Meeting the Needs of American Businesses and Consumers

By Bruce Mehlman

The U.S. government is the single largest user of spectrum, and without its willingness to relinquish control over spectrum bands that are not being put to their highest and best use, our country will suffer from significant losses in economic gains and jobs.

Today the House Energy and Commerce Committee held the hearing “Creating Opportunities Through Improved Government Spectrum Efficiency.” Beyond the hearing’s focus on improving government spectrum efficiency, clearing spectrum for market use is the best strategy for creating new opportunities for entrepreneurship and innovation. Commercial spectrum users need certainty in order to invest and reliably serve their customers.

Innovation to improve the efficiency of the government’s use of spectrum and moving inefficient users off of spectrum bands, as pointed out by Representative Greg Walden, will mean that more American consumers can take advantage of mobile broadband to enhance their quality of life and more businesses can create new technologies that depend on next-generation wireless networks.

Keeping the App Market Booming

By Brad

At The Hill, Jennifer Martinez reports on a hearing today in the House focused on keeping the growing mobile app market booming:

At the Wednesday hearing, subcommittee chairwoman Rep. Mary Bono Mack (R-Calif.) noted that the booming mobile app marketplace has helped spur the launch of several new small businesses. She said that roughly one-third of apps are developed by entrepreneurs or businesses with fewer than five employees.

“Through American innovation and ingenuity, we’re rapidly becoming a world where there’s literally an app for everything,” she said.

During the hearing, industry reps highlighted some challenges the industry already faces. Among them: trouble finding employees due to a lack of a relatively small pool of trained workers, and an issue we’ve often talked about:

Another challenge facing app companies is the looming spectrum crunch and lack of broadband Internet in rural regions of the U.S., the industry representatives said. 

Ramsey argued that there needs to be right infrastructure in place to handle the rising population of mobile apps. That includes ensuring there is enough spectrum, or airwaves, for mobile apps to run on and reach consumers.

He called the spectrum crunch “a big issue.”

Wireless Impact in Infographics

By Brad

Last May, Roger Entner of Recon Analytics released a report on the effect the wireless industry has on America’s economy. Titled “The Wireless Industry: The Essential Engine of US Economic Growth” (PDF), the report found:

• The US wireless industry is responsible for 3.8 million jobs, directly and indirectly, an increase of more than 200,00 over the past six years; this accounts for 2.6% of all US employment.

• The wireless industry is now larger than the publishing, agriculture, hotels and lodging, air transportation, motion picture and recording, and motor vehicle manufacturing industry segments and rivals the computer systems design services and oil and gas extraction industries.

• The wireless industry and its direct and indirect employees paid $88.6 billion in taxes, including federal, state and local fees and taxes.

To help illustrate his report’s findings, Entner has released a series of infographics highlighting essential facts. Below is one on the economic impact of spectrum. The rest are available at the Recon Analytics website.

Net Tax Gaining Momentum

By Brad

Via Kent Hoover of The Business Journals, a bill that would allows states to start charging sales taxes on online purchases is gaining momentum:

Bricks-and-mortar retailers have long complained that the tax-free status of e-commerce gives Internet retailers an unfair price advantage. As more retail sales move toward the Internet, state and local governments are increasingly feeling the loss of sales tax revenue. Even many Republican governors who favor keeping taxes low now think the time has come to force Internet retailers to collect sales taxes.

One of those governors is Bill Haslam of Tennessee, who testified a today’s House Judiciary Committee hearing.

“Let me clear—I am a Republican governor that does not believe in increasing taxes,” Haslam said.

A Faster FCC

By Jamal Simmons

A lot can change in five years.

Case in point: the telecommunications industry, which just half a decade ago was mainly focused on providing customers with voice calls and texting capabilities. Then Steve Jobs took the stage one afternoon and held up a product he called the iPhone, and since that day the telecom industry — and the computer industry as a whole, really — has been witness to disruption after disruption. Voice minutes are being replaced by data plans. Texting is receiving major competition from Twitter.

While the past five years have been amazing to watch, they’ve also created challenges. And right now, there’s perhaps no bigger challenge — no bigger threat to the continued health and success of the mobile broadband revolution — than a lack of spectrum.

If you’ve followed mobile technology at all over the past year or so, chances are you’ve heard of America’s looming “spectrum crunch.” The very real problem of a shortage of airwaves for the wireless industry — a shortage that will make it extremely difficult, if not outright impossible, for wireless providers to keep up with demand. Congress and the FCC have been working to address this shortage via so-called “incentive auctions,” a process where spectrum holders such as broadcasters are encouraged — and well-compensated — for giving up some of their spectrum holdings for wireless use.

