireless Connections 

 

Source: “Internet Access Services: Status as of June 30, 2010,” FCC Wireline Competition Bureau, March 2011. 

Note: Figures are for wireless connections with speeds over 200 kilobits per second in at least one direction. 

Figure 4: Average Data Used Per Line 

Source: “Mobile Broadband: The Benefits of Additional Spectrum,” FCC OBI Technical Paper No. 6, October 

2010, citing data from Validas, LLC. 

 

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38 

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The rapid growth in wireless data traffic shows no sign of slowing 

Industry forecasters expect that this rapid pace of growth in data traffic will continue. For 

example, Cisco projects that mobile data traffic in the U.S. will increase by a factor of 20 

between 2010 and 2015 (see Figure 5). 

Figure 5: Mobile Data Traffic Forecast for North America, 2010 - 2015 

 

Source: Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2010-2015. 

Note: The U.S. accounts for over 90% of North American mobile data traffic throughout this period. 

The surging demand for wireless services cannot be met without additional spectrum 

Spectrum is an essential input into wireless services, the “invisible infrastructure” that makes 

wireless communication possible, as FCC Chairman Julius Genachowski has described it.2 

Spectrum is also a critical constraint on a wireless network’s capacity. As the volume of data 

flowing over a wireless network increases relative to the amount of spectrum available, the 

network can become increasingly congested, leading to dropped calls, delayed connections, and 

slower flows of data to mobile devices. The need to expand network capacity to accommodate 

growing demand for data services is the primary reason that wireless carriers were collectively 

willing to invest over $19 billion to purchase new spectrum during the FCC’s 2008 auction of 

spectrum made available by the transition to digital over-the-air television broadcasting.3

Adding spectrum is not the only way to expand the capacity of a wireless network. One 

alternative is to transition to new technologies that improve “spectral efficiency,” the amount of 

data that can be transmitted on a given band of spectrum (measured in bits per second per Hertz 

of spectrum). Most recently, this kind of technological progress is occurring as wireless carriers 

 

2

 Remarks of Chairman Julius Genachowski, FCC Spectrum Summit, October 21, 2010. 

http://transition.fcc.gov/Daily_Releases/Daily_Business/2010/db1021/DOC-302331A1.pdf 3

 For example, Verizon’s 2008 Annual Report states, “Our purchase of spectrum in the FCC auction expanded our 

inventory by 60 percent, which gives us additional capacity to accommodate the rapid growth of wireless data 

services such as text messaging, e-mail, and Internet access.” 

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roll out more spectrally efficient “fourth generation” (“4G”) wireless technologies to replace 

older, less efficient technologies. However, the network capacity improvements from the 

migration to 4G technologies are not expected to keep pace with the surging demand for wireless 

data services. For example, the FCC has made projections based on the reasonable assumption 

that the gradually improving mix of technologies as 4G networks are rolled out would effectively 

double the average spectral efficiency of wireless networks between 2009 and 2014.4 With data 

traffic volumes potentially increasing by a factor of 35 over the same period,5

 it is clear that the 

spectral efficiency improvements achieved through the transition to 4G technology will not be 

sufficient to avoid a shortage of spectrum. Moreover, the potential for spectral efficiency to 

increase beyond the level provided by current 4G technologies may be limited, as it is widely 

believed that current levels of efficiency are approaching the theoretical physical limits of 

spectrum.6

Another way to expand capacity on a wireless network is to increase the “spatial reuse” of the 

spectrum, by increasing the density of the network. In other words, when the nodes of the 

network (cell towers and antennas) are closer together, the same band of spectrum can be used 

more intensively. Because increasing network density is one of the key ways to alleviate 

network congestion, wireless carriers have been making substantial investments in new cell sites. 

Overall, the number of cell sites in the U.S. increased by roughly 40% over the five year period 

ending in 2009, to roughly 246,000 sites.7

 Wireless carriers will undoubtedly continue to look 

for opportunities to add new cell sites, but even if investment in new cell sites were sustained at 

the same pace as in recent years, it would likely be insufficient to fully address the looming 

shortage of wireless capacity. The FCC has estimated that if no additional spectrum is allocated 

to mobile broadband, wireless carriers would need to invest over $170 billion to build enough 

capacity to accommodate the anticipated demand for mobile data traffic by 2014.8 A capacity 

expansion of that magnitude would require adding more than 300,000 new cell sites over the 

next five years,9 more than doubling the total number of sites in the U.S. Such a large increase in 

the number of cell sites is unlikely to be achieved, not only because of the large capital 

expenditures required, but also because it may become increasingly difficult to find suitable 

locations for new cell sites that accommodate local zoning restrictions and other constraints.10 

 

4

 “Mobile Broadband: The Benefits of Additional Spectrum,” FCC Omnibus Broadband Initiative Technical Paper 

No. 6, October 2010. 

5

 According to the Cisco Visual Networking Index Global Mobile Data Traffic Forecast. 6

 For example, “Efficient Use of Spectrum,” Rysavy Research, May 4, 2011, states that today’s advanced wireless 

technologies are nearing the “fundamental constraints of physics,” indicating that the past growth rates in spectral 

efficiency will not be able to continue. 

7

 “Mobile Broadband: The Benefits of Additional Spectrum,” FCC Omnibus Broadband Initiative Technical Paper 

No. 6, October 2010. 

8 Id.

9

 The FCC study estimates the average cost of a cell site is $550,000. 

10 In addition to constructing new cell sites, carriers often address network congestion by offloading data traffic from 

their wireless networks via Wi-Fi hotspots and “distributed antenna systems.” These solutions are important ways 

of making more efficient use of spectrum, and will undoubtedly play an increasingly important role in network 

capacity management as wireless data usage increases, especially in urban centers and other areas with a high 

density of wireless device users, such as sports arenas and convention centers. In many areas, however, these 

options may not be cost effective solutions to the growing congestion on wireless networks. 
7 

In short, unless additional spectrum is made available, wireless networks will have inadequate 

capacity to accommodate the demand for mobile data services. These capacity limitations will 

put increasing pressure on wireless carriers to ration mobile data usage through higher prices. 

