Unlicensed Spectrum a Boon to the Economy

Posted by Anoop Gupta 
Corporate Vice President, Technology Policy & Strategy

As consumers increasingly ask for mobile access to content and information wherever they are, sensible public policy regarding the allocation and efficient use of wireless spectrum is critical to ensuring that people can stay connected – whether they’re sitting in a coffee shop, riding in a car, or walking down the street. The huge importance of spectrum policy was highlighted at a workshop on the topic that the Federal Communications Commission (FCC) held in Washington, DC, on September 17 as part of its effort to develop a National Broadband Plan.

One of the key decisions facing policymakers is how to treat unlicensed spectrum, which has provided room for great innovations such as cordless phones, Wi-Fi routers, Bluetooth devices, and baby monitors, as well as specialty technologies such as wireless meter readers and telemetry. We at Microsoft believe that our nation’s policymakers should encourage further innovation by embracing unlicensed spectrum as a key pillar of America’s communications framework and by working to resolve outstanding issues in a timely manner. This is one of several suggestions we made to the FCC in a filing on Sept. 21 as part of our ongoing engagement on the national broadband plan.

As with any public good, however, the benefits of unlicensed spectrum are hard to measure. To help put a monetary value on this important public resource, Microsoft commissioned Richard Thanki of Perspective Associates, a UK economics consulting firm, to prepare an estimate. His findings are reported in a new paper, The Economic Value Generated by Current and Future Allocations of Unlicensed Spectrum.

Mr. Thanki found that technologies using unlicensed spectrum are delivering significant innovation and economic value. The value delivered just by Wi-Fi in American homes is conservatively estimated at between $4.3 billion and $12.6 billion dollars a year. Over the next 15 years, home Wi-Fi, hospital Wi-Fi, and Radio Frequency ID (RFID) tags could generate a combined value of $16 billion to $37 billion a year.

And these three uses account for only 15 percent of the total projected market for unlicensed-spectrum devices; the total projected benefits are far greater. Mr. Thanki’s analysis indicates that shipments of devices using unlicensed spectrum will surge over the next five years and will ultimately dwarf the sales of devices relying solely on licensed spectrum (i.e., televisions, radios and even some cellular phones).

Unlicensed spectrum fuels innovation by enabling rapid deployment of wireless networks. And innovations first developed for unlicensed spectrum often build the foundation for licensed-spectrum technologies. For example, licensed 4G mobile wireless broadband networks are partly based on innovations first designed for use in unlicensed wireless local area networks (LANs).

Furthermore, unlicensed-spectrum technologies such as Wi-Fi can complement licensed-spectrum technologies such as mobile phones. AT&T, for example, offers its mobile phone subscribers access to over 20,000 Wi-Fi hot spots in the U.S. Sprint Nextel recently announced that it will feature Wi-Fi in all of its major devices, and Verizon Wireless has made similar statements about its smartphones. Wireless carriers also are marketing personal “MiFi” mobile hot spots, and some are charging for daily and monthly Wi-Fi access. Unlicensed Wi-Fi connectivity is of such value that competing wireless carriers are reportedly negotiating deals for roaming rights on each other’s Wi-Fi hot spots, much as wireless carriers today negotiate for voice and data network roaming rights.

Freeing additional spectrum for unlicensed use could bring tremendous, additional benefits. For instance, the vacant broadcast channels known as TV white spaces could be used to deliver innovative communications capability in devices and to create wireless hotspots larger than those enabled by today’s Wi-Fi networks. Just by using TV white spaces to improve current Wi-Fi applications, Mr. Thanki estimates that an additional $3.9 billion to $7.3 billion would be generated each year — for the next 15 years. That’s up to $109.5 billion in economic value just from adopting a sensible spectrum policy. Microsoft will soon demonstrate the value of white spaces for improving Wi-Fi with our own wireless network on our campus in Redmond.

At the recent FCC spectrum workshop, Ranveer Chandra, a scientist in Microsoft’s Networking Research Group, spoke about the potential of white spaces and the importance of providing opportunities to explore new uses for unlicensed spectrum. Microsoft will continue to advocate for unlicensed spectrum and for policies that foster innovation.

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