Taking advantage of emerging next-generation wireless networks could add some $2.7 trillion to the U.S. economy by 2030, according to a new study about the economic impact of wireless from the Progressive Policy Institute (PPI).
Increasing wireless network capacity can contribute significantly to resolving a variety of pressing public issues and challenges, including sluggish economic growth and declining living standards, highlights report author Michael Mandel, PPI chief economic strategist.
“Creating vastly more wireless capacity is essential for getting the United States out of the slow-growth trap we are currently stuck in,” he writes in ¨Long-term U.S. Productivity Growth and Mobile Broadband: The Road Ahead.¨
“In order to catalyze the next round of spectrum-enabled economic expansion, policymakers need to focus on freeing up multiples of the current amount of spectrum – both for licensed and unlicensed uses – while creating an economic environment in which it is profitable to build and maintain a greatly expanded number of cell sites.¨
Failure to do so, or instituting onerous regulations that raise the cost and lower returns on telecom industry investment in next-generation wireless networks, would likely constrain productivity increases across U.S. physical industries, which make up most of the economy, Mandel continues. “In that event, all Americans will suffer,¨ he asserts.
The Economic Impact of Wireless
The results of Mandel’s study highlight the importance of the FCC’s upcoming auction of 600MHz spectrum, as well as related efforts to identify new wireless frequency bands, added Meredith Atwell, president and CEO of mobile industry association CTIA.
“PPI’s paper provides concrete evidence that next-generation wireless networks will be key to transforming our economy and drive economic growth by over 10 percent,¨ he was quoted as saying. Policy Institute (PPI). That would boost GDP by 11%, or 0.7 percentage points in terms of annual economic growth.
PPI highlights the study’s three main points:
• The slow rate productivity growth correlates with the failure of “physical” industries, such as manufacturing, health care, and construction, to make good use of digital technologies, compared to “digital” industries such as professional services, finance, and entertainment.
- According to PPI, physical industries make up roughly 80% of the private sector but account for just 35% of private IT investment and only 40% of telecom usage.
- A recent paper from the McKinsey Global Institute estimates that the United States has only reached 18% of its potential for digitization.
• The use of remote sensors and remote controlled devices, such as drones, cars and construction equipment, will need to expand rapidly in order for physical industry digitization to be successful.
- Cisco forecasts that M2M wireless traffic in the United States, including wearables, will rise from 3% to 11% of all mobile data by 2020.
- In its new study PPI projects that IoT related M2M communications will account for roughly 35-47% of mobile data communications by 2030.
• Mobile broadband network capacity will have to increase sharply to achieve this level of connectivity. That, in turn, will depend on technological developments and deployments.
- Based on an analysis of historical trends, PPI projects that 1900MHz of sub-millimeter wave wireless network spectrum bands – three times more than is available today – will be required to fully realize IoT connectivity and resulting productivity gains by 2030.
- In addition, this will require adding at least 1.2 million cell sites – four times the current level.