The first signs of this pressure have already emerged, as three of the four largest U.S. wireless 

carriers have announced that they will be eliminating their unlimited data plans in favor of tiered 

usage-based pricing.11 Moreover, if wireless data traffic is constrained by shortages of available 

spectrum, the potential for wireless broadband to generate substantial economic benefits by 

serving as a platform for innovation will be severely limited. 

III. Wireless Broadband: A Platform for Innovation 

With access to sufficient spectrum, wireless broadband has the potential to transform many 

different areas of the American economy, as new wireless technologies give new capabilities to 

consumers, businesses, and the public sector. Devices and applications that take advantage of 

high-speed mobile data services are already appearing, giving an early preview of the endless 

possibilities for innovation that lie ahead. This section of the report describes some of the 

innovative products and services that are likely to emerge in various sectors of the economy as a 

result of the growth in wireless broadband. 

Consumer applications 

More than anything else, the explosion in wireless data usage is driven by the surging consumer 

demand for full internet browsing, media-rich applications, and streaming video content on 

mobile devices. To date, there have been over 18 billion downloads of “apps” for Apple’s 

iPhone and other mobile devices, as well as more than 10 billion downloads for devices using the 

Android operating system, with each total increasing by around one billion each month.12 These 

mobile app downloads will account for an estimated $7.3 billion in annual revenue in 2011, with 

that figure projected to increase to over $14 billion in 2012.13 There are over 120,000 companies 

publishing apps for Apple’s platform alone,14 and many have been actively increasing 

employment. For example, a Wall Street Journal article in April 2011 cited evidence that in 

early 2011 there were more than 5,000 online job postings for mobile app developers and other 

positions requiring smartphone expertise, for each of the three primary smartphone platforms.15 

Recent research indicates that more than 88% of the 500 most popular mobile apps were 

developed by small businesses, most with fewer than ten employees.16 

 

11 “Verizon to Drop Its Unlimited Mobile-Data Plan,” New York Times Gadgetwise blog, July 5, 2011. 

http://gadgetwise.blogs.nytimes.com/2011/07/05/verizon-to-drop-its-unlimited-mobile-data-plan-july-7/

12 http://news.businessweek.com/article.asp?documentKey=1377-aZexK83DlR8E7LHAMSL2GJ1L94BEL37Q9IPT42 and http://www.forbes.com/sites/greatspeculations/2011/12/09/googlesandroid-market-celebrates-10-billion-downloads-but-still-lags-apple-where-it-counts/ 13 Canalys Mobile App Store Analysis forecast, June 2011. http://canalys.com/pr/2011/r2011064.html 14 As of December 5, 2011, there were 122,478 active publishers in Apple’s U.S. app store. 

http://148apps.biz/app-store-metrics/?mpage=appcount

15 “Mobile App Talent Pool Is Shallow: Companies Scramble for Engineers Who Can Write Software for 

Smartphones,” Wall Street Journal, April 5, 2011. 

http://online.wsj.com/article/SB10001424052748704547604576263200170918660.html

16 “The Surprise Behind the Mobile App Numbers,” Huffington Post, July 12, 2011. 

http://www.huffingtonpost.com/morgan-reed/the-surprise-behind-the-m_b_895397.html
8 

Today’s mobile apps offer diverse new ways for consumers to communicate with one another, to 

find and share information, and to enjoy media content. Recent surveys show that the most 

popular categories of mobile apps include weather and news; mapping, navigation, and search; 

social networking; and music, games, and other entertainment.17 A particularly promising area 

for innovation may be “location-based services,” such as those that assist consumers in finding 

local businesses or services (e.g., restaurants, ATMs, or car rentals), or those that provide realtime information on local traffic conditions to enable drivers to avoid congested roadways. Also, 

the combination of widespread access to wireless broadband with the development of cloudbased computing services has the potential to transform consumers’ uses of technology in many 

ways. For example, the introduction of cloud-based music storage services by Amazon and 

Apple could change the ways that consumers access their personal media collections. Another 

way that wireless broadband will have a dramatic impact on consumers’ lives is by enabling 

remote interaction with appliances and other electronic products. For example, consumers can 

already use smartphones from any location to control their air conditioning and lighting, creating 

opportunities for energy conservation and greater convenience. 

As connection speeds improve with the rollout of 4G networks, consumers will be able to access 

increasingly high quality media content. Video content, in particular, already accounts for 

between 40 and 60 percent of all mobile data traffic today,18 and that figure is projected to 

grow,19 as new content becomes available on wireless devices and that content attracts a growing 

number of consumers. For example, within two months after HBO introduced an app to allow 

subscribers to view video content on mobile devices, 3 million consumers had downloaded the 

app, representing more than 10% of HBO’s subscriber base.20 Overall, the number of consumers 

who view video content on a mobile phone has more than doubled in the past two years, reaching 

more than 28 million in the first quarter of 2011, and that trend shows no sign of slowing (see 

Figure 6). Streaming video, which now suffers from interruption or stalling up to 40% of the 

time,21 will undoubtedly become more reliable, and will increasingly be available in high 

definition and even 3D. Increased use of multi-way video chat services on mobile devices will 

enable friends and families to communicate with one another in new ways, and will also allow 

real-time face-to-face collaboration and interaction on both work and leisure activities. 

 

 

17 http://blog.nielsen.com/nielsenwire/online_mobile/games-most-popular-mobile-app-category/ 18 “Bytemobile Gives Update on Mobile Video Traffic Trends,” Wireless Week, June 21, 2011. 

http://www.wirelessweek.com/News/2011/06/Technolgy-Bytemobile-Update-Traffic-Trends-Mobile-Video/

19 According to Cisco, mobile video has the highest data traffic growth rate of any application category measured by 

Cisco’s Visual Networking Index. 

http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-520862.html 20 http://news.cnet.com/8301-31001_3-20074484-261/take-that-netflix-hbo-go-app-sees-big-growth/ 21 Wireless Week, supra note 19. 
9 

Figure 6: Number of U.S. Mobile Subscribers Watching Video on a Mobile Phone 

Source: Nielsen 

Business Productivity 

Wireless broadband also has the potential to facilitate significant productivity improvements in 

American businesses. Wireless carriers and other technology firms offer mobile products 

designed to enable businesses to operate more efficiently. Examples include mobile 

videoconferencing products that enable real-time video collaboration with offsite field workers; 

applications in transportation logistics, allowing remote management of fleets and inventories; 

and real-time remote access by sales personnel to customer-relationship software, the latest 

inventory and sales data, and other back-office information. In most cases, these services rely on 

commercial wireless broadband networks. For example, Librestream, a provider of mobile 

business videoconferencing solutions, announced in January that it had begun using Verizon’s 

newly deployed 4G wireless network.22

Many mobile business applications take advantage of the growing use of smartphones and tablets 

in commercial settings. A recent report projected that by 2016 there will be 830 million users of 

business-to-employee and business-to-customer applications for mobile devices.23 Low-cost 

mobile devices can be a cost-effective way for businesses to access web-based services, taking 

advantage of the high processing power and large data storage capabilities of remote servers. 

