Washington, DC, November 29, 2011 — The Consumer Federation of America sent the following letter to the House Subcommittee on Communications and Technology in advance of the December 1st House of Representatives Commerce SubCommittee mark-up of legislation regarding future spectrum policy.
Dear Chairman Walden, Ranking Member Eshoo and Members of the Subcommittee:
The most important and immediate goal of spectrum policy reform is to ensure that the mobile communications sector, which lies at the center of the digital economy, continues to develop in an innovative, user and consumer-friendly, manner, so that it can continue to spur economic growth, investment and job creation.
Our analysis of The Consumer Benefits of Expanding Shared Use of the Public Airwaves, which we are releasing today (www.consumerfed.org/pdfs/Consumer–Benefits–of–Shared–Use–Spectrum.pdf) demonstrates that spectrum made available for shared use without a license (unlicensed spectrum), has played a central and critical role in growth of wireless broadband data service. In fact, the shared use model has performed as well as, if not better than, the exclusive licensed model, even though unlicensed spectrum was considered to be “junk” by commercial operators. Using unlicensed technologies like Wi-Fi and Bluetooth, consumers receive higher quality service at lower prices.
- Consumers “extend” broadband service to their mobile devices at home and directly access hundreds of thousands of public and private hot spots across the U.S. This adds over $25 billion per year in value to broadband service.
- The efficient use of shared spectrum allows cellular wireless providers to “offload” more than one-third of their data traffic, dramatically reducing the number of cell sites they have to build and operate. This lowers the cost of service by at least another $25 billion per year.
- Intensive intra-firm communications, remote metering and monitoring, tagging of assets and goods, pay and go billing, and a host of others machine-to-machine applications, all of which rely on shared use spectrum, save businesses tens of billions of dollars per year.
Policymakers must ensure that the shared use model continues to expand by making available additional, high quality spectrum on an unlicensed basis. Making spectrum available for shared use is likely to reduce the deficit in the short and long term.
- In the short term, the wireless companies will bid up the price for spectrum, if less is available at auction.
- In the long-term, because shared uses will create more economic value the increase in commerce will also indirectly generate additional tax revenues.
Proposals to auction all high-quality spectrum made available by clearing current users (like broadcasters) that would markedly curtail unlicensed access will have the effect of strangling the shared use model.
- The cost of wireless broadband service will be higher and value lower, resulting in less economic activity, fewer jobs and less federal revenue.
- In particular, the large incumbent wireless providers like AT&T and Verizon are likely to prevail in any auction: in the last two auctions, the top four wireless companies bought up over four-fifths of the spectrum made available. If all spectrum that is cleared is auctioned, little will be left over for innovative and dynamic shared use.
Legislation to increase the spectrum for wireless communications should ensure that high quality spectrum is made available for shared use and give the FCC the authority to determine how much should be made available to promote the continued consumer-friendly, innovation-friendly development of this vital sector.
The Consumer Federation of America is an association of nearly 300 nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education.