Study finds that Next-Generation Wireless Networks Could Add Nearly $3 Trillion to U.S. GDP by 2030; Increase Economic Output by 11 Percent
WASHINGTON—A new policy report released today by the Progressive Policy Institute (PPI) examines the long-term relationship between mobile broadband and U.S. economic growth and relates it to current public policy questions.
The report, authored by PPI Chief Economic Strategist Michael Mandel, focuses on the year 2030 and considers the economic implications of next generation wireless networks for long-term productivity growth and living standards. The result could be an acceleration of productivity growth in the physical industries that adds roughly $2.7 trillion (in 2015 dollars) to U.S. GDP by 2030, according to the report. This translates into an 11 percent increase in economic output, which is equivalent to boosting the average annual growth rate by 0.7 percentage points.
“Creating vastly more wireless capacity is essential for getting the United States out of the slow-growth trap we are currently stuck in,” Mandel writes. “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.
“Conversely, if policymakers fail to free up enough spectrum, or free up more spectrum for unlicensed rather than licensed operations, or impose regulations that reduce the return on investment that currently fuels spending on telecom infrastructure build-out, the likely outcome will be that the physical industries—which make up the greater part of the economy—will fail to achieve their productivity potential. In that event, all Americans will suffer.”
“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. This report underscores the importance of the FCC’s upcoming 600 MHz auction and spectrum frontiers effort, as well as the need to identify the next bands of spectrum for wireless use to fuel our mobile-first lives,” said Meredith Attwell Baker, President and CEO, CTIA. “We remain committed to working with all interested parties to free up more spectrum—both licensed and unlicensed—so that the world’s best mobile industry can provide our nation with almost $3 trillion in productivity gains.”
This report makes three main points.
• Slow productivity growth today across much of the economy is correlated 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. PPI estimates that the physical industries, which make up roughly 80 percent of the private sector, account for only 35 percent of private info-tech investment, and only 40 percent of the telecom usage. A recent paper from the McKinsey Global Institute estimates that the United States has only reached 18 percent of its potential for digitization.
• PPI suggests that successfully digitizing physical industries will require a vast increase in remote sensors and remote-controlled devices such as cars, drones, and construction equipment. Cisco forecasts that M2M wireless traffic in the United States, including wearables, will rise from 3 percent to 11 percent of all mobile data by 2020. In this paper, PPI further projects that IoT related M2M communications will account for roughly 35-47 percent of mobile data communications by 2030.
• Achieving this level of connectivity and productivity improvement will require a sharp increase in the capacity of the nation’s mobile broadband networks. The nature of the capacity increase will depend on the development of technology. Using an analysis based on historical trends, we project that by 2030 it will be necessary to have more than 1900 MHz of spectrum in the sub-millimeter wave (mmW) bands (3 times the current availability) and at least 1.2 million cell sites (4 times the current level) in order to fully enable the IoT-driven productivity gains we document in this new paper.
Download “Long-term U.S. Productivity Growth and Mobile Broadband: The Road Ahead”
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