Because these “cloud-based” solutions do not require the high fixed costs of information 

technology infrastructure, they can be cost-effective even for small businesses. An AT&T 

survey of small businesses found that about one-third of small businesses currently use cloudbased software services, while nearly three-fourths use mobile apps for their business.24 As 

smartphones and tablets continue to grow in popularity and as wireless broadband access 

 

22 http://www.librestream.com/news/jan-5-2011.html 23 http://dhdeans.blogspot.com/2011/07/mobile-enterprise-apps-for-smartphones.html 24 “AT&T Survey Shows Mobile Apps Integral to Small Business Operations,” March 15, 2011. 

http://www.att.com/gen/press-room?pid=19326&cdvn=news&newsarticleid=31689&mapcode=enterprise

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becomes widespread, new business-oriented applications for mobile devices will likely emerge, 

promoting greater increases in productivity. 

Health Care 

The health care industry now comprises roughly one-sixth of the U.S. economy, and improving 

the efficiency of the sector is an important public goal. One of the most promising public 

benefits of increasing access to wireless broadband is the potential for mobile technologies to 

have a positive impact on the quality of patient care and to slow the growth of health care costs. 

The use of mobile technologies in health care is also an important opportunity for economic 

growth and innovation, with the potential consumer demand for mobile health services worth an 

estimated $20 billion in the U.S., according to a 2010 McKinsey study.25

An important role for wireless technology in health care is the use of videoconferencing to 

enable direct interaction between a patient and a health care provider, or between two or more 

providers, who are in different locations. This can be particularly valuable for aging patients and 

others with limited mobility, and in rural and underserved areas where access to specialists may 

be limited. A number of studies have shown that the quality of care achieved via 

videoconferencing can sometimes be equivalent to traditional face-to-face care. For example, 

the AHA issued a statement in 2009 that, for stroke patients, a remote exam with high-quality 

videoconferencing is as effective as a bedside evaluation.26 While medical videoconferencing 

often occurs today over wired broadband connections, the availability of wireless options can be 

important to enable communications even when a patient or physician is unable to be at a fixed 

workstation. For example, in August 2011 the TriStar Health System announced that it is rolling 

out a videoconferencing system at five Nashville area hospitals to enable neurologists to evaluate 

stroke patients from a wireless-enabled laptop in any location.27 

With the widespread adoption of smartphones (some estimate that more than 80 percent of 

physicians now have one),28 a key emerging area of innovation is the development of 

technologies that enable health care providers to access electronic health records and diagnostic 

information, such as lab results and medical images, from their personal mobile devices. One of 

the pioneering firms in this area is AirStrip Technologies, which offers the first FDA-approved 

mobile applications that can send real-time waveform data directly from hospital monitoring 

systems to mobile devices, allowing physicians to monitor fetal heartbeats, maternal 

contractions, and other vital signs from their smartphones or tablets.29 Another key milestone 

passed in February 2011, when the FDA approved Mobile MIM, the first diagnostic medical 

imaging app for iPhones and iPads. This app gives physicians access to diagnostic images like 

 

25 “Global Mobile Healthcare Opportunity,” McKinsey and Company, February 18, 2010. 

http://www.mckinsey.it/idee/practice_news/global-mobile-healthcare-opportunity.view. 26 AHA news release, May 7, 2009. http://newsroom.heart.org/pr/aha/733.aspx 27 “TriStar Goes Live with Tennessee's First TeleMedicine Network for Stroke Care,” August 8, 2011. 

http://tristarhealth.com/about/newsroom/tristar-goes-live-with-tennessee-s-first-telemedicine 28 “Doctors using smartphones, tablets to access medical data,” Star Telegram, July 5, 2011. 

http://www.star-telegram.com/2011/07/05/3201630/doctors-using-smartphones-tablets.html

29 “InformationWeek Selects AirStrip OB as a Vital Healthcare App,” Business Wire, July 6, 2011. 

http://www.businesswire.com/news/home/20110706005283/en/InformationWeek-Selects-AirStrip-OB-VitalHealthcare-App
11 

MRIs on their own mobile device, allowing for accurate and timely medical decisions to be made 

from any location.30 In September 2011, the FDA cleared Calgary Scientific’s ResolutionMD 

Mobile, an application that allows physicians to view high-resolution scans and patient data on 

both Apple and Android devices.31 These kinds of applications have the potential to improve 

access to scarce specialists and enable rapid decision-making in time-sensitive medical 

emergencies. Moreover, web-based services delivered over commercial broadband networks can 

help to reduce hospital information technology infrastructure costs, by shifting the 

computationally intensive image-rendering functions away from hospital-based hardware to 

centralized servers. 

Another category of emerging wireless health technologies includes devices that allow remote 

monitoring of patients with chronic conditions. For example, Corventis, Inc., a developer of 

wireless cardiovascular solutions, distributes a wearable sensor that continuously monitors a 

patient’s heart rate, respiratory rate, and other vital signs, automatically captures an 

electrocardiogram if an irregular heart rhythm is detected, and transmits the data wirelessly to a 

remote server that can be accessed over the internet by the patient’s physician.32 Another 

innovator, Asthmapolis, developed an inhaler for asthmatics that wirelessly transmits the time 

and location to a central server each time the patient uses it. The patient and her physician 

receive weekly summary reports that may assist them in identifying and preventing conditions 

that trigger asthma attacks.33 Wireless monitors for blood pressure, glucose level, and bone 

density have also been introduced. As patients with multiple chronic conditions account for an 

increasing proportion of overall health expenditures, effective round-the-clock monitoring is an 

important way to identify problems early, keep patients out of the hospital, and reduce 

unnecessary costs. Mobile patient monitoring with wireless technologies has been projected to 

reduce healthcare costs by between $2 billion to $6 billion by 2014.34

Education 

Access to wireless broadband can also have important benefits for education. In February 2011, 

