Experts debate spectrum economics at CTIA

Experts ranging from economists to investment researchers debated the economics of spectrum as part of a symposium about the connection between spectrum policy and the growth of the wireless industry ahead of the 2009 International CTIA Wireless show in Las Vegas.

The panelists generally concluded that often policy makers do not take into account the practical economics of spectrum use, and said that the growing demand for spectrum and mobile data was placing extraordinary economic pressure on spectrum licensees.

John Mayo, a professor of economics at Georgetown University, said that policy makers often under-emphasize the role of economics in spectrum policy, and that policy should be enacted to complement the fluidity of spectrum supply. He said, however, that the benefits to society that spectrum can bring--wireless broadband in rural areas, for instance--should not be based on the "wishes and dreams of economists" but on the actual results to consumers that changes in spectrum policy can bring. Larry Darby, a senior fellow at the American Consumer Institute, echoed those points and said that the debate over spectrum policy is colored by impressions, assumptions and very little impact on users.  

Those looking at spectrum policy from the point of view of investors said that the demands being placed on spectrum licensees as they look to take advantage of new technologies using recently acquired spectrum should not be underestimated. Jessica Zufolo, senior policy director for telecommunications, media and technology at Medley Global Advisers, said that infrastructure expenses associated with using new spectrum for next generation technologies were a huge risk to spectrum licensees.

Similarly, Mike Rollins, a telecom analyst for Citi Investment Research, said that with wireless penetration rates nearing 90 percent, and carriers looking to capitalize on the explosion of mobile data usage, network capacity was more critical than ever from an investment standpoint. Expanding network capacity inherently brings risk for operators, he said, since doing so puts capital at risk as part of an upfront investment in the network.

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