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Will the Incentive Auction Increase Mobile-Broadband Competition in Rural America?

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Today, the Center for Business and Public Policy at Georgetown University's McDonough School of Business released a new economic policy vignette by Visiting Senior Policy Scholar Anna-Maria Kovacs titled “Regulation in Financial Translation: Will the Incentive Auction Increase Mobile-Broadband Competition in Rural America?”

The policy vignette examines whether or not making low-band spectrum available only to certain carriers in the upcoming incentive auctions will indeed spur wireless competition in rural America. Kovacs’ research finds that providing low band spectrum to some companies at below-market rates does not resolve the biggest impediment to deploying in rural markets, which is a lack of revenue per square mile, to justify the expense of building out the spectrum.

Using publicly available information, Kovacs explicates the revenue potential for mobile wireless providers on a per square mile basis in rural and urban environments. She finds that there is a nearly thousand-fold disparity. Kovacs concludes that no matter how cheap the spectrum is to buy at auction and no matter how good its propagation characteristics may be, the small amount of revenue to be made by building networks in rural markets remains a major deterrent to any companies building out low-band spectrum that do not already have infrastructure in these markets. 

The Georgetown Center for Business and Public Policy is an academic, non-partisan research center whose mission is to engage scholars, business people and policymakers in relevant inquiries and dialogue to impact key business, economic and public policy issues confronting American and international businesses today.  Housed at Georgetown University's McDonough School of Business, the Georgetown Center was created in 2002 to encourage thoughtful discussion and to document and disseminate knowledge on a range of issues in the public interest.