President Obama introduced his Wireless Innovation and Infrastructure Initiative in a speech on 

the campus of Northern Michigan University, in part to highlight the university’s decision to 

invest in a local wireless broadband network. This investment aims to ensure that all students 

and faculty have access to high-speed internet, even if they live off-campus, and hence to 

“expand the learning environment,” as the University described it.35 

 

30 “Mobile MIM, First FDA-Cleared Diagnostic Medical Imaging App, Now Available on the U.S. App Store,” 

MIM Software press release, February 15, 2011. http://www.mimsoftware.com/about/mobilemimpr 31 “Using Smartphones for Medical Diagnosis,” Cellular News, May 9, 2011. http://www.cellularnews.com/story/49088.php. See also “Calgary Scientific's ResolutionMD Mobile Receives FDA Clearance for 

Diagnostic Image Viewing on iPhones and iPads,” Sept. 26, 2011. http://www.prnewswire.com/newsreleases/calgary-scientifics-resolutionmd-mobile-receives-fda-clearance-for-diagnostic-image-viewing-on-iphonesand-ipads-130581658.html

32 http://www.corventis.com 33 “Inhaling information: How to collect data on asthma while, at the same time, treating it,” Economist, April 7, 

2011. http://www.economist.com/node/18526861 34http://mobihealthnews.com/7564/cost-savings-from-mobile-health-monitoring-to-reach-1-9-billion-to-5-8-billionglobally-by-2014-says-juniper-research/

35 http://webb.nmu.edu/SiteSections/WiMAX.shtml
12 

Wireless educational technologies have also been effectively deployed in primary and secondary 

education settings. For example, Maine’s Learning Technology Initiative equipped all of the 

state’s middle schools with wireless access, and provided laptops for every seventh- and eighthgrade student and teacher. Studies conducted after the implementation of the project showed 

improvements in writing proficiency and in math and science retention.36 Another example is 

Project K-Nect, a funded pilot program that began in North Carolina in 2007. The project 

provided smartphones to at-risk poorly performing high school and middle school students, 

giving them access to digital instructional content aligned with in-class lessons and enabling 

them to collaborate with one another on assignments and to communicate electronically with 

after-school tutors. Teachers reported that students enrolled in the program were more engaged 

academically, and in 2009, the program was extended to schools in Virginia and Ohio.37 More 

generally, the academic literature on the impact of information technology in the classroom has 

yielded mixed evidence, with some studies finding evidence of positive effects on student 

achievement, while other studies do not.38 This highlights the importance of efforts to identify 

the most promising opportunities for innovation and to rapidly evaluate the effectiveness of new 

technologies. As the White House and the Department of Education announced on September 

16, 2011, such efforts are among the primary goals for “Digital Promise,” the new national 

center created to advance educational technologies.39 

 

Even outside of the classroom, wireless broadband has the potential to enhance educational 

outcomes, through the availability of educational applications for smartphones and tablets. For 

example, the app store for iPhones and iPads currently offers over 40,000 apps in the education 

category.40 The most popular categories of educational apps include foreign language, literacy, 

math, and test prep.41 Some research suggests that educational apps can be promising ways to 

facilitate learning in children. For example, a study released by PBS Kids in 2010 found 

evidence of improvements in vocabulary and other reading skills for children aged three to seven 

who played with popular reading apps.42 Much remains to be learned about how to most 

effectively harness the potential of wireless technology for educational purposes, but it is already 

evident that this is a promising area for innovation as wireless broadband usage continues to 

grow. 

IV. Wireless Broadband and Public Safety 

Wireless broadband has a vital role to play in improving the ability of emergency personnel to 

communicate efficiently and to obtain necessary information quickly, including real-time videos, 

 

36 See references cited at fn. 684 of the FCC’s “Annual Report and Analysis of Competitive Market Conditions With 

Respect to Mobile Wireless, Including Commercial Mobile Services,” released June 27, 2011. 

37 “Project K-Nect, 24/7 Wireless Collaboration Enhances Student Engagement and Math Development,” 

Qualcomm. http://www.qualcomm.com/documents/files/project-k-nect-case-study-education-technology-digitalinclusion.pdf

38 See, for example, Barrow, L., L. Markman, and C. E. Rouse, “Technology's Edge: The Educational Benefits of 

Computer-Aided Instruction,” American Economic Journal: Economic Policy. Vol. 1, No.1 (February 2009), pp. 52-

74, and the references therein. 

39 http://www.whitehouse.gov/the-press-office/2011/09/15/fact-sheet-digital-promise-initiative. 40 http://148apps.biz/app-store-metrics/?mpage=catcount 41 “iLearn: A Content Analysis of the iTunes App Store's Education Section,” Carly Shuler, November 2009. 

http://www.joanganzcooneycenter.org/upload_kits/ilearn_1_.pdf 42 http://pbskids.org/read/files/iPod_Report_ExecSum.pdf
13 

images, and other data. Historically, emergency personnel have relied on land mobile radio 

systems to communicate. In recent years, with the growing capabilities of mobile information 

and communication technologies, public safety agencies have also begun to invest in wireless 

broadband systems to support their missions. Access to wireless broadband will enhance the 

ability of first responders to send and receive vital information in real time, including live video 

transmitted from security cameras or from a helicopter monitoring a scene from the air. 

