Introduction

Spectrum management used to be an esoteric specialism practiced mainly by engineers outside the knowledge and understanding of policy makers, businesses, and consumers. That all changed with the rapid diffusion of mobile communications in the 1990s, and the consequential rocketing in the values of spectrum, vividly illustrated in the auctions of 3G spectrum around the year 2000. Since that time, spectrum management has risen in importance and, as part of this process attention has been directed to the growing role of spectrum-using services in the economy and in society.

In the case of some natural resources, calculations of the level of economic activity they add to the economy are justified by the possible exhaustion of supply. In the case of spectrum, this is not an imminent or even a distant prospect. However, estimates of the growing importance of spectrum-using services do underline the importance of allocating what we have efficiently. Thus if misallocation and hoarding reduce the effective stock of spectrum by half, a quick and inexpensive way of increasing output and welfare in the economy is to improve the spectrum management regime.

This chapter brings together some estimates of the links between the use of spectrum and the wider economy. The focus is not on spectrum itself (as this is an input) but on the spectrum-using services which generate final output. We first consider how key services which rely on spectrum contribute to economic welfare, examine the weight of those services in gross domestic product (GDP), and consider evidence on how investment in information and communications technologies (ICT) has contributed to increasing productivity throughout the economy.

However, the impact of certain spectrum-using technologies, notably mobile voice and data communications, has the potential to pervade the economy, not only affecting firms and households directly purchasing spectrum-using services, but changing business models, altering competitive structures, and promoting innovation. Attempts have been made to estimate these external effects by relating changes in GDP to the diffusion of fixed and mobile communications services. We discuss the implications of these results.