While it’s doubtful the spectrum obtained through these auctions alone will be enough for wireless providers to keep up with skyrocketing demand, they’re still vital for the health of the industry and our economy as a whole. But as with most things in government, the process has been painfully slow, which is why two statements from recently appointed FCC Commissioners this week have been encouraging.

The first came from Commissioner Ajit Pai while he was delivering a speech at Carnegie Mellon University in Pittsburgh. While laying out his vision for the FCC going forward,Pai said:

[T]he FCC must act with the same alacrity as the industry we oversee. That’s not to say we should rush to regulate, but delays at the Commission have substantial real-world consequences: new technologies remain on the shelves; capital lies fallow; and entrepreneurs stop hiring or, even worse, reduce their workforce as they wait for regulatory uncertainty to work itself out.

Pai then went on to talk about the incentive auctions, stating:

[T]he Commission should kick-off the rule-making process for implementing incentive auctions this fall and set a deadline to conduct those auctions no later than June 30, 2014.

Whether such a deadline for auctions is feasible remains to be seen, but it’s a positive sign that a Commissioner of the FCC — a government body even Pai admits has “long had a reputation in Washington as an agency that moves too slowly” — is speaking so strongly about speeding up the process.

Also encouraging were statements from Pai’s fellow recent appointee to the Commission, Jessica Rosenworcel, who just a few days later hit on the need to speed things up — especially for freeing up more spectrum — in a statement of her own. As she said during a FCC meeting yesterday:

We all know that the President has called for 500 megahertz of spectrum to be cleared for commercial use within ten years. We are making progress at the Commission, including in our review of how to provide for more flexible use of the 2 GHz band currently assigned to Mobile Satellite Service. Plus, we have a series of auctions, including incentive auctions, on the near-term horizon. To bring certainty to the marketplace, I believe we should put these auctions on a clear timeline.

So there you have it. Two FCC Commissioners, one a Republican and one a Democrat, agreeing that in order to address America’s spectrum needs the Commission start turning words intoaction. It’s another positive example of the Commission under Chairman Julius Genachowski working to keep pace with the speed of technology, and while the FCC may not be there yet, here’s hoping it happens soon.

Because who knows what things will be like five years from now?

The Spectrum Process

By Brad

“Mobile Network Design and Deployment: How Incumbent Operators Plan for Technology Upgrades and Related Spectrum Needs” is a paper released last week by engineer Peter Rysavy. In it, he examines the lengthy process wireless providers go through to locate new spectrum and put it to use:

Managing wireless networks is a complex process that must balance infrastructure investment with service revenues, capacity with demand, and that must optimally time the deployment of new technologies. Part of this balancing act is acquiring and deploying radio spectrum. Spectrum can neither be immediately acquired, nor can it be immediately deployed. Instead, operators have to phase it into their networks in conjunction with the right technology at the right time over periods that span many years. The fact that operators may have idle spectrum at specific points in time does not mean that they don’t need it, and it does not mean that they don’t intend to use it.

If you’re looking for a smart — and consumable — breakdown of the importance of spectrum, Rysav’s paper is worth digging in to.

The Coming Roadblock From Spectrum

By Jamal Simmons

Tomorrow, as part of the National Conference of Black Mayors 38th Annual Convention in Atlanta, there will be a panel event titled “The Wireless Spectrum Crisis: Its Impact on Underserved Communities.”

This will be an important event on an important issue. The mobile broadband revolution — and I think it’s safe to call it a revolution at this point — has helped America make a major dent in its digital divide. Just take a look at some numbers from Pew:

Nearly two-thirds of African-Americans (64%) and Latinos (63%) are wireless internet users, and minority Americans are significantly more likely to own a cell phone than are their white counterparts (87% of black and Hispanics own a cell phone, compared with 80% of whites).

We can all agree it’s critical for America to keep this positive trend going — not just for the digital divide, but for our country’s economic rebound. But the threat of a spectrum shortage — one that could grind innovation to a crawl and hurt consumers with higher prices — has the potential to be a major roadblock.

This is something Minority Media & Telecom Council (MMTC) President and co-founder David Honig recently touched on during an appearance at the World Conference of Mayors Broadband Symposium in Alabama. Broadband & Social Justice’s Marcella Gadson covered Honig’s speech, and wrote:

“The relative affordability of mobile wireless broadband use versus costs for home broadband use sparked some to describe this phenomenon as the ‘minority wireless miracle,’” [Honig] stated. However, “Since African Americans are disproportionately relying on mobile wireless broadband for Internet access, they will be [disproportionately] affected if the supply of commercial spectrum is not increased.”

