Faulty spectrum argument doesn’t hold up — Industry Voices: Entner

spectrum
Wireless infrastructure spending has increased every year at roughly the same pace regardless of how much the industry has spent on auctions. (Pixabay)
Roger Entner

In a recent op-Ed in the Wall Street Journal, Paul Wolfowitz, one of the architects of the Iraq War, laid out his plans to re-architect the United States wireless industry.

A former staunch advocate for competition has been reformed to push spectrum handouts, echoing the “5G nationalization” talking points notoriously pushed over the past few years by a company that has never built and operated a wireless broadband network.

Mr. Wolfowitz’s apparent ignorance of the wireless industry writ large, particularly within the U.S., is jarring. He seems unaware that the U.S. wireless industry has managed to spend in the last 10 years $158 billion to buy spectrum at auction, and then spent from 2011 to 2021 another $291 billion plus an expected additional $30 billion in 2021 to build out the spectrum and operate networks that serve consumers.

As you can see from the chart below, wireless infrastructure spending has increased every year by roughly the same pace – $30 billion per year – regardless of how much the industry has spent on auctions.

Entner chart
Source: FCC and CTIA

The idea that spectrum purchases constrain companies’ investment in the networks is as credible as those about weapons of mass destruction in Iraq. No matter how some people want it to be true, it is plain and simple: The assertion is not supported by the facts on the ground.

It is also surprising that someone who knows nothing about the U.S. wireless industry would nonetheless suggest we deprive the U.S. Treasury of billions in auction revenues.

He mentions the failure of Mexico’s Atlan Redes, commonly called Red Compardida or “Shared Network,” as a cautionary tale about Huawei. Mr. Wolfowitz conveniently forgets to mention that was a launch based on the same faulty assumption he proposes for the United States: A sole provider on set aside spectrum to provide capacity for third parties. There is no example in the world where such a network has succeeded, but still Mr. Wolfowitz pushes for such a proven failure.

We don’t know what is worse, Mr. Wolfowitz not knowing the truth or deliberately ignoring it in favor of a narrative that fits his view of the world. Just as the old saying goes: fool me once shame on you, fool me twice shame on me. We should not be fooled twice. Under his scenario, American taxpayers lose again, wireless consumers lose, and the U.S. economy loses.

Roger Entner is the founder and analyst at Recon Analytics. He received an honorary doctor of science degree from Heriot-Watt University. Recon Analytics specializes in fact-based research and the analysis of disparate data sources to provide unprecedented insights into the world of telecommunications. Follow Roger on Twitter @rogerentner and catch him on The Week with Roger podcast.

"Industry Voices" are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by Fierce staff. They do not represent the opinions of Fierce.