Ambulances will be equipped to remotely access patient medical records and to transmit images 

and data that will aid in rapid evaluation and delivery of needed medical care. The parent of a 

missing child will be able to email a photo to a police dispatcher, and have it instantly viewed by 

officers in the field.43 And as the President described in his 2011 State of the Union Address, a 

firefighter will be able to “download the design of a burning building onto a hand-held device.”44 

The new legislation that Congress has now passed provides for the creation of a state-of-the-art 

nationwide wireless broadband network for public safety communications. Developing and 

deploying such a system will help ensure that the public safety benefits of wireless broadband 

are available throughout the nation, and will also enable interoperability at the national level, 

making first responders more effective when they are called on to cross jurisdictional lines. An 

interoperable network will also reduce the costs of the assorted interoperability measures now 

being used, ranging from swapping radios to using Internet-based gateways to patch together 

different systems. Moreover, deploying a single nationwide network will realize important scale 

economies, eliminating duplicative operating and maintenance costs and enabling public safety 

entities to obtain commercially supplied devices and equipment at substantially lower cost than 

they can today. Finally, with clear, nationwide standards that help make public safety 

communication systems interoperable across jurisdictions and vendors, software and hardware 

developers will find it more economical to invest in innovative public safety devices and 

applications, further enhancing the effectiveness of first responders.45

Another important public safety benefit of the new legislation is that it designates the band of 

spectrum known as the D-block for public safety use. A critical challenge in public safety 

communications is the risk that, during a large-scale emergency such as an earthquake or 

hurricane, wireless networks will become highly congested, due to the sudden spike in cellphone 

usage as many individuals simultaneously try to communicate with family members and 

colleagues. If public safety communications rely on the same wireless infrastructure as everyone 

else, this congestion has the potential to limit the effectiveness of public safety personnel 

precisely when their services are most needed. By contrast, with dedicated spectrum for public 

safety use, as provided for in the new legislation, the public safety wireless broadband network 

will have sufficient spectrum to operate effectively in emergency situations, ensuring that first 

responders will have access to critical information even when commercial wireless networks are 

congested. 

 

43 “Ventura Police Department Saves Seconds and Lives,” 2010, Motorola Case Study, 

http://www.motorola.com/web/FileScan/Business/US-EN/NGPS/Ventura_Police_Department_Case_Study.pdf 44 State of the Union Address, January 25, 2011. 

45 For more detail on the benefits of a public safety wireless broadband network, see “The Benefits of Transitioning 

to a Nationwide Wireless Broadband Network for Public Safety.” The White House, June 16, 2011. 

http://www.whitehouse.gov/sites/default/files/uploads/publicsafetyreport.pdf
14 

The new legislation also provides vital funding to support research and development in 

standards, technologies, and applications to advance wireless public safety communications. 

This funding will accelerate the development of wireless technologies that will enhance the 

communication capabilities of public safety entities. Moreover, just as defense-related research 

into networking technologies played an important role in the early development of the internet, 

research directed towards wireless public safety communications is likely to generate 

innovations that spill over into other important areas. 

In addition to the benefits of a nationwide network for public safety communications, wireless 

broadband promises to enhance public safety through the emergence of smartphone and tablet 

apps developed by or for public safety entities. For example, in August 2011, the FBI released a 

Child ID app, the first mobile application created by the FBI. The app allows parents to 

electronically store photos and vital information about their children on a smartphone, so that the 

information can be easily accessed and shared with law enforcement officials in an emergency.46 

Apps designed for use by public safety personnel include technologies that allow police to 

quickly identify criminal suspects and accident victims. For example, a number of police 

agencies are planning to adopt a new technology that uses a smartphone to perform facial 

recognition, iris scanning, and fingerprint identification.47 Other innovations in development 

include plans to equip smartphones with small air sensors, to automatically alert public safety 

entities if dangerous chemicals are detected in the air.48 In short, wireless broadband offers a 

tremendous potential for life-saving public safety innovations. 

 

V. The Overall Economic Impact of Wireless Broadband 

As the examples in the previous section illustrate, growth in wireless broadband is likely to drive 

substantial economic benefits, by serving as a platform for new innovation in many areas of 

public and commercial importance. In aggregate, these benefits will likely lead to increased 

investment, faster economic growth, and new jobs. While it is difficult to quantify these 

aggregate effects precisely, a number of studies have examined the economic effects of past 

growth in information and communication technology, including broadband, while other studies 

have made projections on the likely impact of expanding wireless broadband. 

Evidence on the economic impact of information and communication technology 

A large body of literature has linked macroeconomic performance with the growth in 

information and communication technology. For example, Roller and Waverman (2001) 

estimate that one-third of the growth in per capita income in 21 developed economies from 1970 

to 1990 can be attributed to telecommunications infrastructure investments.49 Looking at more 

recent evidence, Jorgenson et al. (2008) estimate that information and communication 

technology accounted for 59% of productivity growth from 1995 to 2000, and 38% of 

 

46 “The FBI’s Child ID App.” http://www.fbi.gov/news/stories/2011/august/child_080511/child_080511 47 “How a New Police Tool for Face Recognition Works.” Wall Street Journal “Digits” blog, July 13, 2011. 

http://blogs.wsj.com/digits/2011/07/13/how-a-new-police-tool-for-face-recognition-works/ 48 “Cell-All: Super Smartphones Sniff Out Suspicious Substances,” 

http://www.dhs.gov/files/programs/gc_1268073038372.shtm

49 Röller, Lars-Hendrik, and Leonard Waverman, “Telecommunications Infrastructure and Economic Development: 

A Simultaneous Approach,” The American Economic Review, Vol. 91, No. 4 (Sep., 2001), pp. 909-923. 
15 

productivity growth from 2000 to 2006.50 Similarly, Brynjolfsson and Saunders (2010) conclude 

that most of the growth in productivity in the U.S. since 1995 can be attributed to information 

technology.51

Evidence on the economic impact of broadband 

A number of economic studies have examined the impact of broadband on measures of economic 

performance, including economic growth, employment, and consumer welfare. For example, 

Gillett et al. (2006) find that U.S. communities where mass-market broadband was available by 

December 1999 experienced more rapid growth in employment and in the number of businesses, 

relative to comparable communities without broadband at that time, between 1998 and 2002. 

Based on these findings, the authors estimate that broadband added about 1-1.4% to the growth 

rate in employment, and about 0.5-1.2% to the growth rate in the number of business 

establishments.52 Goolsbee and Klenow (2006) estimate the consumer welfare from internet use, 

finding that, as of January 2005, the value to the average user was on the order of several 

thousand dollars per year.53 Czernich et al. (2011) estimate the effect of broadband infrastructure 

on economic growth in a panel of developed economies from 1996-2007, finding that the 

introduction of broadband causes per capita income to increase by 2.7 to 3.9 percent, on average. 

