When bigger is in fact better

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Whether it’s processors on a chip, chips on a motherboard, motherboards on a computer or computers in a system, the trend in technology has been towards aggregation. This has proved true and immensely valuable in computing, storage, networking, app stores and venture capital. Unfortunately there is growing risk that some policy makers oppose this trend in wireless spectrum, to the detriment of consumers and the economy.
 
During the past decade wireless carrier consolidation and repeated auction of public airwaves enabled the spectrum aggregation required to support increasingly robust nationwide wireless data services – and all the advantages delivered for consumers. Over the years, combinations in the wireless market enabled carriers to amass bigger footprints and gain the capacity to carry mobile apps, real-time social media and streaming video. These actions helped accelerate more investment, innovation, and new opportunities for start-ups across the country.
 
Our nation gained from this trend. The number of broadband users in America exploded nearly 10-fold over the past decade. An “App Economy” and “Social Media Society” are empowering entrepreneurs and accelerating innovation. And consumers have benefitted. During this decade of steady spectrum aggregation, prices per message, per minute and per megabit all fell substantially, while the number and sophistication of available wireless services has increased. Today consumers enjoy intense competition among device-makers, online retailers and wireless service providers, all without government direction, intervention or controls.
 
For a while, policy makers seemed to get this. Pro-Internet policy successes came when government removed barriers, rather than adding new ones; when they allowed the market to shift spectrum from inefficient users to those who maximized its value to benefit consumers.
 
Unfortunately those days may be ending. While there is rare bipartisan agreement that the biggest challenge to broadband-enabled growth is lack of available spectrum, there is growing disagreement on how to fix it.
 
Some recognize that the new investment needed for networks to keep pace with the explosion of digital content and rapid growth in the number of users will come from greater flexibility: allowing spectrum assets to migrate to those who use them best; shifting wireless frequencies from government to the private sector; allowing companies to innovate, combine and reinvent themselves.
 
Yet others believe new government regulation is needed. They mistrust the very market-led spectrum aggregation that powered the broadband economy of 2012. Despite highly competitive markets – more than 90 percent of consumers have a choice among five or more wireless data providers today – they want to limit how carriers can manage their networks; which carriers are allowed to obtain more spectrum to serve; what prices carriers can charge for access to their networks; and when carriers can combine.
 
It is hard for these policy makers to trust the markets. What if the “wrong” players win? What if the system that worked so well for the past decades breaks down? What if government guardians are the only barrier between today’s robust competition and a monopolistic future?
 
The fact is that innovation is inherently unpredictable. But it’s also the best solution for consumers. With wireless markets so rapidly-changing – and with remedies to actual uncompetitive behavior far preferable to preemptive strikes against theoretical risks – policy makers would do best to act with humility in their own predictive powers and with faith in wireless markets’ proven resistance to capture.
 
It is nice to have a national broadband strategy and Presidential targets. But no amount of jawboning from the bully pulpit can take the place of private investment and market-based competition. Our nation does not need new laws and new regulations…we need more government spectrum dedicated to consumer use and fewer limitations on which wireless carriers can obtain additional spectrum and deploy more robust networks.
 
Mehlman is former Assistant Secretary of Commerce for Technology Policy and founding co-chairman of the Internet Innovation Alliance.

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