It sounds like a scam, doesn't it – selling air. But the Consumer Electronics Association (CEA), the lobbying arm of the gadget business and the folks who put on CES, have suggested to the Congressional joint select committee on deficit reduction – aka the "supercommittee" – that selling off spectrum not currently used by TV broadcasters to wireless companies could bring in between $24.5 to $33 billion dollars into federal coffers one fell swoop.
Not only would selling spectrum swell the U.S. Treasury without raising taxes, but a Deloitte Consulting study, which you can read here, found wireless carriers could invest between $25 billion and $53 billion in new 4G networks in coming years, accounting for between $73 billion and $151 billion in gross domestic product growth and 371,000 to 771,000 new jobs, all depending on how much spectrum gets sold.
This isn't exactly a controversial idea, but of course there are issues.
Who gets hurt?
First off, some of the spectrum in question is used by folks who still receive analog TV over-the-air – you know, with an antenna.
According to a CEA survey, only eight percent of American homes with TVs still rely on over-the-air TV. Nielsen Research says the number is a bit higher, 9.8 percent, with a margin of error of 2.8 percent.
To make the math easy, let's say the number is 10 percent of TV homes with at least one set receiving signals via antenna. That be 1.15 million homes who might lose reception to at least one TV. Those folks should be taken care of in some way since these are folks least likely to be able to afford pay TV, especially in an economy that just added 2.6 million more poor people.
Whose spectrum is it anyway?
Then there's the question of who owns the spectrum to begin with and who gets compensated.
According to CEA's letter to the supercommittee, a "voluntary incentive auction would enable interested television broadcasters to get paid for returning their underutilized spectrum."
In other words, we have to ask broadcasters nicely for our spectrum back, maybe even give them money for it.
To which I say, "Huh?!"
You see, TV broadcasters got this spectrum for free, to serve the public interest. But now that they've got it, they are loathe to let it go. So the Feds might have to remunerate the broadcasters to put the spectrum up for auction.
But this compensating broadcasters is akin to lending your neighbor some folding chairs. You now want those chairs back to sell to someone, except your neighbor is demanding you pay her to get them back.
I don't think CEA – or anyone other than the broadcasters – actually is in favor of this arrangement; I think it's a matter of facing business reality. But I think the only people should receive some sort of compensation are the poor devils who'd lose their over-the-air reception and can't afford to pay for TV.
I'm hoping to get a legal opinion on this, but I hope the government can use eminent domain to get our spectrum back for auction without shelling out money to broadcasters.
RUNNING OUT OF AIR
Spectrum auctions aren't just a chance to pile some cash into government coffers. Making more spectrum is as essential as finding additional/alternative energy sources. As the CEA explained to the supercommittee, "our nation faces a crisis as demand for wireless spectrum will soon outstrip supply."
CEA is correct.
In a seemingly never-ending cycle, speedier 3G and especially burgeoning 4G wireless networks enable more data-hungry applications such as Web browsing, photo and video sharing, peer-to-peer game playing, GPS navigation, video downloading and video chatting, all of which sucks spectrum.
All this activity is one reason why you may be experiencing connection delays for both voice and data. Imagine an empty autobahn – zoom zoom to your heart's content. But everyone hitting the road at once, and you crawl if you move at all.
And the Internet autobahn is getting crowded.
According to analyst Chetan Sharma, we absorbed 20 MB of wireless data per month per user in 2007, growing to 370 MB/month/user by the end of 2010 and to almost 3 GB/month/user by 2014. U.S. data traffic exceeded 1 exabyte (EB) in 2010 – that's 1 quintillion, or 1,000,000,000,000,000,000, or 1 billion gigabytes, or 1 million terabytes of data.
That's a bumper-to-bumper data traffic jam, an information superhighway parking lot.
There are two ways to keep the Internet autobahn moving: limit the number of cars – hence the data caps AT&T and Verizon have instituted, or add lanes – more spectrum.
That's why getting this spectrum back and auctioning it off is a great idea.