Beginning in 1994, the FCC auctioned PCS licenses for 120 MHz of spectrum for mobile telephony. Hazlett et. al. (2004) estimated that in the five years, from 1994 to 1998, the wireless industry invested $33.8 billion to build out PCS networks.

Recently a lot of talk has been around the word Spectrum. Mobile broadband is emerging as a critical feature of theU.S.communications infrastructure and essential to the future of our economy.

Capital spending by companies in the wireless sector has been substantial over the past decade and has laid a solid foundation of modern connected infrastructure that has contributed significantly to economic growth and job creation throughout theUnited States.

Between 2002 and 2010, capital spending in the wireless industry exceeded $185 billion, creating, on average, approximately 420,000 jobs throughout the economy.

In the current stagnant economic environment, policymakers should be concerned with facilitating private sector investment, which will generate market-based growth and job creation. Stimulating investment in mobile broadband infrastructure will create jobs, spur consumer demand and facilitate the innovation of new goods and services.

Wireless spectrum is an essential input to mobile broadband services and there is widespread agreement that spectrum constraints are challenging for the industry. For example,U.S.networks are currently operating at 80 percent of capacity, well above the aggregate utilization rate of 65 percent for all countries worldwide.

Acknowledging that mobile broadband is “a key platform for innovation in theUnited Statesover the next decade,” the Federal Communications Commission (FCC) has expressed concern that “the growth of wireless broadband will be constrained if government does not make additional spectrum available.

If the U.S. does not address this situation promptly, scarcity of mobile broadband could mean higher prices, poor service quality, an inability for the U.S. to compete internationally, depressed demand and, ultimately, a drag on innovation.”

As a remedy for this problem, the FCC has proposed to make 500 MHz available for mobile broadband use over the next ten years, including 300 MHz in the next five years. Experts have estimated that between two and four times this amount will be needed by 2020 to continue supporting consumer demands.

In helping to reallocate spectrum to meet evolving consumer demand, policymakers have a unique opportunity to facilitate private sector investment in critical wireless infrastructure that will create jobs, spur demand and encourage innovation.

Building on past studies of the economic impact of investment in communications infrastructure, updated with current data, we estimate the likely macroeconomic effect of investment by the wireless industry to build out the spectrum release proposed by the FCC.

Mobile broadband is critical to theU.S.communications infrastructure and our future economy. Private sector investment, with substantial job creation benefits, can be facilitated by the reassignment of spectrum to mobile broadband.

Building on previous studies, we estimate that the reassignment of 300 MHz of spectrum to mobile broadband within five years will spur $75 billion in new capital spending, creating more than 300,000 jobs and $230 billion in additional Gross Domestic Product (GDP).

The release of an additional 200 MHz of new spectrum after five years will create an additional 200,000 jobs and increase GDP by an additional $155 billion. These estimates represent the tip of the iceberg in terms of economic benefits.

Reassigning additional spectrum to mobile broadband also would generate substantial spillover effects as companies such as Apple, Google and Qualcomm,  small application developers and other innovative start-up companies rush to create new mobile broadband products and services.

Given published estimates of the spillover effects from communications and broadband investment, it seems likely that the spillover effects from the reassignment of spectrum to mobile broadband will exceed, by a considerable margin, the multiplier effects that we present here. A delay in the reassignment of spectrum will necessarily delay the future in broadcasting.

Beginning in 1994, the FCC auctioned PCS licenses for 120 MHz of spectrum for mobile telephony. Hazlett et. al. (2004) estimated that in the five years, from 1994 to 1998, the wireless industry invested $33.8 billion to build out PCS networks.

To project the effects of making an additional 300 MHz of bandwidth available to service providers today, we assume an increase in capital spending (in 2010 dollars)  proportional to the investment that occurred following PCS licensing, adjusting for the current proposal to issue licenses for 300 MHz relative to the 120 MHz of spectrum allocated to PCS.

Our estimates of additional investment that will result from build-out and deployment of newly available spectrum are derived from incremental capital investment data as reported by the wireless industry and exclude the cost of acquiring spectrum via auction. These estimates of capital spending increase over time, consistent with the observed ramp-up in capital spending during the build out of the PCS spectrum.