By Christian Kuzdak
It has become an article of faith in the modern telecommunications landscape that the mobile industry needs more spectrum. Annually, companies, trade associations, and groups from across the world of mobile carriers, equipment manufacturers, and app developers sponsor dozens of reports, register hundreds of public appearances, and file incessantly in proceedings before the Federal Communications Commission (FCC) warning that any delay in transferring government spectrum to essentially three corporate behemoths will stunt American industry, worsen climate change, diminish America’s national and economic security, and generally hasten the falling of the sky. Proponents of this massive transfer of public resources promise a great deal. The next generation of mobile technology is presented to consumers and regulators alike with slick branding and chart after chart of sharp, upward slopes. 5G, for example, was projected to create some four million jobs, add more than $1.5 trillion to US Gross Domestic Product (GDP), close the digital divide, and unlock a sci-fi future of smart cities, autonomous vehicles, and ill-defined “killer apps.”
As it happens, this utopia has yet to reveal itself, at least not as described, and despite the mobile industry getting essentially all the spectrum it requested. 5G has so far been met with a collective shrug from US consumers. This year, not even the carriers and equipment suppliers themselves have seen workforce growth – quite the opposite, in fact. Nokia on October 23 announced 14,000 job cuts, the latest in a string of deep reductions from 5G equipment suppliers, attributed to lower-than-expected spending on 5G. There seems to be little reflection on this shortfall as companies and their representatives in Washington pivot to the next generation of mobile technology. 6G, we are now told, will bring a multitude of new and dramatic economic and social benefits with key performance indicators orders of magnitude beyond those of today’s networks, if only regulators are appropriately generous with government spectrum.
It is time for regulators and legislators to evaluate these claims with appropriate scrutiny, and to weigh them carefully against the generous benefits provided by alternative spectrum users such as Wi-Fi providers, innovative private networks, and government users of all stripes.
Broken Promises
In 2015, CTIA expressed a need for “350 more megahertz of licensed spectrum by the end of the decade,” to meet its 5G ambitions. Per NTIA’s Second Annual Report on the Status of Spectrum Repurposing, this target was easily surpassed. In fact, the FCC auctioned off thousands of megahertz of licensed spectrum before the end of the decade. Even excepting the high-band spectrum auctions conducted in 2018 and 2019, the licensed portions of the UHF TV Incentive auction (70 megahertz), and the AWS-3 auction (60 megahertz) fulfilled a large chunk of this request with high-quality low- and mid-band spectrum. The whopping 280-megahertz C-Band auction followed soon after in 2020.
Despite this, 5G has made very little splash. The vast swaths of mmWave spectrum doled out to AT&T and Verizon in particular have been put to little use, with US consumers connecting to mmWave 5G less than 1% of the time in 2021. Even some in industry openly admit that 5G was overhyped and underperformed. A 2023 SK Telecom white paper on 6G notes “a variety of visionary services” including “autonomous driving, UAM, XR, hologram, and digital twin[s],” but acknowledges that “most of them did not live up to expectations,” and “there was no killer service” discovered.
Add to this the weak financial performance of the major carriers in recent years. With the exception of T-Mobile, US mobile network operators are churning out postpaid phone net additions ranging from middling to poor. AT&T added only 750,000 new phones in the first half of 2023, a nearly 50% reduction from the first half of 2022. Simultaneously, Verizon lost nearly 120,000 phones in that same period, and Dish continued to hemorrhage at an alarming rate, losing almost 270,000 phones. Across the US MNOs, 5G spending in 2023 amounted to only 50% of some projections. This has led to sharp layoffs across the industry. The major carriers themselves do not appear to be flourishing under 5G, drawing into question the creative math utilized to trumpet the anticipated benefits to the broader US workforce of 5G deployment. Indeed, Ericsson, Nokia, CommScope, Cisco, and others have made similar workforce reductions throughout 2023, citing a dearth of 5G spending.
The Mother of Invention
None of this is to say that regulators should adopt a luddite approach to new technologies. Our world has undeniably been shaped by innovative new machines dependent on steady access to spectrum, and mismanagement of that vital resource can certainly lead to lost opportunities.
