Accounting for Wi-Fi

By Bill Maguire, Director of WifiForward’s Save our Wi-Fi Campaign

We need more unlicensed spectrum for technologies like Wi-Fi. But efforts to increase the amount of spectrum available are sometimes hamstrung by an unlikely obstacle: accounting procedures. When policymakers at the Congressional Budget Office (CBO) do their jobs, they assign value to spectrum when it is licensed and sold at auction. Thus, high marks go to bills that direct the Federal Communications Commission (FCC) to sell licensed spectrum, while legislation that provides more spectrum for Wi-Fi receives low grades.

As evidence mounts on how much unlicensed spectrum contributes to our economy and businesses — $228 billion in 2014, Wi-Fi gets short shrift in legislative proposals.

Congress gives the FCC the authority to manage our wireless spectrum, including making it available for commercial use as well as on an unlicensed basis. If Congress directs the FCC to maximize the revenue for the federal government to “off-set” federal government expenditures, then freed-up spectrum is all auctioned off to single users. But while off-sets are politically very appealing, the CBO’s scoring structure ignores the economic value that unlicensed spectrum offers. It’s time for a new accounting system that works for consumers, innovators and our economy writ large.

CBO process should account for the economic contributions of unlicensed spectrum technologies.

Repeated studies find unlicensed spectrum generates billions of dollars for the U.S. economy. Two reports, in particular, provide detailed methodologies for quantifying the value of unlicensed spectrum bands:

● The first — a report released by the Consumer Technology Association (CTA), a WifiForward member — concludes that unlicensed spectrum generates over $62 billion a year for the U.S. economy. In the report, Unlicensed Spectrum and the American Economy, CTA quantifies a wireless device’s incremental retail sale value, taking into account only the fraction of the sales price attributable to unlicensed spectrum. And, the report finds that devices that rely heavily on unlicensed spectrum, which includes Wi-Fi, Bluetooth and radio frequency identification-enabled devices, have a cumulative annual growth rate of roughly 30% from 2011–2016. The findings of the CTA report illustrate that even a conservative methodology supports the following two-fold conclusion: The contribution of unlicensed spectrum to the U.S. economy is both significant and projected to grow rapidly.

● The second — a report completed by Telecom Advisory Services, LLC (Raul Katz, Columbia Business School) and commissioned by WifiForward — concludes that the economic value of unlicensed spectrum to the U.S. economy is over $228 billion per year. The report, The Economic Value of Unlicensed Spectrum in the United States, assesses the value of unlicensed spectrum, quantifying its economic impact on both gross domestic product (GDP) — direct sales of technologies, services and applications that run on unlicensed spectrum — and economic surplus — the use of unlicensed spectrum-powered technologies that add value to the economy. A follow-up study projected that unlicensed spectrum will add $547.22 billion in economic surplus to the U.S. by 2017.

The need for an updated CBO scoring process is not lost on FCC commissioners. Earlier this year, Commissioner Jessica Rosenworcel reminded those assembled at CES about the CBO’s outdated accounting methods, pointing to the billions of dollars worth of economic value and the thousands of devices using unlicensed spectrum that were on the exhibit floor of CES. FCC Commissioners Mignon Clyburn, Ajit Pai and Mike O’Rielly were quick to share her sentiments, remarking on the paths the FCC is taking to allocate more spectrum for unlicensed use and stressing its importance to the U.S. economy.

Earlier this month, Commissioner Rosenworcel offered these comments during a presentation at CTIA’s 5G Forum:

“Today, the CBO scores every spending bill. That means it takes big ideas about how we use the airwaves and subjects them to a grinding review of their impact. On the budget, and the deficit. This analysis is important. It is useful. But in practice if we are honest, these estimates can hamper creative ideas about long-term infrastructure investment, including how we can free more of our airwaves to support economic growth. And this is a problem. It is especially challenging for unlicensed spectrum to make it through this filter, because it requires this regarding the economic value of setting aside more of our airwaves for Wi-Fi. They can also harm our ability to identify airwaves to repurpose them for licensed services. Because when the auction estimates are not right, relocation cost are wrong, or assumptions are built into the other baseline that doesn’t reflect what is happening, we have a problem. It’s a problem that slows the ability to get airwaves to market, create jobs, innovative new services, and build the infrastructure of the future. We need to find a better way to manage these balance sheets.”

With bipartisan agreement on the importance of unlicensed spectrum and detailed research on unlicensed spectrum’s specific contributions to the U.S. economy; it is time to rethink CBO’s approach to accounting for unlicensed spectrum.

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