America’s infrastructure is in dire need of an overhaul – an upgrade that extends far beyond just physical structures. Our country’s digital infrastructure, which includes the vital networks supporting commerce, defense, transportation, and public safety, is also in dire need of improvement. This infrastructure not only keeps our nation at the forefront of technological advancements, but it also plays a crucial role in our competitiveness and national security in the modern world.
For decades, America set the pace for the digital era, continuously producing groundbreaking innovations in cellular technology. From 2G, which gave us the ability to send text messages, to 3G’s mobile broadband and BlackBerry devices, and finally 4G’s advancements in mobile video and the introduction of app stores, our country has been a leader in the realm of digital innovation. However, as we enter the era of 5G, it is clear that we have fallen behind. Compared to countries like Bulgaria and Malaysia, our 5G speeds are lacking, and we have only a fraction of the 5G base stations per capita that South Korea has. While Chinese tech giant Huawei’s dominance in the global 5G market has been somewhat slowed by recent sanctions, they still hold a leading position, highlighting our nation’s lack of superior innovations in this field.
With the release of the first-ever National Spectrum Strategy, the Biden administration has shown that it is taking the deteriorating state of America’s digital infrastructure seriously. This strategy, along with the broadband investments of the Infrastructure Investment and Jobs Act, as well as the CHIPS and Science Act’s industrial policy, recognize the critical role that telecommunications and infrastructure play in maintaining America’s position as a global technology leader. However, despite these efforts, our approach to spectrum innovation is not enough.
One major issue is our failure to keep up with the constantly evolving telecommunications technology landscape. The focus of our spectrum policy and allocation debates has been on accelerating mobile network deployment, which was reasonable in the 1990s and 2000s when the leaps in cellular technology spurred the smartphone revolution. However, this approach is not as relevant in today’s world.
“Our spectrum policies don’t reflect the increasingly complex communications system that consists of data exchanges between people, computers, devices, apps, the cloud, and autonomous agents.”
It’s clear that we cannot compete with our global counterparts if we continue to rely on outdated digital infrastructure and policies that do not support our potential for growth.
Hyperscale companies currently handle two-thirds of the global data traffic, including that which comes from mobile cellular networks, and they also own the undersea fiber-optic cables that transmit data between continents. On top of that, much of our communication happens through internet connections enabled by Wi-Fi, an unlicensed wireless technology. Additionally, as we spend the majority of our time indoors, mobile cellular coverage is less practical, and therefore, we consume the majority of data via Wi-Fi instead. Even within the realm of mobile network users, half or more of all smartphone data is transmitted over Wi-Fi rather than through the carrier’s spectrum. Yet, our spectrum policies have not caught up to this reality, hindering our ability to compete globally.
Instead of trying to keep up with our peers by outspending them, we should focus on our comparative strengths and avoid competing in areas where we have little chance of winning. While targeted government subsidies may be helpful, it is unlikely that we will see substantial government investment in the near future, and we cannot outspend China. Nor can we produce communication equipment domestically that is cheaper or superior to other countries. Therefore, we should not embrace a government-directed command economy. The option to pressure other countries not to use Huawei systems is also not a viable solution. We must instead find a clear alternative that is both cheaper and superior if we want countries to give up the growth that comes with investing in the digital economy.
However, we do have strengths that we can use as a foundation for developing world-class digital infrastructure. Our expertise in software development, for example, is a comparative strength that we can build upon, especially as network architecture becomes increasingly software-defined, similar to how cloud computing operates. Even in situations where non-American companies provide network hardware, American companies can still compete if they excel at producing the necessary software to manage these networks. The introduction of Open Radio Access Networks, which allow multiple vendors to build the mobile ecosystem, is a positive step that will encourage further innovation. We must also focus on creating more “killer app” use cases for wireless technology. By doing so, we create a demand that drives the development of better digital infrastructure. The advancements in AI applications for network management will also increase our technical capacity for spectrum utilization.
In response to competitive command economies, we should promote competitive access to spectrum to accelerate innovation. The National Spectrum Strategy reflects a refreshing open-mindedness towards sharing spectrum by design, but there is more work to be done. As FCC chairwoman Jessica Rosenworcel has stated, we need to “turn spectrum scarcity into abundance.” Instead of relying on exclusive use, which increases scarcity, we must avoid it unless there is a clear and credible rationale for doing so.
- “Licensing innovation can foster innovation, as seen in the successful Citizens Broadband Radio Service experiment to share spectrum, with over 370,000 access points deployed.”
- “There are also opportunities in spectrum auction design – an American innovation that has been adopted worldwide and provides a useful mechanism for allocating spectrum usage rights.”
Successful experiments, like the Citizens Broadband Radio Service, have shown that licensing can be an effective way to foster innovation. This experiment, with over 370,000 access points deployed, highlights the opportunities that come with sharing spectrum.
Spectrum auction design, an American innovation that has been adopted worldwide, offers a valuable tool for allocating spectrum usage rights. For example, Nobel Prize winner Paul Milgrom has developed the concept of “depreciating licenses,” where auction winners declare a spectrum value that determines both an annual license fee and a buyout price at which they agree to sell. When the FCC’s auction authority is restored, these innovative spectrum allocation tools should be seriously considered to maximize public benefit.
At the same time, we must devise policies that ensure we achieve the ultimate goal – a functional network. Creative uses of funds that reduce service costs and incentivize swift and widespread deployment could significantly benefit the development of our digital infrastructure. For instance, auction payments might be set aside to provide low-cost loans for network development, with strict performance requirements and clawback provisions. While this may lead to some loss in auction revenue, the long-term economic value created in GDP, productivity, and new products would far outweigh any deficits, ultimately promoting a best-in-class digital infrastructure.
America’s vast potential for innovation has been a powerful catalyst for prosperity and security. However, in order to continue competing with our global peers, we must recognize the new realities and make use of our strengths to reverse the deterioration of our digital infrastructure. By playing to our comparative advantages in software, competitive innovation, and market shaping and design, we have a unique strategic opportunity to develop world-class digital infrastructure that will drive our country forward in the 21st century.