The spectrum crunch can be a hard issue to wrap your head around. After all, spectrum isn’t something we can see. But the effects of a spectrum shortage will be very visible, and with demand for mobile broadband threatening to soon outstrip the supply of spectrum for mobile use, conversations like tomorrow’s event in Atlanta are an absolute necessity.

IIA will have more coverage of the “The Wireless Spectrum Crisis: Its Impact on Underserved Communities” panel during and after the event. To follow along, use the hashtag #ncbmspectrum.

Spectrum & Innovation

By Brad

In an opinion piece for Politico, CTIA President and CEO Steve Largent makes the case that more spectrum for wireless will mean an explosion of innovation:

The world leadership we claim has been built over time, and today the U.S. is home to more than 69 percent of the global LTE subscribers, even though we have less than 5 percent of the world’s population and less than 6 percent of the world’s wireless subscribers.

Some of the most advanced wireless devices were launched first in the U.S., including Apple’s iPhones and iPads, Samsung’s Galaxys, Motorola’s Droids and HTC’s EVO 4G. In addition, Americans may choose from more than 630 unique devices while, by comparison, those in the United Kingdom have fewer than 150 choices. But all this is at risk if the industry is allowed to become even more spectrum constrained.

In response to Largent’s piece, our own Bruce Mehlman left this comment:

American consumers are benefiting from increasingly robust nationwide wireless data services including mobile apps, real-time social media and streaming video. With new wireless subscribers signing up every day and more and more spectrum hungry services snacking on the available airwaves, of course there is less spectrum to go around. Saying that the spectrum crisis isn’t real is an excuse for inaction.

Things Are Changing

By Brad

Over at Politic365, Kristal High digs in to the National Urban League’s report “Connecting the Dots: Linking Broadband Adoption to Job Creation and Competitiveness”:

The report explains that in 2010, 56 percent of African Americans had access to broadband at home, compared to 67 percent of whites, or an 11 percent difference.  But in 2009, the difference between those same groups was 19 percentage points.

These findings show that increasing numbers of consumers are discovering the limitless potential and possibilities brought by access to mobile broadband. It’s clear that broadband drives economic growth, job creation, and innovation in every industry—but for individuals and families, the benefits include better access to health care and educational opportunities, as well as the ability to find a job, network online, and obtain job training. And for one group that has traditionally had less access to this life-changing technology, things are changing.

The National Urban League’s report is available here (PDF).

Larry Downes on the FCC Spectrum Roadblock

By Brad

In a must-read article for Bloomberg, Larry Downes argues the FCC — despite its good intentions — is getting in the way of freeing much-needed spectrum for wireless:

Speaking the week of May 7 at the annual meeting of the mobile trade group CTIA-The Wireless Association, FCC Chairman Julius Genachowski had to acknowledge the sad truth that “the overall amount of spectrum available has not changed, except for steps we’re taking to add new spectrum on the market.”

Those “steps,” however, only promise spectrum sometime in the vague future. For now, the two agencies have put almost no new spectrum into actual use. Instead, the agencies have piled up a depressing list of delays, scandals, and wasted opportunities.

Later in the piece, Downes calls for a major overhaul of how spectrum is managed by the government:

Saving the mobile ecosystem—and making way for the next generation of mobile innovation—demands a bold new strategy. For starters, it is time to stage an intervention for federal agencies hoarding spectrum. Private licensees who no longer need the spectrum they have must be able to sell their rights quickly in a working market and be prodded, when necessary, to do so. Buyers need the freedom to repurpose spectrum to new uses.

Also, we need to increase incentives for network operators to continue investing in better and more efficient infrastructure, not throw cold water on them in the name of a vague and largely undefined public interest. The number of competitors isn’t what matters. It’s the ability of consumers to get what they want at prices that, at least up until now, continue to decline.

Downes’ full article is blunt, alarming, and worth reading.

More Cuts For T-Mobile

By Brad

Last March, T-Mobile announced it had cut its workforce by 5% in the wake of the blocked merger with AT&T. Now, Brier Dudley of the Seattle Times reports, the company is gearing up for a new round of cutbacks:

T-Mobile USA Chief Executive Philipp Humm warned employees a few months ago that more layoffs would happen by the end of May. It’s happening right on schedule.

Today, the company is informing employees of “a series of organizational changes,” a spokeswoman said.

A net loss of about 900 jobs will result. But even more jobs are likely affected by the changes, which include layoffs and shifts to outsource more work.

