OPINION:
As congressional gridlock continues, there is a lot more at stake than payroll taxes, unemployment benefits, doctors’ payments, improving job growth and a better budget outlook. Too often good policy gets forgotten amid financial decisions. Unfortunately, spectrum auctions are treated as merely a budgetary means to pay for other programs.
Auctions are important in their own right. The immediate implementation of spectrum incentive auctions has the potential to add large amounts of this valuable wireless infrastructure resource to address the nation’s looming “spectrum crunch.” This would boost the economy, spur job creation and enhance economic growth, speeding the transition to our 21st century digital economy.
This perspective is shared across the political spectrum. For example, a recent study from the NDN think tank and the New Policy Institute by Robert Shapiro, former undersecretary of commerce in the Clinton administration, and Kevin A. Hassett, former Federal Reserve economist now at the American Enterprise Institute, probed the effects on employment of investments in next-generation wireless broadband infrastructure, both the transition from second- to third-generation networks and the current transition to fourth-generation efforts.
They concluded that “the adoption and use of successive generations of cellphones from April 2007 to June 2011, supported by the transitions from 2G to 3G, led to the creation of more than 1,585,000 new jobs across the United States.” Additionally, “every 10 percentage point increase in the penetration rate of 3G and 4G phones and devices occurring as we write today - in the last quarter of 2011 - should add 231,690 jobs to the economy by the third quarter of 2012.”
This rapid job growth stands in contrast to the sharp economic downturn during which total private-sector employment fell. Without the job growth afforded by wireless investments, the path toward economic recovery would be even shallower. Even if one disagrees with the specific estimates, the important economic contribution of spectrum-generated investments stands out.
In some cases, the benefits of private-sector investment benefits are narrowly focused. In contrast, investments in wireless broadband have significant spillovers across many sectors of the economy through both increased productivity gains enabled by wireless technology and through innovation across sectors as varied as health care, education, agriculture and energy (as well as information technology itself). Mobile e-commerce, for instance, registered nearly fourfold gains in the period from 2009 to 2011, even as economic recovery was slower than the historic norm.
The transition to fourth-generation networks will require meaningful and rapid spectrum reform. Without it, the transition will be spotty and generate fewer economic gains than would otherwise be the case. Indeed, only meaningful spectrum reform, in the form of incentive auctions, will enable the scale of investments leading to further productivity gains and job growth across the nation’s economy to continue.
Virtually all economists agree that reducing the federal deficit will also have a beneficial effect on the environment for economic growth, and incentive auctions are expected to bring in billions in new revenue for purposes of deficit reduction, according to the nonpartisan Congressional Budget Office.
I believe Congress should act immediately to promote spectrum incentive auctions that will not only reduce the federal deficit but also begin the process of getting spectrum into the hands of network operators who will immediately make it available for the use of consumers and businesses. A successful competitive auction should be open to broad participation, to all entities, to help ensure that the ultimate winners drive investment that will strengthen our nation’s economy and secure America’s communications and technological leadership.
Douglas Holtz-Eakin, a former director of the Congressional Budget Office, is president of the American Action Forum.
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