For Immediate Release: Wednesday, November 30, 2011
Contact: Phoebe Silag or Karen Conner, news@epi.org 202-775-8810
EPI releases The Benefits of Robust Wired and Wireless Networks
The Economic Policy Institute (EPI) today released an analysis of the broadband ecosystem, the strategic importance of broadband deployment and the role that the AT&T/T-Mobile merger could play in closing the broadband gaps in the United States.
The Benefits of Robust Wired and Wireless Networks, by Nathan Newman, director of Economic and Technology Strategies LLC and founder of Tech-Progress.org, summarizes the benefits of strong wired and wireless networks and explains how the explosion in wireless smartphones, tablets and other devices requires urgent action by policymakers to address the looming spectrum crunch. The report also analyzes aspects of the proposed AT&T/T-Mobile merger and outlines steps policymakers could take to ensure the proposed merger helps close the digital divide while promoting competition-driving investment in wired and wireless broadband networks.
With the rise in the use of smartphones, tablets and other wireless devices, wireless data traffic has exploded and is expected to grow by 2000 percent in the next few years. As a result, the spectrum available to carry wireless data is rapidly reaching capacity. Newman outlines a number of ways that wireless companies and policymakers can respond to the imminent spectrum crunch: building more robust wired networks for wireless backhaul, and offloading more traffic onto unlicensed Wi-Fi networks and wired networks.
Newman describes a highly competitive, rapidly evolving wireless ecosystem that includes not only network operators but also wireless application and service providers. It is not just the carriers like AT&T, Verizon Wireless or Sprint that drive the market, Newman explains, but also such players as Microsoft’s Skype, Google Voice, Facebook’s Beluga texting option, Apple’s iPhone, and Google’s Android devices and the applications they empower that shift the locus of market power in the wireless industry. Because these wireless market players exert pricing pressure on the carriers, they should be considered relevant in antitrust issues.
Newman also discusses the well-known yet persistent broadband gaps in the U.S., particularly among rural, low-income and minority households, noting that only a third of Americans subscribe to broadband with enough capacity to transmit two-way video and that 26 million Americans have no wired broadband available at all in their communities.
“Policymakers in the U.S. have a limited number of tools at their disposal to influence broadband deployment to meet our growing needs,” said Newman. “They could use the merger of AT&T and T-Mobile to put private capital to work to achieve a public objective by requiring that AT&T meet its voluntary commitment to build out next-generation advanced wireless networks to 55 million more people than under the current projection. An AT&T/T-Mobile combination could allow AT&T to spread the costs of rural wireless infrastructure over a larger asset base and use cost reductions from a more efficient use of spectrum to build out its next-generation 4G LTE network to 97 percent of the country.”
Expansion of next-generation high-speed wireless networks will especially provide benefits to minority communities, whose primary access to broadband is through a smartphone device. As the ecosystem evolves, these users will have access to new competitive service options which can help close the digital divide.
The U.S. lags behind a number of nations in both access to and the speed of broadband connections. Only 33% of American households have a full broadband connection under the FCC’s definition of 4 megabits per second (mbps) downstream/1 mbps upstream, and only 64 percent of American households subscribe to any kind of broadband. Furthermore, 80 percent of schools and libraries funded under the national E-rate program say their broadband connections are inadequate. Broadband download speeds are significantly slower in U.S. cities than in cities in other countries.
Widespread broadband access benefits the economy directly, stimulating productivity and job growth. Every percentage point increase in broadband deployment adds about 300,000 jobs; every dollar invested in wireless deployment results in $7 to $10 in higher GDP; and an additional $8 billion in wireless investment would lead to up to 96,000 job-years of work. Broadband investment also benefits the economy indirectly because it facilitates distance education, electronic health records and telehealth programs, and energy conservation.
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