The Mobile Social Network

By Brad

It’s going to be a big week for Facebook creator Mark Zuckerberg. First up is his birthday, which is today. Then later in the week, Facebook’s IPO, which is expected to be massive. But as Alistair Barr of Reuters reports, the 27-year-old tech titan isn’t slowing down — in fact, he’s aiming to better position Facebook for the future of the Internet:

Zuckerberg, 27, who started Facebook in his Harvard dorm room 8 years ago, said Facebook’s key priorities in 2012 were to improve its mobile application, to build stronger ties incorporating its social network with other online apps and to create a “transformative” advertising experience.

The company is “just getting started” with its mobile app, said Zuckerberg, who appeared on stage in a grey T-shirt and dark trousers at Palo Alto’s Crowne Plaza, flanked by Chief Operating Officer Sheryl Sandberg and finance chief David Ebersman.

A Double Shot of Reports

By Brad

There are two new reports worth checking out today. FIrst up, a look at the benefits of broadband for businesses courtesy of Connected Nation:

• Nearly one in three businesses (32%) earn revenues from online sales. This translates into more than 2.4 million U.S. businesses

• Broadband-connected businesses bring in approximately $300,000 more in annual median revenues than non-broadband adopting businesses

• An estimated 4.4 million U.S. business establishments have websites, including more than 2 million businesses with fewer than five employees

• Teleworking also continues to have an impact in the marketplace, with 24% of rural businesses and 35% of non-rural businesses currently allowing employees to telework or telecommute

• Minority-owned businesses in the U.S. account for $49 billion in annual sales revenues from online sales (or 12% of total online sales in the U.S.). A large percentage of minority-owned businesses report using broadband to handle some or all of their business functions (79%, compared to 76% of all businesses on average)

Connected Nation’s full “2012 Jobs and Broadband Report” is available on their website (PDF). It’s worth digging in to.

Also worth checking out is “Connecting the Dots: Linking Broadband Adoption to Job Creation and Job Competitiveness” (PDF) from the National Urban League, which examines where the digital divide persists in America, and highlights how expanding access helps drive employment and opportunity in the African America community. From the report’s findings:

• Overall broadband adoption gap is narrowing: In 2010, the home broadband adoption gap between African Americans and white Americans was 11 percentage points—in 2009, this was 19 percentage
points (56% for African Americans and 67% for white Americans in 2010).

• Target broadband adoption efforts at high school dropouts and households below $20,000 annual income: This group has persistently low broadband adoption—38% of African American and 51% of white American high school dropouts adopted broadband in 2010.

• Close broadband adoption gaps by linking it to jobs: Segment of African American population with low adoption has the most interest in using broadband for jobs—77% of African Americans and 17% of white American high school dropouts used broadband to search for jobs in 2009.

• African Americans are underrepresented in broadband jobs and businesses: African Americans were 8% of broadly-defined STEM occupations in 2010 and made 0.23% of revenues in information sector businesses in 2007. Broadband adoption can be leveraged to change this.

The e-Book Game

By Brad

With e-books like Amazon’s Kindle increasing in popularity, it’s no surprise other tech giants are trying to get in on the action. Apple has its iPad and iBooks, and now, as the Wall Street Journal‘s Shira Ovide and Jeffrey A. Tractenberg report, a little company from Redmond, Washington is getting in the game:

Microsoft Corp. is pledging $605 million to help bolster Barnes & Noble Inc.‘s Nook digital-book business, as the software giant wages another bet on an industry where it has lagged behind rivals.

The deal catapults Microsoft into a high-stakes battleground whose combatants include Amazon.com Inc., Apple Inc., and Google Inc., and also gives Barnes & Noble a lifeline to continue investing in its fast-growing digital-book business. As part of its investment, Microsoft is taking a 17.6% stake in a new subsidiary that will include the e-book division and Barnes & Noble’s college bookstores unit, which operates 641 stores.

The Wireless Economic Engine

By Brad

A new report from Recon Analytics casts a light on just how important the wireless industry is to America’s economy. The full report, titled “The Wireless Industry: The Essential Engine of U.S. Economic Growth, is available here (PDF), but here’s some highlights:

• The US wireless industry is responsible for 3.8 million jobs, directly and indirectly, an increase of more than 200,00 over the past six years; this accounts for 2.6% of all US employment.

• The wireless industry is now larger than the publishing, agriculture, hotels and lodging, air transportation, motion picture and recording, and motor vehicle manufacturing industry segments and rivals the computer systems design services and oil and gas extraction industries.

