New Study Shows Every 10% Increase in 4G Adoption Creates 231,000 Jobs

Today leading economists Rob Shapiro and Kevin Hassett released a study analyzing the impact of the adoption of 4G mobile technologies on the U.S. economy. (The study is available in pdf here.) A comparison of wireless technology penetration rates to state-by-state employment data shows that the transition from 3G to 4G mobile technologies should create more than 231,000 jobs for every 10 percentage point gain in adoption rates within a year. This means that a 40 percent gain in 4G adoption would produce nearly 1 million new jobs. These results provide powerful evidence that our national job creation strategy should seek to accelerate the deployment of 4G infrastructure.

The study also demonstrates the critical role 4G mobile technologies will play in achieving other national goals related to health care, energy, e-commerce, and cloud-based innovation. The shift to 4G would:

• Accelerate mobile e-commerce, which grew from about $1.4 billion in 2009 to between $6 billion and $9 billion in 2011;
• Enhance savings from the wide use of electronic medical records created and accessed wirelessly, along with other “mHealth” applications;
• Save $10 billion by further reducing power outages in the nation’s electricity networks; and
• Enable the market for cloud-based services to reach $39 billion by 2016.

Mobile service providers are already investing billions of dollars to deploy 4G infrastructure. But they can’t achieve these goals on their own. Congress and the FCC must make available more spectrum for the United States to sustain its mobile advantage. Today’s evidence shows just how much the success of our economy depends on it.

To hear directly from the authors about the paper, come see them in person in Washington on Thursday, or participate in a live web video briefing/discussion later that afternoon. You can learn more about each presentation or RSVP here.

Spectrum Buzz

By John Celentano, Strategic Marketing, TESSCO Technologies

Seems like radio frequency (RF) spectrum, or lack of it, is a hot topic these days.

Consider the recent buzz on spectrum in the industry.

• AT&T, in addition to owning a large block of 700 MHz spectrum along with its 850/1900 MHz holdings for its cellular network, is willing to plunk down $39 billion to buy T-Mobile USA, ostensibly to gain access to T-Mobile USA’s extensive spectrum holdings across the country. If the deal goes through, AT&T gains T-Mobile USA’s existing 1900 MHz spectrum and more importantly, the 120 licenses of AWS (1.7/2.1 GHz) 20 MHz spectrum for which T-Mobile USA paid $4 billion in the 2006 auction.

• Right behind that, AT&T has offered to buy 22 700 MHz licenses from a rural service provider that operates in parts of Minnesota and Wisconsin.

• Verizon already has started its LTE build-out in the 700 MHz band as an overlay to its existing CDMA 1900 MHz network. The company just announced LTE build-outs in 21 new markets starting in June 2011.

• Sprint with its Network Vision architecture intends to recast its customer access to available spectrum by consolidating its holdings across the 800/900, 1900 and 2500 MHz bands.

• On May 20, 2011, the FCC issued a Public Notice inviting technical input on how to maximize the 2 GHz band for fixed/mobile applications.

• WCAI itself has been vocal in calling for channel allocations that are both wider and contiguous in certain bands such as 2.5 GHz. Such adoption by regulators would make use of this spectrum more “effective and efficient.”

Spectrum translates into bandwidth. More bandwidth means wider channels for carrying information. Wider channels mean faster download speeds that can support a greater array of services: high-speed Internet access, mobile voice, and increasingly, video. And more services simply means greater revenues for the service providers.

Where is all this demand for more spectrum coming from? Quite simply, it comes from the surge in usage of data-intensive smartphones, tablets, and mobile-enabled laptops that is driving demand for any speed, anywhere, any media services. If the carriers are going to deliver, they will need access to more spectrum wherever it can be made available.

Consider what happened when AT&T first released the Apple iPhone. In the beginning, the company was pleasantly surprised at the customer take-rates despite the iPhone’s high purchase price. But then, with literally millions of iPhones coming online in major markets in a matter of months, AT&T began to see its network suddenly bog down as all those data-rich devices tried to get a high-speed connection. Clearly, the company was unprepared for the surge in data traffic usage that iPhones generated. Needless to say, iPhone users were not very happy with AT&T’s performance. So the company embarked on a rapid network upgrade program to expand capacity in both the access network between customers and cell sites, and in the backhaul network that connects cell sites to switching centers. AT&T’s current motivation in scooping up more spectrum likely has as much to do with avoiding future network congestion as it does for providing new data-rich services. In this context, all wireless service providers, whether in metro or rural markets, are facing similar capacity issues.

This situation begs the question: how much investment will be needed to build the network that can handle all this traffic?

Two main factors drive wireless capital expenditures (capex) – the number of wireless devices connected to the network, and the minutes of use (MOUs-voice & data) that each device generates. The number of devices is proliferating when you count smartphones, tablets, mobile-enabled laptops, and growing volume of machine-to-machine (M2M) connections for a host of industrial and commercial applications. And each device is churning out ever-increasing megabits per second of information. Taken together, the data traffic load on the network is expected to grow at high double-digit rates annually with no foreseeable deadline. This means that wireless carriers will book, for some time, significant capex as they expand area coverage and increase data-handling capacity, while beefing up the backhaul network throughput.

In the end, this capex pace and duration will be gated by the amount of spectrum being freed up over the next several years. That will create even more buzz!

WCAI Responds to NAB President Gordon Smith’s Keynote

WCAI President and CEO Fred Campbell released the following statement in response to NAB President and CEO Gordon Smith’s keynote address at the NAB conference:

“Broadcasters say the spectrum crisis would be solved once the mobile broadband providers build out the spectrum they recently acquired at auction. The fallacy here is that demand projections supporting the need for more spectrum already assume all previously auctioned spectrum will be built out. Broadcasters are the ones warehousing spectrum they received for free and use to serve only ten percent of the population.”

UK Recognizes the Need for More Spectrum and Announces Plans for Its Largest Auction Ever

Everyone has probably heard the National Association of Broadcasters’ (NAB) assertion that there is no spectrum crunch. Many have refuted NAB’s claim, including FCC Chairman Genachowski. Further evidence can be found overseas in the UK, which just announced its plans to hold its largest ever single auction of additional spectrum for mobile services in the UK, equivalent to three quarters of the mobile spectrum in use today. The UK regulator, Ofcom, has come to the same conclusion as the FCC: More mobile spectrum is essential to meet the demands of increasing mobile traffic. If the U.S. doesn’t make additional mobile spectrum available as well, it risks falling behind the UK and other countries in mobile wireless innovation. The U.S. shouldn’t allow that to happen.