Moreover, they find that higher levels of broadband penetration result in faster growth in per 

capita income. In particular, a 10 percentage point increase in broadband penetration raises the 

growth rate of per capita income by 0.9 to 1.5 percentage points.54 Similarly, Koutroumpis 

(2009) investigates the economic impact of broadband on growth in 22 OECD countries based 

on data collected for the period 2002-2007, also finding a significant causal link between 

broadband infrastructure and economic growth.55 In a study commissioned by the Internet 

Innovation Alliance, Dutz, Orszag, and Willig (2009) estimate that access to broadband at home 

generates about $32 billion per year in net value to consumers.56 Finally, while there is still only 

limited empirical evidence quantifying the effect of broadband on innovation activity, a recent 

paper by Bertschek et al. (2011) studies the expansion of broadband service in Germany from 

2001 to 2003, finding that access to broadband increases the likelihood that a firm will introduce 

a new innovation by about 40 percentage points.57

 

50 Jorgenson, Dale W., Mun S. Ho and Kevin J. Stiroh, “A Retrospective Look at the U.S. Productivity Growth 

Resurgence,” The Journal of Economic Perspectives, Vol. 22, No. 1 (Winter, 2008), pp. 3-24. 51 Brynjolfsson, Erik, and Adam Saunders, Wired for innovation: how information technology is reshaping the 

economy, MIT Press, 2010. 52 Gillett, Sharon , William Lehr, Carlos O'sorio, and Marvin Sirbu, “Measuring Broadband's Economic Impact,” 

Broadband Properties, vol. 24, no. 12 (2006) 12-24. 53 Goolsbee, Austan and Peter J. Klenow. "Valuing Consumer Products By The Time Spent Using Them: An 

Application To The Internet," American Economic Review, 2006, Vol. 96, No. 2, (May 2006), 108-113. 54 Czernich, Nina, Oliver Falck, Tobias Kretschmer, and Ludger Woessmann, “Broadband Infrastructure and 

Economic Growth,” The Economic Journal, vol. 121, issue 552, (May 2011), 505-532. 55 Koutroumpis, Pantelis. “The economic impact of broadband on growth: A simultaneous approach,” 

Telecommunications Policy, vol. 3, no. 9, (2009) 471-485. 56 Dutz, M., J. Orszag, and R. Willig, “The Substantial Consumer Benefits of Broadband Connectivity for U.S. 

Households,” Internet Innovation Alliance, 2009.

http://internetinnovation.org/files/special-reports/CONSUMER_BENEFITS_OF_BROADBAND.pdf 57 Bertschek, Irene, Daniel Cerqueray, Gordon J. Kleinz, “More bits - more bucks? Measuring the Impact of 

Broadband Internet on Firm Performance,” University of Mannheim working paper, March 2011. 

https://community.oecd.org/servlet/JiveServlet/previewBody/24346-102-1-

46419/bertschek_cerquera_klein_2011.pdf
16 

Projections on the economic impact of wireless broadband 

Although it is too soon for the empirical data to yield reliable estimates of the economic impact 

of wireless broadband, a few studies have estimated economic effects with the available 

evidence. For example, in a study for CTIA (the wireless industry trade association), Entner 

(2008) estimates that the productivity gains from wireless broadband adoption resulted in $33 

billion in annual cost savings in 2005, with that figure projected to grow to $127 billion by 

2016.58 Pearce and Pagano (2009) project that an additional $17.4 billion in investment in new 

wireless broadband networks would increase national income by $126 to $184 billion within 2 

years.59 In a study released by the Broadband for America Coalition, Crandall and Singer (2010) 

estimate that, from 2003 to 2009, 3G wireless and satellite technologies accounted for $11.6 

billion in annualized investment and about 168,300 new jobs; and project that annual investment 

in wireless technologies from 2010 to 2015 will average $14.3 billion, creating 205,000 new 

jobs.60 A Deloitte report projected that U.S. investment in 4G networks could fall in the range of 

$25 – $53 billion over the period 2012 to 2016, accounting for $73 – $151 billion in GDP 

growth, and 371,000 – 771,000 new jobs.61 Lastly, Sosa and Van Audenrode (2011) estimate 

that the reassignment of 300 MHz of spectrum to mobile broadband will lead to $75 billion in 

new investment, 300,000 new jobs, and $230 billion in additional GDP, within five years.62 

Given the wide range of uncertainty as to the incremental impact of new spectrum assignment on 

industry investment levels, CEA does not endorse any specific numeric prediction. Nonetheless, 

the evidence is clear that the wireless industry is an important source of investment and 

employment in the U.S. economy, and that supporting the growth of this industry through new 

spectrum allocation is likely to generate substantial economic benefits. 

VI. Wireless Broadband in Other Countries 

The U.S. is not alone in recognizing the large potential benefits of wireless broadband, and the 

need to ensure that there is sufficient spectrum for these benefits to be realized. Other countries 

are also moving forward with their own mobile broadband spectrum policies. 

Japan and South Korea are often recognized as the world leaders in both wired and wireless 

broadband deployment. As early as 2005, commentators were expressing concern about how far 

the U.S. had fallen behind those countries in broadband technology.63 A Morgan Stanley 

analysis in late 2009 concluded that Japan has outpaced the rest of the world in most mobile 

internet areas by about five to ten years, affecting such areas as online commerce and the 

 

58 Entner, Roger, “The Increasingly Important Impact of Wireless Broadband Technology and Services on the U.S. 

Economy,” 2008. http://files.ctia.org/pdf/Final_OvumEconomicImpact_Report_5_21_08.pdf

59 Pearce, Alan and Michael Pagano, “Accelerated Wireless Broadband Infrastructure Deployment: The Impact on 

GDP and Employment,” Media Law and Policy, Spring 2009. 60 Crandall, R. and H. Singer, “The Economic Impact of Broadband Investment,” Feb. 23, 2010, released by the 

Broadband for America coalition. http://www.ncta.com/DocumentBinary.aspx?id=880 61 “The impact of 4G technology on commercial interactions, economic growth, and U.S. competitiveness,” August 

2011, Deloitte Development, LLC. 

62 Sosa, D. and M. Van Audenrode, “Private Sector Investment and Employment Impacts of Reassigning Spectrum 

to Mobile Broadband in the United States,” August 2011, Analysis Group, Inc. 

