The Current State Of Wireless Economics (Part 1)

The wireless industry is a vital engine of economic growth in the United States, yet policy makers often underestimate its value. New research from Recon Analytics, commissioned by CTIA-The Wireless Association, shows that wireless products and services grew significantly during the past four years, in spite of the recession. Earlier this week in Washington, D.C., Roger Entner, Recon Analytics’ founder, discussed his findings at a round table sponsored by the Progressive Policy Institute.

“When we looked at the wireless economy, what struck me was how vast, how big and how expansive it is. It touches every facet of our lives today. Almost half of the jobs in the United States are touched by wireless,” Entner said.

The Stats

From June 2010 to June 2011, the wireless industry generated $195.5 billion GDP globally, with three quarters of that ($146.2 billion) staying in the United States.

“If the wireless industry were counted as a county, it would be 46th largest economy in the world. Not a lot of people recognize how big and how impactful that is,” Entner noted.

In 2011, the wireless industry also:
 • Accounted for more than 3.8 U.S. million jobs, directly and indirectly, an increase of 200,000 jobs during the past six years and representing 2.6 percent of all U.S. employment.
• Contributed — through employees, employers and end users — $88.6 billion in income taxes, sales taxes and fees for federal and state governments.
• Supported $33 billion in productivity improvements for U.S. businesses; during the next 10 years, these efficiency gains will grow to more than $1.4 trillion.
• Generated more than $164 billion in operator service revenues and spent approximately $26.8 billion in capital expenditures.

The wireless industry also has created an entirely new economy — the app market —that in four years has grown from zero to about $10.8 billion. Of that, $8.2 billion comes from end users, $500 million from carriers and $2 billion from mobile advertising. This new sector, which employs some 200,000 people, “came out of nowhere,” Entner said. “Smartphones made it happen.”

Billion-Dollar Stimulus Plan

Another U.S. economic contribution the wireless industry makes comes from “employee-liable” plans. These are discounts wireless companies extend to the employees and families of their corporate customers. About 75 million consumers were eligible for these plans in 2011, and 40 percent sought the discounts, which averaged 4 percent, explained Entner.

“That’s a $680 million annual stimulus plan that goes into the pockets of American consumers. Over the next 10 years, as these plans grow, this discount will grow to more than $1 billion a year,” he added. “If any other industry came up with a $1 billion stimulus plan, it would be discussed in the press.”

How do we continue to stoke this powerful economic engine? Make more spectrum available and limit regulation, said Entner: “The faster we can release the spectrum, the quicker we can stimulate the economy.”

However, “we also need policies to support the industry. Now that we are reaping the rewards of the wireless industry, we are starting to clamp down on the industry, which will choke this economic engine,” he warned. “Rather than adding barriers, we need to remove them. We need to make this a lightly, smartly regulated industry, and not a heavily regulated industry, where this growth sphere might die.”

(Editor’s note: For more details on the economic impact of spectrum and the need for regulatory reform, see Part 2 of this feature in the May 7 issue of CT Reports, coming to you live from the 2012 CTIA show in New Orleans.)

— Jennifer Whalen