White House Buries Wireless in Bureaucracy

Senior Fellow and Director, Center for the Economics of the Internet
Legal Fellow, Center for the Economics of the Internet
(Wikimedia Commons)

Mobile phones and the wireless services that empower them comprise some of the world’s most innovative and consumer-friendly industries.  Today, nearly every person on the planet is attached to a smartphone, both figuratively and literally.

Today’s wireless industry developed with little direct help from the federal government.  This neglect turned out to be both benign and enlightened.  The surest way to help wireless providers and consumers was to keep the government out of the way.  Relative to other communications industries, wireless has always enjoyed the least regulation, and therefore the least government intervention.  For the past three decades, across every American president and administration, the approach has worked staggeringly well.

Nearly every country around the world has allowed the wireless industry to develop in a similarly hands-off manner.  Wireless network equipment, consumer handsets, and everything in-between compete and operate in a global marketplace.  Thanks to wireless devices and networks, people today can communicate with friends, family, and business partners around the block or around the globe.  Visit almost any country in the world and chances are your cell phone will connect to some sort of a wireless network, whether through cheap or inexpensive international roaming plans or inserting a SIM card from a local carrier.

Wireless networks have been one of the greatest innovations in human history, helping rich and poor alike, all in less than 30 years.  Among the triumphs wireless networks are responsible for include democratizing the previously-restrictive taxicab business, allowing access to mobile celestial jukeboxes of endless entertainment, and facilitating unbanked citizens in developing nations cheaply and reliably sending money to one another.

Like most innovations, wireless services were developed and deployed by private businesses, not governments.  Much of that private development was in the United States.  Even North Korea and Cuba rely on private wireless carriers, rather than government enterprises.

Wireless services are also intensely competitive.  Carriers invest tens of billions of dollars in new technologies and network upgrades each year.  As a result, profits are slim and inconsistent.

Ask any wireless executive—or any consumer—what America’s wireless sector needs and one will undoubtedly hear an earful.  But one won’t hear several requests: a national spectrum strategy, a national testbed, a national spectrum R&D plan, or a national spectrum workforce plan.

Nevertheless, the Biden Administration recently released a National Spectrum Strategy and a Memorandum on Spectrum Policy containing precisely those proposals.  Spectrum—the set of radio waves that wireless networks operate on—is the lifeblood of the wireless industry. 

Rather than maintain the successful hands-off-approach that has worked well for thirty years, the Biden Administration instead seeks to visibly and consistently insinuate the federal government in the planning of wireless networks, alongside efforts to “educate” the public and policymakers.

Of course, the federal government has long had a role in the wireless industry: chiefly through clearing and setting aside swaths of spectrum and then putting that spectrum up for auction.  These auctions have raised hundreds of billions of dollars for federal coffers.  And available remaining bands of spectrum have the potential to raise in excess of at least another $100 billion for the U.S. Treasury.

Such federal receipts are undeniably valuable.  But what is far more valuable, and far more important for American wireless customers, is putting spectrum to its highest-value use, as determined by free and private markets.

In the prior administration, the federal government quietly yet expeditiously auctioned off spectrum rights to private wireless carriers, which in turn provided improved 5G wireless services to the American public.  All of this worked well without an overarching national spectrum strategy, years-long studies, or any of the other visible projects that the Biden Administration envisions.

But now, for unexplained reasons, America now apparently needs a national spectrum strategy.  It is long on plans and studies and short on actions.  Various spectrum bands are to be studied for a period of two years.  This is supposed to occur after at least one of those spectrum bands has been studied by the Pentagon for more than a year. 

The bottom line?  No federal spectrum will be available for auction anytime soon.  Check back in a few years.

Complicating matters further is that the FCC’s legal authority to auction off spectrum expired earlier this year following a brief extension.  Efforts to reauthorize this authority have been stalled in Congress.  Now, with the administration conceding that no new bands of spectrum will be released in the foreseeable future, there is little urgency for Congress to take up the issue and grant the FCC auction authority once again.  A wise course of action would be to grant the FCC permanent auction authority so that Congress need not reauthorize it every few years.  Yet no one seems to want permanent authority and valuable Congressional time is wasted every few years for no purpose.

The National Spectrum Strategy uses the words “collaborate” or “collaboration” 39 times.  It is all well-intended, no doubt.  But American businesses did not innovate and did not create the wireless industry through government collaboration.

In the end, America has two starkly different choices.  One approach is guided by the heavy hand of government: “collaboration,” a national spectrum workforce plan, a national spectrum R&D plan, and other federally-managed programs.  It is an approach that has rarely worked well, if at all.

The other approach is based on tried-and-true competitive markets.  Businesses compete and innovate to meet customer demands, not government mandates.  Wireless communications services, the most important technological advancement of our lifetimes—if not in all of modern history—developed under competition. 

Yes, more spectrum needs to be transferred from government to private hands.  But that can happen quickly, quietly, and without the complexity of a national spectrum plan that does everything except actually help auction off spectrum to private actors in a timely or efficient manner.

The administration’s National Spectrum Strategy was undoubtedly prepared with good intentions.  But good intentions are not enough.  America can and must do better—much better.

Read in RealClearMarkets.