The Economic Importance of Unlicensed Spectrum in the Case of 5.9 Ghz
Posted: 15 Mar 2018
Date Written: August 15, 2018
The ongoing policy debate surrounding the best use of the 5.9 GHz band, a 75 MHz frequency band spanning 5.85-5.925 GHz, exemplifies how regulators continue to grapple with the conventional top-down allocation framework. Originally allocated for Intelligent Transportation Systems (ITS) in 1999, and specifically to dedicated short range communications (DSRC) for vehicle to vehicle (V2V) safety, the 5.9 GHz band has since remained underused. At the same time, a robust Wi-Fi infrastructure grew in the surrounding unallocated frequencies, along with corresponding applications, devices, and device standards.
This paper offers a fresh perspective on the debate, by providing a new estimate of the economic importance of the 5.9 GHz band. To further explore the economic significance of this band, we also consider different scenarios for how this frequency could be allocated, and explore possible macroeconomic implications for consumers. The objective of this paper is to provide these estimates as a way to inform the broader discussion on unlicensed spectrum allocation, given the saturation of existing bands, proliferation of devices and applications that run on Wi-Fi networks, the digitization of industry, and the movement toward 5G.
The estimation of the current economic value of unlicensed spectrum in the 5.85-5.925 GHz band will use methodological approaches consistent with similar measures, to reflect the recent growth in demand and the evolution in technology and applications. These approaches will be based in the economics literature regarding consumer welfare, producer surplus, and economic gains from investment, and use a variety of government and commercial data sources for information related to supply and demand for unlicensed spectrum. The estimates will be preliminary, and we will focus on those consumer welfare measures deemed most informative for policymakers and the broader spectrum discussion.
Moreover, our sensitivity analysis will provide a range for potential economic benefits and costs under specified policy directions and associated outcomes. Specifically, this paper will consider scenarios and resulting estimates in the context of existing rules, regulations, and standards, such as 3GPP for 5G currently under development. For example, scenarios might include the current movement to use and allocate higher frequency bands, the general need for more contiguous bandwidth to achieve 1Gbps Wi-Fi speeds and stream more video, new entrants into the wireless communications provider market, and the approaching saturation of existing unlicensed spectrum bands.
We hope these estimates will shed meaningful insight into how policymakers could best approach unlicensed spectrum allocation going forward. By providing a deeper appreciation for the economic value of the 5.9 GHz band, it can help shape the broader context of the economic importance of the entire 5 GHz unlicensed band as it relates to current and future potential Wi-Fi use and applications. Finally, we hope the policy insights stemming from these estimates could extend to the broader conversation on higher frequency bands. This includes growing concerns over satellite-based communications creating additional congestion and interference, and to highlight new opportunities for the Federal Communications Commission (FCC) to prioritize innovation and economic growth in spectrum management as we transition to 5G.
Keywords: Unlicensed, Spectrum, Consumer Welfare, Policy, FCC
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