The Economic Promise of Wireless Spectrum

Benjamin H. Harris and Melissa S. Kearney

A founding principle of The Hamilton Project’s economic strategy is that long-term prosperity is best achieved by fostering economic growth and broad participation in that growth in a changing global economy. One important way to fulfill the goals of this strategy is to encourage the efficient use of our nation’s resources to maximize economic growth and to foster innovation. In this policy memo, The Hamilton Project considers the economic challenge of more-efficient assignment of wireless spectrum, which is critical to our modern information economy, as well as to national security, defense, and first responders.

Access to wireless spectrum is an essential input for individuals, the wireless industry, and the U.S. economy as a whole. Wireless devices—such as television, cell phones, Wi-Fi networks, car radios, GPS devices, and energy grid controls—use electromagnetic signals in the radio frequency range. This range is known as wireless (or radio) spectrum. The use of wireless systems is also critical to public-sector priorities. Providing public goods like national defense and public safety requires the effective use of wireless spectrum. Military satellites rely on spectrum to send data, police depend on radio channels to communicate, educational institutions depend on wireless applications, and air traffic controllers use spectrum to track and manage aircraft.

Due to technological limits, today’s wireless devices can operate effectively using only a limited range of frequencies. Technological limits also constrain the amount of spectrum available for use at any one time. This gives rise to the classic economics problem of how to efficiently provide a scarce good, which in this context refers to the rights to operate radio systems. An important goal of policy should be to facilitate the allocation and reallocation of wireless spectrum to realize the massive economic value of usable spectrum.