A high-stakes auction of government-owned airwaves to mobile broadband providers, completed last month in Washington, is set to drop a record windfall exceeding $80 billion into the US Treasury. Two additional auctions of wireless frequency bands, called spectrum, are on tap for 2021 and slated to follow the same course.
The nation has become painfully aware of the digital divides that are widening inequality, slowing productivity, and impeding innovation. So, is dumping the proceeds from the privatization of the public airwaves into the federal Treasury, as is now routinely done, the best use of our nation’s precious resources?
The answer is decidedly no.
As the COVID-19 crisis has made clear, broadband access is no longer a luxury but, like electricity, a fundamental necessity for every person, young or old — for education, remote work, health care, public safety, banking, and virtually every other aspect of life. Yet our digital ecosystem suffers not just from a single divide but also from a triple digital rupture.
First is the well-known digital demographic divide. Tens of millions of America’s adults and students, most in rural and low-income communities, lack effective access to this most critically needed form of communication because high-capacity broadband service remains physically inaccessible or financially unaffordable for them.
Exacerbating this inequity is a network infrastructure vs. software divide. Our national approach has emphasized investments in the construction of faster and faster Internet connections. But investments in public-purpose applications have been downplayed or ignored. Hence, personal video games and digital entertainment are ubiquitous while innovative applications for telemedicine, education, government services, and other advanced uses lag badly behind.
Finally, underlying these inequities is a pervasive digital private vs. public divide. Because wireless connectivity is provided primarily through the sale of public airwaves to private companies, essentially privatizing the air, we end up, in economist John Kenneth Galbraith’s words, “privately rich but publicly poor.” Expensive smartphones and profitable applications proliferate while crucial public-purpose uses and needier users languish. And rather than dedicating the proceeds of public auctions to remedying this market failure, we dump them willy-nilly into the federal budget, where they are absorbed without a trace.
Instead, the nation should dedicate a sizable share of spectrum auction proceeds to closing these digital equity gaps and establishing a reliable vehicle to pursue this task.
A Digital Futures Foundation, endowed with a meaningful portion of spectrum auction revenue, could fund the development of innovative digital software, such as new low- or no-cost interactive learning tools. It could pioneer applications of emerging artificial intelligence and augmented reality technologies for health care, energy conservation, smart city services, and more. And it could foster robust public-service digital media applications and content.
Experience in this country and abroad suggests that an endowed, independent, private charitable foundation would best have the flexibility, research focus, long-term perspective, and ability to engage other partners that such a mission will require.
This experience emerges from the success around the world of a strategy known as philanthropication thru privatization. Germany successfully deployed this strategy in 1960, when it privatized its state-owned Volkswagen Company and deposited 60 percent of the proceeds in a new Volkswagen Foundation dedicated to overcoming the lag in German science suggested by Russia’s Sputnik launch.
This PtP strategy has led to the creation of 650 other private charitable foundations that make effective public-purpose uses of the proceeds from transactions involving other government-owned, -controlled, or -subsidized assets, including over 250 in the United States. This strategy also builds on the proposal for a Digital Divide Trust Fund, funded with spectrum auction revenue, in legislation advanced by a bipartisan group of US senators last year.
By designating a portion of the tens of billions of dollars of spectrum auction proceeds recently generated and expected over the coming years to endow a private Digital Futures Foundation, Congress can take a giant step toward bridging America’s triple digital divide and setting us on a more reliable, economically sensible, and just digital course.
Michael Calabrese directs the Wireless Future Project at New America. Lester Salamon directs the Johns Hopkins Center for Civil Society Studies.