As lawmakers in Washington continue to wrangle over a solution to the debt-ceiling mess, their search for a compromise has now got them thinking about iPhones, iPads and other smartphones and tablets.
That’s because Senate Majority Leader Harry Reid has added the sale of wireless spectrum to his proposed package of spending cuts and revenue-raisers that would accompany a debt limit increase.
Mobile broadband use has been surging as smartphones have become more popular, and data-intensive apps like streaming movies and music, as well as video conferencing, gain users. AT&T, for example, saw mobile data volume increase 8,000% in the first four years it sold the iPhone.
Yet providers like AT&T and Verizon don’t have enough radio spectrum to meet projected customer demand, meaning that they will soon face a spectrum crunch. Left unresolved, such a shortage will mean slower speeds and more dropped calls.
Luckily, there’s a great big swath of underutilized spectrum available that would be perfect for high-speed broadband—it’s called broadcast television.
Over-the-air TV, like wireless broadband, uses radio spectrum to propagate its signals. But unlike wireless broadband, the demand for broadcast TV is at an all-time low. Less than 10% of households get their TV signals over-the-air. The rest rely on cable, fiber or satellite connections. Additionally, only a handful of stations are fully utilizing the spectrum bands they received during the digital TV transition.
The obvious answer is to move that spectrum from TV to mobile broadband, but it’s not that easy. The broadcasters who currently have the spectrum must be persuaded to give it up, and they want to be compensated. So, the FCC has proposed an incentive auction plan that would allow broadcasters to put up their spectrum for bidding by mobile broadband providers and take a share of the revenue. That’s where Congress comes in.
Congress has to give the FCC authority to hold the auctions and share the revenue with broadcasters. What they’re more interested in, however, is the part of the auction revenues that isn’t shared. That goes straight to the federal government thus generating much needed revenue without raising taxes—something upon which both Democrats and Republicans can agree.
How much revenue are we talking about? The Congressional Budget Office has estimated that the amount from spectrum auctions that could be used to reduce the deficit would total $6.5 billion. More rosy estimates from Congress put the figure at up to $15 billion. Either way, it’s just a drop in the bucket in the trillions Congress and the President are trying to reach.
That’s why the real good news here is not the extra federal revenue, as important as that may be to Congress right now. It’s the fact that we may finally address the looming spectrum crunch, which is starving a growing and innovative industry at the expense of a dying one. More spectrum for mobile will mean better coverage, higher speeds, and cooler gadgets to take advantage of them.
Mobile broadband providers get more spectrum, TV broadcasters get compensated, Congress gets revenue for the deficit, and consumers get a better wireless experience and don’t have to miss their favorite TV shows.
Thanks perhaps to the iPhone, there’s a rare silver lining in an otherwise cloudy outlook.