How Textbook Economics Is Helping You Play Temple Run

By Matthew O'Brien

How Julius Genachowski is trying to save our smartphones

Love your smartphone but hate your network? I'm sorry, there wasn't supposed to be a question mark there.

Broadband policy doesn't get much attention when it comes to big policy fights inside the Beltway, and that's too bad. Would you believe it if I told you that broadband traffic is set to increase thirty times -- yes, thirty times -- in the next two years? Well, it is. Our smartphones and tablets are writing checks our broadband infrastructure can't afford.

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Balancing our broadband books, so to speak, is the question that Federal Communications Commission (FCC) chairman Julius Genachowski has been obsessed with the past four years. Speaking at the Washington Ideas Forum today, Genachowski emphasized the steps his agency will take in the next few years to make sure our infrastructure keeps pace with our innovation. It's a case of textbook economics -- making sure we allocate resources efficiently. Right now, we're not. The government has given too much broadband spectrum to too many older industries, like broadcast television.

How to fix this? Well, some textbook economics -- using prices to make sure the people who will get the most out of the broadband can get it. That's what the FCC is doing, with what it calls "incentive auctions." They've only run a test program in New York so far -- it will come to the rest of the country in 2014 -- but the idea is to auction off little-used broadband spectrum like we do broadcast television, and give the broadcasters a portion of the money.

Broadband auctions certainly aren't sexy, but it's the kind of smart policy we need to set the stage for the startups of the app age. It's just another way Econ 101 is helping us play Temple Run.



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http://www.theatlantic.com/business/archive/2012/11/how-textbook-economics-is-helping-you-play-temple-run/265248/