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Why the iPhone Economy Is Drawing Silicon Valley Deeper Into Washington Politics

BY Sarah Lai Stirland | Friday, September 14 2012

An expected 'spectrum crunch' is spurring Silicon Valley companies to look to Washington for answers.

Anyone looking for evidence that the esoteric and wonky is becoming increasingly important in mainstream politics need look no further than the theatrical launch of the iPhone 5.

Preorders for the latest magical device from Apple have sold out. Numbers released by the Pew Internet & American Life Foundation earlier this week say that 66 percent of younger Americans already own an iPhone or some other smartphone. By some estimates, more than 50 billion devices will wirelessly connect to each other by 2020 – that’s more than seven times the number of human beings on the planet. Wireless technology already also connect our cars, our utility meters, and even devices implanted in our bodies.

As management of the country's wireless spectrum becomes more important to business, it's becoming more important in policy as well. And it's attracting the interest of the growing political constituency inside Silicon Valley as efforts continue to change the policies that undergird the way we run our wireless networks to accommodate the explosion in wireless traffic.

“We know there’s going to be a data crunch, anybody will tell you that, that the amount of spectrum that we have right now is getting to a point where it can’t handle the load with all of those devices out there,” says Mike McGeary, co-founder of Engine, an advocacy group for the startup community in San Francisco. Members include dozens and dozens of startups from relatively well known names, such as Uber, Causes, Optimizingly, to the Mozilla Foundation, Google, Yelp and SV Angel.

Along with immigration,intellectual property policy and crowdfunding, spectrum management is drawing Silicon Valley companies into the political process. Similarly, it's one of several policy issues politicos are looking to for ways to spur economic growth, revenue for the government, and interest in their own election.

On the East Coast, House lawmakers examined the growth of the "app economy" in a hearing this week. And lawmakers, technologists and policy wonks on both coasts also examined a lengthy report that the President’s Council of Advisors on Science and Technology (PCAST) issued in July entitled “Realizing the Full Potential of Government-Held Spectrum to Spur Economic Growth.”

Google Chairman Eric Schmidt and Hummer Winblad Venture Partners’ Managing Director Mark Gorenberg, both PCAST members, spent Wednesday explaining the report to the public during a lunch meeting at Stanford University along with Federal Communications Commission Chairman Julius Genachowski and Stanford economic policy research deputy director Gregory L. Rosston.

The report represents the Obama administration’s take on how best to manage this resource.

One of the report’s prime recommendations is that the government should start sharing access to the spectrum it uses rather than taking the time to inventory it and sell it off piece by piece to the highest commercial bidder. The reasoning behind this is that it’s been historically difficult to persuade government bodies to vacate the spectrum. In addition, the report said that it would take 10 years and more than $18 billion to reallocate the available spectrum to the private sector. (The Government Accountability Office took issue with those numbers in a report issued earlier this year, noting that they came from the government users of spectrum themselves and that there had been no independent verification.)

Mitt Romney’s campaign wasn’t able to respond in time to a request for comment on how its administration would approach this issue, but the Republican party platform rolled out at their convention this year bashed the Obama administration for not making an adequate attempt to inventory spectrum and auction it off.

That criticism echoes those made by House Republicans in a Thursday hearing put on by the Subcommittee on Communications and Technology. The party made no mention of spectrum management in its 2008 platform.

“Spectrum sharing may hold potential in the future for some spectrum bands where clearing is impossible or we have certainty that the cost of relocation exceeds the value of the spectrum,” said Subcommittee Chairman Greg Walden (R-Ore.) during the hearing. “I am not ready to accept the opinion that 'the norm for spectrum use should be sharing' today. That’s simply not good enough.”

Both he and other Republican House members noted the GAO report that called the cost and timing estimates suspect, and advocated more effort to be put into clearing government users off of federal spectrum.

Some of the groups representing startups are encouraged by the attention politicians are now paying to these issues, but they’re reluctant to take sides yet on which is the best approach. Already, there is a sense of frustration despite the attention.

“The reality is that both sides are right, and both sides are wrong,” said Mike Montgomery, CALInnovates’ executive director. “When you look at what the Republicans are saying, yes, they’re right because we do need to look at government spectrum, but no they’re [also] wrong, because we don’t have time to take a full inventory. By the time we take a full inventory, it could be 10 years later, and guess what, we’re all screwed.”

“From the perspective of the Democrats, they’re on the right road with auctions, but the first auction isn’t theoretically set to take place until 2014, and it could take anywhere from seven to 10 years to deploy that spectrum,” he said.

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