Regulatory Reform

The Importance of Unlicensed Spectrum

Technology can quickly outpace regulatory frameworks, and a new example of this phenomenon is the rapid expansion of WiFi-enabled devices without a concurrent increase in the fixed amount of unlicensed spectrum.

Spectrum is the full frequency range of radio waves available for wireless communications, and WiFi operates in the unlicensed section—that is, no licenses from the Federal Communications Commission are needed to broadcast. By 2017, Cisco has predicted that the average person will use approximately five WiFi-enabled devices each; but as it stands now, WiFi hotspots are already very congested. The gigabit speeds promised (and required) to meet 2017 device growth projections do not currently exist, primarily because not enough spectrum has been allocated for WiFi use. To give a more concrete example of increasing spectrum saturation, the number of states offloading over 90% of data usage to WiFi has increased by 875%, and WiFi traffic itself increases by 68% per year.

Moreover, currently 57% of all data is carried over WiFi, compared to just 41% by wired and 2% by cellular. In 2018, WiFi is set to grow from 57% to 64% of all data, which amounts to an increase of 1.75% per year.

Uncertainty and the possibility of congestion creating limits on spectrum capacity in the future means new WiFi devices may see a marked decrease in investment and development, as well as degradation in service quality. Companies will not continue to design more new products if their products fail to properly function. WiFi enables devices to be deployed in the field without a preexisting wired infrastructure, which allows for an unrivaled flexibility in wearable tech, wind turbines, and smart homes with adaptable add-on modules. Wired cannot come close to competing with wireless on the levels of mobility and adaptability.

Seeing future trends in advance leads to the question: how can we give WiFi a boost? In a recent vote, the FCC took a promising step to free up 100 MHz of radio spectrum in the 5 GHz band for unlicensed use, but there is still much more room for expansion to ensure devices become less sluggish, gigabit speeds are unlocked to encourage innovation, and an array of new devices are able to take advantage of real-time updates and connectivity while mobile. In 2013, unlicensed spectrum was responsible for contributing $222 billion to the U.S. economy. The FCC’s decision will undoubtedly increase that contribution, now that the band is slowly opening up for new companies. More unlicensed spectrum means new companies do not have to apply for burdensome licenses that favor incumbent tech firms. Moreover, an increase in unlicensed spectrum creates indirect competition in the mobile connectivity market, effectively forcing existing carriers to reduce prices on data plans for smartphones and other devices. Existing WiFi in homes currently accounts for $36 billion dollars in benefits and savings.

Unlicensed spectrum is the way forward. Regulation struggles to keep pace with technological development, but the FCC has made welcome advances to create space for the future to unfold. If this positive regulatory trend continues, we can expect to see more devices, faster signal, and increased mobility.

In Depth: Regulatory Reform

In his first inaugural address, Thomas Jefferson said that “the sum of good government” was one “which shall restrain men from injuring one another” and “shall leave them otherwise free to regulate their own pursuits of industry.” Sadly, governments – both federal and state – have ignored this axiom and…

+ Regulatory Reform In Depth