63 See, e.g., Bleha, Thomas, “Down to the Wire,” Foreign Affairs, Vol. 84, No. 3 (May - Jun., 2005), pp. 111-124. 
17 

provision of digital consumer content.64 Press reports early in 2011 described South Korea’s 

plans to increase broadband speeds for every household in the country to a level more than 200 

times as fast as the average broadband speed in the U.S.65 South Korea later announced plans to 

transition all paper textbooks to digital versions accessible on tablets and other mobile devices by 

2015, as well as shifting nationwide testing and after-school educational programs online, so that 

South Korea may be among the first countries to realize the potential for wireless broadband to 

transform education.66

Europe is also moving forward with plans to accelerate the growth of wireless broadband. The 

world’s first commercial network using the most advanced 4G technology (known as “LTE” 

technology) was rolled out in Scandinavia in late 2009 by TeliaSonera, a full year before Verizon 

rolled out the first commercial LTE services in the U.S. Moreover, download speeds on 

TeliaSonera’s network are substantially faster than available in the U.S., with speeds expected to 

range from 20 to 80 megabits per second, compared with 5 to 12 megabits per second on 

Verizon’s network. According to an executive at telecom equipment supplier Ericsson, the 

reason for the dramatic difference in speed and capacity is that TeliaSonera has twice as much 

spectrum available for each channel.67 European advances in adopting wireless broadband are 

reflected in OECD statistics on wireless broadband penetration rates. As illustrated in Figure 7, 

in December 2010, the U.S. ranked 9th, with penetration rates significantly lower than Japan, 

Korea and a number of Scandinavian countries. As a result of Europe’s success in rolling out 

LTE technology, a Vice-President of the European Commission remarked in June 2011, “One 

year ago, we thought that companies in the U.S. would be alone in pioneering the 4th generation 

systems; now we can say that Europe is in the lead.”68

Even in countries that rank below the U.S. in wireless broadband penetration, there are efforts to 

allocate substantial amounts of additional spectrum for wireless broadband. For example, a 2010 

report noted that, even though European countries already have somewhat more spectrum 

allocated to wireless broadband than the U.S., Germany is auctioning an additional 340 MHz, 

and the United Kingdom an additional 262 MHz.69 

 

 

64 “The Mobile Internet Report: Ramping Faster than Desktop Internet, the Mobile Internet Will Be Bigger than 

Most Think,” Morgan Stanley, December 15, 2009. 

http://www.morganstanley.com/institutional/techresearch/pdfs/mobile_internet_report.pdf 65 “Home Internet May Get Even Faster in South Korea,” New York Times, Feb. 21, 2011. 

http://www.nytimes.com/2011/02/22/technology/22iht-broadband22.html

66 “All Korean Textbooks to Go Digital By 2015,” eSchool News, July 1, 2011. 

http://www.eschoolnews.com/2011/07/01/all-korean-textbooks-to-go-digital-by-2015/ 67 “TeliaSonera launches first commercial LTE services,” ComputerWorld, December 14, 2009. 

http://www.computerworld.com/s/article/9142222/TeliaSonera_launches_first_commercial_LTE_services 68“Spectrum must be backbone of internet revolution, not the bottleneck,” Neelie Kroes remarks at the 6th Annual 

European Spectrum Management Conference, Brussels, June 14, 2011. 

http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/11/433 69 Bennett, R. “Going Mobile: Technology and Policy Issues in the Mobile Internet,” Information Technology and 

Innovation Foundation, 2010. http://www.itif.org/files/100302_GoingMobile.pdf
18 

Figure 7: Wireless Broadband Penetration Rates for Selected Countries, December 2010 

Source: OECD 

VII. The Benefits of Voluntary Incentive Auctions and Unlicensed Spectrum 

Voluntary incentive auctions are the most efficient way to repurpose licensed spectrum 

Since the FCC first started to use auctions to assign spectrum to commercial carriers in 1994, the 

success of the program has led to similar auctions around the world.70 Despite wide acceptance 

that these auctions have been a highly efficient way to allocate spectrum, the FCC did not have 

the authority to use auctions to allow existing licensees to bid for the right to receive 

compensation in exchange for voluntarily relinquishing their spectrum holdings. The goal of 

passing legislation permitting voluntary incentive auctions was highlighted in the President’s 

Wireless Initiative, endorsed in April 2011 by 112 economists in a letter to President Obama,71

and has now become a reality with the passage of the new spectrum legislation. By authorizing 

the FCC to use voluntary incentive auctions to reallocate spectrum, the new legislation will 

ensure that spectrum is transferred from relatively low value uses to higher value uses, 

generating net economic benefits that will be widely shared among all of the key stakeholders. 

Wireless carriers will benefit from increased wireless broadband capacity, as the additional 

capacity will enable them to profitably serve the growing demands of their customers. 

Consumers will benefit from the growth of new services, reduced constraints on data usage, and 

lower prices, relative to levels the market could support in the absence of new spectrum. 

Broadcasters who choose to participate in the auction will benefit from the ability to share in 

auction proceeds in exchange for releasing underused spectrum assets. The use of voluntary 

incentive auctions will ensure that market forces will drive reallocations, so that spectrum will 

 

70 See, e.g., Cramton, P. “Spectrum Auctions,” in Handbook of Telecommunications Economics, Martin Cave, Sumit 

Majumdar, and Ingo Vogelsang, eds., Amsterdam: Elsevier Science B.V., Chapter 14, 605-639, 2002. 

71 Economists’ letter to President Obama regarding incentive auctions, April 6, 2011. 

http://www.politico.com/static/PPM41_april6_economists_letter_to_obama_regarding_incentive_auctions.html

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Subscriptions Per 100 Population
19 

only be repurposed if both new and existing licensees are made better off by the transaction. In 

particular, if a broadcaster believes that it can most profitably make use of its spectrum holdings 

by continuing to broadcast to households that rely on over-the-air television or by investing in 

innovative services such as mobile DTV, it is under no obligation to participate in the auction.72 

This approach allows market forces to guide spectrum towards its highest value uses. For 

example, if a broadcaster has a promising opportunity to introduce mobile DTV, and if that 

opportunity offers greater value than repurposing the spectrum for wireless broadband, the 

broadcaster will likely choose to retain the spectrum and invest in the innovative new service. In 

other instances, when wireless broadband offers the highest value, broadcasters will likely find it 

profitable to relinquish some or all of their spectrum holdings in exchange for financial 

compensation. 

