As next-generation 5G technology becomes more widely available, global mobile data traffic is expected to grow to 77 exabytes per month by 2022, a seven-fold increase over 2017. To meet this surging demand, U.S. wireless carriers are scrambling to acquire more spectrum.
The FCC has made significant strides in reforming outdated regulations and encouraging private-sector investment in 5G infrastructure. And it’s paying off: According to a recent report, the U.S. is tied with China for first place in 5G readiness, up from third place last year.
Since last year, the FCC has overseen two auctions to make more of the airwaves, mainly high-band spectrum, available for 5G operators. A third auction is slated for later this year. But so far, the U.S. has been slow to change how highly-coveted mid-band spectrum is used. Mid-band spectrum constitutes the “Goldilocks” zone for 5G, combining just the right mix of signal distance, building penetration, and bandwidth. Yet much of it is currently underutilized.
Our international competitors are moving quickly to make large swaths of mid-band spectrum available for 5G use. A report last year found that by 2020, other countries plan to make over four times more licensed mid-band spectrum available than the U.S. — China, for example, plans to dedicate more than seven times more mid-band spectrum (over 500 MHz) to 5G use. Japan plans to make 10 times more mid-band available. Several other countries, including South Korea, the U.K., Australia, Italy, and Spain, are also ahead of us. Policymakers in the U.S. have made some recent progress, but it isn’t enough.
Making more mid-band spectrum available to 5G operators is critical. Winning the race to 5G means more than merely acquiring bragging rights. The first-mover advantage in 5G will be substantial, positioning the victor to enjoy a decade of technological dominance and rapid economic growth. Investment in 5G is expected to create three million new American jobs and add $500 billion to our economy. Consumers will derive trillions of dollars in benefits from smart homes, enhanced health applications, driverless vehicles, Internet of Things (IoT) technology, and other innovations.
Now all eyes are on the 3.7 GHz to 4.2 GHz mid-band frequencies, which are primarily controlled by a group of satellite companies, the C-Band Alliance (CBA), which supply clients like CBS, NPR and C-SPAN with content distribution services. Technological advances have made it possible for the CBA to clear part of its spectrum without compromising the services it provides to its customers, and the CBA is offering to sell up to 200 MHz of this spectrum to mobile carriers to help speed 5G deployment.
Under normal circumstances, it could take a decade or more of regulatory and court battles to reallocate this spectrum through an incentive auction. Such delays could irreparably harm U.S. competitiveness in 5G and deny Americans enormous economic benefits. According to an estimate by The Brattle Group, each year of delay would reduce the social value of the C-Band by between 7 and 12 percent.
To accelerate the process, the CBA has proposed to conduct direct secondary market transactions, allowing it to clear the spectrum in just 18 to 36 months after approval by the FCC. Secondary markets — which, simply put, exist when a seller of a good is not the same entity that initially sold the good — allow spectrum to quickly shift to new, more efficient uses, much like selling unwanted items in a garage sale. In this case, the CBA, in addition to selling its spectrum rights to mobile 5G carriers, is prepared to cover upgrade costs and reimburse other spectrum users for their reconfiguration expenses.
There’s not much time left for the U.S. to take decisive steps toward winning the race to 5G. Approving the CBA proposal is the fastest way to get services developed in the U.S., keep the U.S. on track to be a world leader in 5G, and heighten competition between wireless, cable, and fiber broadband services.
Liam Sigaud works on economic policy and research for the American Consumer Institute, a nonprofit educational and research organization. For more information about the Institute, visitwww.TheAmericanConsumer.Org.