Concurrently, we should acknowledge that it is not a given that commercial actors, given their preference, will allocate spectrum efficiently. The vicissitudes of the market often lead to spectrum warehousing by highly competitive actors playing a zero-sum game. Under our current system, it seems entirely plausible that major players like the US MNOs would collect more spectrum than they need, preferring to deny access to competitors and keep their options open for a rainy day. In fact, the government’s approach to industry’s purported spectrum needs has been so accommodating that it may have removed a key source of pressure responsible for innovation: scarcity. Rather than invest seriously in research and development efforts aimed at improving spectrum efficiency, MNOs prefer the comparatively cheaper option of lobbying Congress and wheedling the FCC for more government spectrum. In the process, we are deprived of innovations in spectrum efficiency and sharing that could benefit numerous stakeholders.
Dollars and Cents
In revisiting the philosophical presumption that commercial entities inexorably put spectrum to its highest and best use, we might also question whether the value of spectrum can always be measured in dollars and cents. Government entities with missions encompassing national security, safety of life, space exploration, climate monitoring, and more also have critical spectrum needs for missions that cannot always be easily expressed in purely economic terms. What is the dollar value of accurate and quick climate monitoring, designed to forearm us with the knowledge we need to prevent the slow-moving catastrophe of climate change for decades to come? What is the contribution to US GDP of our successful return to the Moon through the Artemis program? These missions encompass more than profit calculations and employment numbers. They support a bevy of qualitative goods ranging from our innate desire for exploration to our moral duties toward future generations, and in many cases, they are probably not best served by entities focused on quarterly shareholder dividends. It is the messy business of a spectrum regulator to balance these equities, acknowledging that they cannot be flattened into a single, easily comparable metric.
Even in the comparatively more straightforward world of commercial services, where the dollar reigns supreme, the circumstances are complex. Advocates of unlicensed spectrum use often point out that most internet traffic flows through Wi-Fi networks. In addition to providing generally faster speeds and greater reliability, these networks play nicer with incumbent services, greatly increasing their value per megahertz from the perspective of a regulator. It was not always obvious that Wi-Fi networks operating in unlicensed spectrum would explode among consumers. Wi-Fi was an experimental gamble enabled by open-minded FCC spectrum policy that paid off in spades.
Today, similar experiments are pushing the boundaries of what can be done in an increasingly crowded spectrum environment. The three-tiered sharing scheme implemented in the Citizens Broadband Radio Service (CBRS) band (3550-3700 MHz) opened up premium mid-band spectrum for a wide array of users encompassing the usual MNOs, wireless internet service providers, utilities, cable operators, and many others. All told, 228 diverse bidders (compare to 21 winning bidders in the C-Band auction) won Priority Access Licenses (PALs), and nearly 900 different users utilize the lower-tier General Authorized Access (GAA). This arrangement, while protecting crucial national security incumbents in the band, has facilitated the creation of myriad unique private networks, supported traditional 4G and 5G services, and spawned fixed wireless service solutions aimed at closing the digital divide. The potential for innovation in this space is high. Despite repeated claims by CTIA that the experiment has been a failure, recent reports have highlighted both that the approach has opened the band to far more participants, stimulating competition and innovation, and that a similar arrangement in the 3.1-3.45 GHz band may produce far more value than traditional high-power exclusive licensing.
Looming Challenges for Spectrum Regulators
With the 2023 World Radiocommunication Conference approaching, a National Spectrum Strategy expected to name new bands for study planned, and key decisions on the future of mid-band spectrum in the United States imminent, regulators are faced with a series of tough decisions that will lock in a national approach to spectrum management for years to come. They must view spectrum holistically, applying appropriate scrutiny to the extraordinary claims of some, considering the successful history of bold and innovative approaches, valuing government missions, and striking a balance sure to make at least some stakeholders unhappy. It is a colossal challenge, but one to which the United States has repeatedly risen. With thoughtful leadership domestically and abroad, these challenges can become opportunities that fuel US innovation and put spectrum to its highest and best use.
The views and opinions expressed in this blog post are those of the writer and do not necessarily reflect the views or positions of any entities they represent.