 

Taxpayers will benefit from a valuable source of new revenue. Even after providing a 

reasonable return on wireless carriers’ investment and a profitable sale for broadcasters that 

choose to participate, the transfer of spectrum is expected to generate substantial economic gains. 

In a well-designed auction, a significant portion of that surplus is likely to be retained by the U.S. 

Treasury. While it is impossible to know in advance precisely how much revenue the auctions 

will yield, it is possible to make reasonable inferences from evidence on prior FCC spectrum 

auctions, along with financial information about the likely value of spectrum to broadcasters. 

For example, the White House has projected that voluntary incentive auctions, along with other 

measures to enable more efficient spectrum management, could generate nearly $28 billion in 

revenue over ten years.73 These revenues will provide substantial public benefits through a 

number of different uses, including deficit reduction and critical investments in public safety. 

Finally, as described in greater detail above, the American economy will enjoy broad benefits, 

from greater economic efficiency, new innovations, and increases in employment, productivity, 

and economic growth. The use of voluntary incentive auctions is a significant innovation in the 

area of spectrum allocation, much like the FCC’s pioneering use of spectrum auctions in the mid1990’s, and the spectrum auction provisions of the new legislation have the potential to generate 

significant economic benefits. 

An important feature of the new legislation is that it preserves the FCC’s authority to adopt and 

enforce rules that are generally applicable to all auction participants. These rules may include 

limits on spectrum aggregation, preventing any single entity from licensing an unduly large share 

of the spectrum in a market. The legislation includes safeguards to ensure that the FCC cannot 

“pick winners” by excluding individual entities from participating in auctions, but the FCC will 

still be able to adopt broadly applicable rules that may be necessary to prevent the accumulation 

of market power and to preserve competition in the market for wireless services. 

 

72 Broadcasters that retain spectrum may need to have their spectrum relocated to new frequencies, in order to allow 

for the formation of contiguous bands of spectrum for new uses. The FCC has proposed that “broadcasters should 

be fully compensated for any costs of any channel changes, and that any moves from UHF to VHF should be 

voluntary.” (FCC Chairman Julius Genachowski, prepared remarks at NAB Show 2011, April 12, 2011.) 

73 “Winning the Future through Innovation,” White House fact sheet. 

http://www.whitehouse.gov/omb/factsheet/winning-the-future-through-innovation
20 

Unlicensed spectrum is a valuable complement to licensed spectrum

The new legislation also promotes innovation by authorizing the FCC to make certain spectrum 

available for unlicensed use, including portions of the spectrum released by broadcasters. 

Allocating a portion of the released spectrum for unlicensed use has the potential to generate 

greater economic benefits than a regime based solely on exclusive licenses. In order to access 

exclusively licensed spectrum, a user must enter into a service agreement with the license holder. 

Although licensees may offer service agreements that, in some instances, efficiently facilitate 

user access to licensed spectrum, in other circumstances the transactions costs associated with 

negotiating this access may prove to be a barrier to efficient use of the spectrum. For example, 

innovative firms may find it prohibitive to enter into the necessary licensing agreements each 

time they wish to introduce a new experimental wireless technology. By contrast, when 

unlicensed spectrum is available, the low barriers to entry can promote widespread 

experimentation and the development of innovative new technologies. 

The emergence of Wi-Fi as an essential part of today’s wireless infrastructure illustrates the way 

that unlicensed access can facilitate innovation. In 1985, when the FCC released for unlicensed 

use the spectrum that Wi-Fi currently relies on, that portion of the spectrum was dismissed as 

“junk.”74 Few could have anticipated that, two decades later, unlicensed spectrum would support 

routine wireless internet access in “hotspots” like coffee shops and airports. Today, households 

with fixed broadband access routinely use Wi-Fi routers to enable wireless broadband access in 

the home. A comScore report found that, in May 2011, Wi-Fi accounted for over 47% of web 

page views on the iPhone, and almost 92% of iPad page views.75 Hospitals and other health care 

facilities frequently deploy local Wi-Fi networks to facilitate wireless communications and 

access to electronic medical records. Even major wireless carriers, with their large portfolios of 

exclusive-use spectrum, often rely on Wi-Fi infrastructure to offload traffic from their networks 

in congested areas. According to a Cisco report, 21% of U.S. smartphone and tablet data traffic 

in 2010 was offloaded to fixed line networks through Wi-Fi or femtocells.76 In April 2011, WiFi accounted for over 98% of all offloaded traffic.77 

Moreover, economically important uses of unlicensed spectrum extend beyond Wi-Fi: For 

example, Bluetooth technology has proliferated in numerous devices, ranging from wireless 

headsets and mobile phones to video game consoles and other consumer electronics. Also, the 

use of “radio-frequency identification” (RFID) tags has led to improvements in inventory 

management in retail and other sectors, increasing labor productivity and reducing losses due to 

stock-out events.78

 

74 See, e.g., Statement of FCC Chairman Julius Genachowski, Sept. 23, 2010. 

http://transition.fcc.gov/Daily_Releases/Daily_Business/2010/db0923/FCC-10-174A1.pdf 75 http://www.prnewswire.com/news-releases/comscore-introduces-device-essentials-for-measuring-digital-trafficfrom-all-devices-enabling-optimization-of-marketing-strategies-and-customer-experience-124418053.html

76 Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2010–2015, Table 7. 

http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-520862.pdf 77 Juniper Research press release, April 19, 2011. 

http://www.juniperresearch.com/viewpressrelease.php?id=303&pr=240

78 “The economic value generated by current and future allocations of unlicensed spectrum,” R. Thanki, 

2009. http://fjallfoss.fcc.gov/ecfs/document/view?id=7020039036
21 

Just as it was hard to imagine the explosive growth of Wi-Fi technology when the FCC first 

released unlicensed spectrum, it is difficult today to anticipate the variety of future technologies 

that may emerge if new spectrum is made available for unlicensed use. Different bands of 

spectrum have different propagation characteristics, affecting the ease of transmitting signals 

over long distances or through walls. As a result, technologies that are not feasible today may 

become technically feasible and widely adopted if a portion of the newly released spectrum is 

made available for unlicensed use. In short, a diverse mix of licensed and unlicensed spectrum 

offers the most fertile environment for future innovation.