• The wireless industry and its direct and indirect employees paid $88.6 billion in taxes, including federal, state and local fees and taxes.

The report also looks at the current hot topic of spectrum, and finds that for every 10 MHz of spectrum made available to the wireless industry…

• US GDP increases by $1.739 billion

• US Employment increases by at least an additional 7,000

• Government revenues increase by $468 million

There’s much, much more to be found in the report. Check it out.

The Tablet Boom

By Brad

Earlier this week, Apple announced it had sold close to 12 million of its iPad tablet last quarter alone. But as MediaPost’s Laurie Sullivan reports, that number — impressive as it is — may soon just be a drop in the bucket:

Worldwide global tablet sales will reach 232 million units in 2016, up from 64 million units in 2011, per a new report.

The Tablet Technology and Markets report from Futuresource Consulting estimates a 200% increase for consumer use across the United States and Western Europe during the next two years. Consumers bought about 52 million tablets in 2011 across the two regions, and the market continues on track to exceed 153 million units in 2013—the majority being sold into the United States.

The Need to Encourage More Telecommuting

By Brad

Among the many benefits of broadband is the positive environmental impact due to telecommuting. But as MediaPost’s Laurie Sullivan points out, not many are currently taking advantage of being able to work from home:

Telecommuting allows many people to work from home. In fact, 40% of the U.S. workforce could technically work from home. Even with technological advances making this possible, only 2.5% of U.S. workers telecommute. If the 40% of workers who could telecommute would do this two days a week, it would reduce yearly carbon emissions by 53 million metric tons.

It’s often been pointed out that bridging America’s digital divide will take not just broadband expansion but education. Seems like educating businesses and individuals about the economic and environmental benefits of working from home would be a positive step as well.

Entrepreneurs & Spectrum

By Brad

Yesterday, in partnership with the Small Business and Entrepreneurship Council (SBE Council), we released our latest study, “Start-Up Savings: Boosting Entrepreneurship through Broadband Internet,” which details the 10 Ways Entrepreneurs Can Save Money Through Broadband Internet.

During a conference call with the media about the study, Karen Kerrigan, Chief Executive of the SBE Council, brought up a very good point when she said:

“Dependency on mobile apps and wireless broadband for entrepreneurs calls attention to spectrum — is there enough? [It’s] a wake up call along those lines, we need more spectrum and more investment. Policymakers need to be aware of this.”

While spectrum was not a major focus of our study, we obviously agree with Kerrigan that allocating more spectrum for mobile broadband is critical. In fact, our own Co-Chair Bruce Mehlman said as much in the press release following the study’s release, which was highlighted by Broadcasting & Cable’s John Eggerton:

“Now more than ever we need more spectrum in the hands of those actually serving our entrepreneurs, to ensure robust and reliable Internet service,” said Internet Innovation Alliance co-chair Bruce Mehlman… “Policies that allow the markets to deploy these resources to their highest and best use, rather than politicians’ preferences, will lead to a stronger entrepreneurial ecosystem —  that means more innovation, more jobs, more cost-savings for consumers and more start-up businesses in the United States.”

More coverage of the analysis can be found at Multichannel News, Network World, and eWeek.

Our New Study: Top 10 Ways Broadband Saves American Entrepreneurs Money

By Brad

Today, in partnership with the Small Business and Entrepreneurship Council (SBE Council), we released our latest study on the top 10 ways America’s entrepreneurs can save money with broadband.

To see the results in a cool interactive, click on the feature above or head here. You’ll also find our methodology, along with an embed code. Our press release on the study is available in the Press Room.

Our thanks to the SBE Council for their help in putting this together.

(cut and paste below to include this graphic on your blog)

<img src="http://www.internetinnovation.org/small-biz/Start-Up-Savings-IIA-SBE-graphic.png" style="border:solid 1px #ccc">

A View on Spectrum From the Senate

By Brad

Speaking of spectrum and mobile broadband, Senator Mark Warner has a good piece for Wired on why the airwaves matter more than ever:

We all know the United States, the birthplace of the internet, is falling behind the rest of the developed world in terms of broadband speeds and access. The Obama Administration and the Federal Communications Commission have been pushing for more commercial access to spectrum, yet it is increasingly clear that we do not have a long-term plan to manage this limited resource.

Earlier this year, the internet exploded with consumer concerns about proposed legislation intended to curb online piracy. Without a real spectrum plan, we risk reaching a tipping point where the same forces that spontaneously ignited during the PIPA/SOPA debate are stifled — along with our nation’s economic ability to further innovate and grow.