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May 11th, 2012 3:27 pm
The FCC: Where “economic logic does not penetrate”

When it comes to highlighting federal inanity, Holman Jenkins hits a home run with his take in a Wall Street Journal article on the current FCC’s bureaucratic approach to the wireless industry.

As Jenkins describes the situation, “Like food rotting on a dock, only politics and policy prevents spectrum from getting where it’s needed.”

Jenkins goes on to articulate the point by aptly noting that wireless companies are “being starved of spectrum [their] customers would willingly pay for because of an archaic government allocation system in which economic logic does not penetrate.”

So why care?  Primarily because the wireless industry’s massive investment involved in developing spectrum for the public’s use is one of the few unmitigated bright spots in the US economy. Wireless carriers delivered approximately $27 billion in investment in U.S. mobile networks last year alone.  And continued wireless investment holds the potential to revolutionize our nation’s educational system, healthcare and so much more.

In employment terms, a Deloitte study last fall pegged 4G wireless investment as creating between 371,000 and 771,000 new jobs.  That includes the teams that deploy new cell towers, engineers and software developers, among others.

But the government’s dithering threatens to sideline billions in new investment that would otherwise be pumped into the economy and drive these benefits for consumers.

What’s especially ironic about the delays is that Obama’s FCC Chairman Julius Genachowski has repeatedly sounded the alarm about the “looming spectrum crisis” that threatens “continued innovation in broadband wireless.”  Similar acknowledgements continually have been made directly from the White House.  Yet, when it comes to spectrum policy, the FCC and the Obama Administration have been driven by politics and ideology instead of sound economics and logic — a mindset that not only exacerbates the spectrum problem, but threatens (if not stops cold) private investment to deal with the problem.

Indeed, when wireless providers seek to overcome government obstacles to spectrum and move to address the crunch on their respective networks, they are met with hostility.  Jenkins points to the two obvious examples:

To meet demand of its customers for more and more bandwidth, AT&T laid out $39 billion for T-Mobile, a retreating, second-rank player, only to have the proposal nixed by Washington after many months of torture.

Verizon has been undergoing months of torture over its proposal to buy, for $3.9 billion, several blocks of spectrum sitting idle in the hands of cable TV companies.

That, coupled with the FCC’s counterproductive obsession with putting use conditions on auctioned spectrum to the point of rendering it less desirable or frankly, economically unfeasible, is only making the spectrum problem worse.

Everyone, including the FCC and the Obama Administration, agrees that the spectrum crunch must be resolved… and fast.  “The solution,” as Jenkins points out, “is to permit any spectrum that’s immediately deployable to be immediately deployed by those who can make use of it.”  And it must be deployed without burdensome government conditions and discriminatory bidder qualifications to ensure its most efficient use.

In other words, the FCC and Obama Administration must set aside politics and ideology, stop trying to pick winners and losers in an effort to shape some utopian vision of perfect competition in an already ultra-competitive market and allocate more spectrum for consumer use… now.

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