The UK Labour party has floated the idea of using a projected £3.5 billion "windfall" from the auction of 800MHz and 2.6GHz spectrum to stimulate the housing and construction market.
I thought it might be interesting to consider some discussion on whether gross GDP (or "the economy") is likely to get a bigger boost from stimulating housing demand, or by allowing mobile operators free access to spectrum via a beauty contest to stimulate network rollouts. (Most beauty contest spectrum awards also impose strict coverage and capacity requirements on the operators to ensure good network rollouts.)
In other words, which will give a bigger lift to UK Plc (or Germany, France, Spain, Italy or anywhere else)? In one corner we have the concept of getting more first time buyers into the housing market, which in theory stimulates demand for new housing and drives employment in the construction (and supply) industries. If housing is too specific to the UK as a sector, we could widen this to general infrastructure spending. But we get the idea, we are talking about some demand-side stimulation of a certain sector.
In the other corner there's the idea of allowing operators free or cheap access to spectrum, theoretically giving them more working capital to invest in better and more speedily deployed networks which then allows a) the operators themselves to be more profitable and generate heftier tax returns, employ more people etc b) opportunities for new businesses and for existing businesses to operate more productively – all of which drives increased employment and tax receipts back to the treasury? You might also posit that post-industrial societies who talk a good digital game, and want to be seen as tech innovators, might be expected to foster the basic connectivity that underpins that.
I suspect this is a purely theoretical exercise. Few governments are going to resist the chance to get cash through the tills now, when the other option is to wait for undefined future tax receipts that will almost certainly not accrue whilst you are still in power.
But in markets where there have been beauty contests – Finland, say — has there been a measurable positive economic outcome as a result, versus stimulus in other sectors? I think the GSMA has some numbers where it equates % increases in mobile broadband coverage to increases in GDP. Although there's no reason to doubt their numbers they do have a stake in the game, so it might be interesting to see what other analysis has been done.
This is also not just a UK argument, it just happens to be current here because of the auction and the recent policy idea run up the flagpole by New Labour. There are plenty of markets where operators are crying out for measures to aid investment, and these are the root cause of the various Google tax type ideas we also see.
Should we be subsidising mobile for the greater good, or charging these for-profit corporations the maximum possible for access to the physical assets they depend on to run their businesses?
I would really welcome comments below or if you'd rather, please send me an email to keithd@mobileeurope.co.uk and I can collate responses into a follow-up post. I'm looking for opinion, informed or otherwise by anecdote or hard numbers, and any pointers to research in this area.
PS I'm sorry to be so hardly commercial in tone. I'm well aware there's a whole social discussion to be had as well around both housing and mobile, so if anyone can factor that in too, then please go for it.
PPS And I'm also sorry this is a bit of a binary debate. Mobile vs housing. Let's not forget that there are plenty more options such as C: take the money and use it to pay down debt (as Labour did with much of the 3G licence money), or D: take the money and invest it in something else entirely (schools, hospitals, wisteria maintenance for hard-up Prime Ministers etc).