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The U.S. government’s obsolete and wasteful spectrum hoarding and rationing

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Scott Cleland
Chairman, NetCompetition
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      Scott Cleland

      Scott Cleland is Chairman of NetCompetition® a pro-competition e-forum supported by broadband interests and President of Precursor LLC, a research consultancy for Fortune 500 companies. He is author of the book: Search & Destroy Why You Can’t Trust Google Inc.

The 21st century’s most valuable natural resource is radio spectrum, the fuel of the mobile technology revolution of smart phones, tablets and the Internet of Things.

Shockingly, spectrum is also the most wasted and mismanaged of natural resources, with Big Government the overwhelming hoarder and culprit, consuming or rationing a staggering ~85% of this scarce natural resource. A paltry ~15% of the radio spectrum that is suitable for broadband, ~400 Mhz of ~2600 MHz, has been made available to the private sector for consumer and business broadband Internet use over the last few decades, despite exploding demand for it.

Imagine the competitive benefits, growth, innovations, productivity and market dynamism that could be possible, if only the Government did not hoard and ration spectrum or starve the private sector and consumers of this essential 21st century natural resource, because of an obsolete century-old, analog spectrum allocation policy prompted by the sinking of the Titanic in 1912.

To grasp how obsolete, mismanaged and wasteful U.S. spectrum management is, consider that of the 312 million Americans total, the ~287 million Americans in the private sector have broadband Internet use of ~15% of spectrum and the 25 million Americans in the Government sector have exclusive use of, or manage, ~85% of spectrum. Simply, the private/public spectrum allocation ratio of ~15/85 is completely upside-side-down compared to America’s private/public sector employment ratio of ~92/8.

How does it make any sense that the U.S. broadband private sector is restricted to just ~15 percent of the nation’s natural spectrum resource when: ~99% of energy consumption is consumed by the private sector; ~88% of U.S. GDP is private sector; ~70% of U.S. GDP is consumer consumption; and  ~70% of U.S. land is private sector?
If the Federal Government, including the military, can get by with using or managing only ~1% of the Nation’s energy consumption and ~30% of the Nation’s land why can’t the U.S. Government somehow get by on using, managing, or controlling the use of anything less than ~85% of the Nation’s radio spectrum?

Is there anything special about spectrum as a natural resource that requires the Government to dominate its use and uses? No. Advances in digital technology — continuously propelled by Moore’s Law, Cooper’s Law, and data compression algorithms — make spectrum utilization dramatically more efficient and economic than increasingly obsolete analog communications technology. In fact digital technology is so much more efficient than the analog technology that 21st century government could easily get by on a fraction of the 85% of spectrum that they hoard and mismanage today.

Simply, the problem is obsolete technology, economic and policy assumptions that communications is somehow a natural monopoly that the Government must own or control. More specifically, the political and policy problems stem from many decades of Big Government inertia, benign neglect, and serious bureaucratic dysfunction and entitlement.

Over 30 Government agencies and 3,000+ different government analog spectrum allocations scream for reclamation, auction and more efficient utilization by the private sector. The amount of spectrum waste in the Federal Government is nothing short of scandalous.

The latest recommendation by a Presidential advisory committee that no more of these 3,000+ government spectrum allocations can be spared by the Government and put to better use in the private sector is an outrage. It recommends the Government should “share” 1,000 MHz of their de facto ~85% spectrum-monopoly with the private sector rather than reclaim the Government spectrum for auction for private use to the taxpayers’ benefit.

This exposes that the 30 government agencies hoarding ~85% the Nation’s spectrum know that they are probably utilizing less than 10% of their collective spectrum capacity. Simply, government “sharing” is just a euphemism for government rationing.

The obvious and superior answer here is for the Government to stop mismanaging the Nation’s most valuable 21st century natural resource. Asking the nation’s citizens to organize around the convenience of hundreds of out-of-control bureaucratic fiefdoms is a gross abrogation of the Government’s fiduciary responsibility to the taxpayer.

An obvious potential explanation for this wrong-headed and tortuous spectrum recommendation is that what’s really going on is a back-door attempt to effectively achieve wireless net neutrality by Executive Order, bypassing both Congressional opposition and the Courts which have ruled that the FCC does not have the statutory authority to regulate the broadband Internet.

A thousand MHz of “shared” Government spectrum by executive fiat would achieve a net neutral information commons owned by the Federal Government, and would reject the free market wireless vision in existing law that is predicated on spectrum auctions and private property.

Moreover, by starving the wireless industry of additional auctioned spectrum, after conducting no spectrum auctions during this Administration, the Government can artificially restrict supply to better justify the need for outdated common carrier regulation.

In sum, Congress needs to embark on a massive spectrum reclamation project to eventually get upwards of 70% of the Nation’s radio spectrum reallocated from government to private sector use.

To correct the Executive Branch’s profound spectrum management dysfunction and waste, Congress could consider the following.

First, it could direct the General Accounting Office to investigate the scandalously low spectrum utilization rates of Government agencies and identify which agencies could most easily, quickly, and cheaply share spectrum amongst them.

Second, it could create an ongoing spectrum budget process to track and enforce the reclamation of ~70% of the Government’s spectrum to private sector use over time.

Third, it could consider consolidating spectrum management from 30 agencies and 3,000 allocations to two entities: the General Services Administration for civilian government use and the Defense Department for national security use.

Fourth, it could consider whether a temporary commission independent of bureaucratic pressures — a la the military base closing commission — is necessary to break through this stalemated bureaucratic turf war.

At bottom, there is no single bigger barrier to wireless competitive benefits, growth, innovation, and productivity than the Federal Government’s bottleneck control, waste and rationing of the most valuable natural resource of the 21st century – radio spectrum.

Scott Cleland is Chairman of NetCompetition® a pro-competition e-forum supported by broadband interests and President of Precursor LLC, a research consultancy for Fortune 500 companies.