FCC Needs to Step on the Gas and Move Fast on the Incentive Auctions

Big Tech's "rock stars" are known by their first names only. There's Larry and Sergey, Bill and Steve, and even Mark and Meg.

So it is for the Big Tech commentariat, where two of the most revered names are Walt and Kara. That's Walt Mossberg and Kara Swisher of The Wall Street Journal's "All Things Digital."

Recently, the two went on The Charlie Rose Show to discuss how mobile technology is revolutionizing our economy and our way of life. As Kara put it, mobile has become "your remote control for everything in your life." Kara and Walt described how wireless is changing healthcare, business strategies, social networks and just about everything else.

Kara and Walt did a wonderful job describing the benefits and the potential of wireless. If you care -- and don't we all -- about the future of the mobile economy (a growing subset of the U.S. economy) the Rose episode reinforced how American consumers increasingly embrace wireless technologies, holding great hope for growing our economy as firms match demand with supply.

Supply and Demand

However, that hope won't come true by itself. To secure it, we need to address the dwindling supply of wireless spectrum -- before it becomes a crisis. Spectrum, the invisible airwaves that carry data to our mobile devices, is rationed by our federal government. Satisfying consumer demand for commercial wireless that Kara and Walt reported could run into a bottleneck due to lack of supply as the available spectrum gets maxed out. The federal government must free up more spectrum for commercial wireless use -- and do it soon.

According to a federal report issued last June, Americans are developing a voracious appetite for wireless data. From mid-2011 to mid-2012, as Americans gravitated to smartphones, our total wireless data use grew by more than 100 percent, to more than 1.1 trillion megabytes. As Walt put it, "The percentage of people doing their reading, their transactions, their [social networking] on mobile... is just soaring."

This is also the reality that led Kara to offer a blunt warning to businesses about recognizing the importance of the mobile user: "If you don't have a cogent mobile strategy that actually makes money, you're in a little bit of trouble."

When Did Noah Build the Ark? Before the rain.

However, the real threat to demand from the mobile economy is the entirely predictable and avoidable bottleneck in supply created by the Federal Communications Commission's agonizingly slow process of making more wireless spectrum available to satisfy demand from mobile users.

The primary method the government uses to free up available but unallocated spectrum is spectrum auctions conducted by the FCC. The last FCC spectrum auction was in 2008 -- when Apple didn't have the App Store, and wasn't it great to use 3G to access static web pages? The next spectrum auction is scheduled for 2014 -- six years later. Six years is the life span of a legion of dogs in mobile years.

How has demand for spectrum been affected since 2008? Since then consumers have readily embraced the wireless revolution. More than a third of U.S. households have only wireless phones, a percentage likely to reach 50 percent in the next three years (according to Morgan Stanley's November 19, 2012 telecom industry report). Moreover, a quarter of U.S. patents issued this year are likely to be related to mobile technology, up from just 5 percent in 2001. By all measurements, the FCC should be chomping at the bit to accelerate spectrum auctions.

However, as FCC Chairman Julius Genachowski has warned again and again, we are rapidly running out of spectrum to support the wireless demand. And, while the wireless auctions are expected to take place as early as next year, you don't think there's any risk that the Federal Government might miss a deadline, do you? You don't think that the auction might end up being held in 2015 -- or later? Shall we just tell "demand" to take a number?

Let the Market Work

The projections that Kara and Walt make about our growing mobile economy assume that firms will be able to enter the market to meet demand -- not that available capacity will be artificially withheld due to government controls. Their discussion about the growing mobile economy is based on efficiently matching supply to consumers demand with access to fast, uninterrupted mobile devices. But today's demand trajectory combined with federal inaction creates the potential of a serious bottleneck on U.S. high-speed broadband networks, an avoidable threat to growth in the mobile economy that would contribute mightily to the overall U.S. economy.

But the FCC's woefully slow approach to open more radio spectrum threatens this engine. If mobile is the engine, the FCC needs to step on the gas with its wireless auctions.