Reps.: More Spectrum Needed to Keep Up with Booming App Economy

Hill Hearing witness: App Adoption Fastest in History, Outpacing TV, Radio, Computers, Electricity

In a House Commerce Manufacturing and Trade Committee hearing Wednesday on mobile and online apps, the focus was on jobs, but one of the messages from legislators was that more spectrum in needed for wireless.

The hearing came the same day that Apple was scheduled to introduce its latest iteration of the iPhone, which was instrumental in driving the creation of the app economy, which is now a $20 billion industry and is predicted to be a $100 billion industry within the next three years.

One of the issues teed up for the hearing was "are there policies the federal government should consider to foster further sector growth and job creation?" One of the answers for several committee members was "yes," and it was freeing up more spectrum.

"Wireless spectrum is critically important and we need to seek ways to free up additional spectrum," said Subcommittee chairman Mary Bono Mack in her opening statement. To launch all the mobile apps that drive job growth, said Rep. Marsha Blackburn (R-Tenn.), "we've got to have spectrum."

TechNet CEO Rey Ramsey, a witness at the hearing, echoed the need for spectrum, as well as adoption in rural areas. He said there have been almost 500,000 app-related jobs created in the past five years, while various legislators cited stats, many from TechNet, on the explosive growth of both jobs and economic activity.

Ramsey praised the FCC's upcoming incentive auctions as an innovative way to reclaim spectrum from broadcasters, whom he suggested were using spectrum inefficiently. Witness Morgan Reed of the Association for Competitive Technology put it bluntly. Of spectrum, he said: "I want it more and I want it now."

Ramsey said the policy focus in Washington should be on necessary infrastructure and access. Infrastructure is about capital, human and money. There is a human capital crunch that needs addressing via education and training, he told the legislators.

Another key issue was "are there Federal policies that present a roadblock to sector growth and job creation?" Rep. Fred Upton (R-Mich.), chair of the full House Energy and Commerce Committee, said that one roadblock is regulation that could stifle the growth and innovation of the apps economy.

And that growth is unprecedented, said witness Peter Farago, of app facilitator Flurry Inc. He said that app industry adoption has been faster than any industry in history, including radio, TV, phones, computers and even electricity.

Bono Mack demonstrated the pervasiveness of the app economy with a picture of her grandson, Sonny, and the story that when she was trying to calm him, she naturally went to the app store to download a baby-soothing app -- it didn't work, she added.

Bono Mack asked Farago whether the government should be concerned that the app explosion was like the tech bubble of the late 90s and whether there was danger of it bursting. He said no, arguing that it was a very different environment, with over 1 billion people online now versus about 30 million then, and that apps were mostly direct sales rather than an ad model of old where the idea was to collect eyeballs and hope ad revenue would follow. He said app developers made about $5 billion last year, 80% of that through direct sales, though he suggested advertising could take off down the road.

Rep. Bill Cassidy (R-La.) raised the issue of mobile app privacy and who owned the data. He used Bono Mack's baby picture as an example, asking whether she still owned that data, or whether it was the developer or the distributor (ISP).

ACT's Reed said his association was more focused on doing a better job of being more transparent about the process, including working with the White House and the National Telecommunications and Information Administration on their mobile app best practices framework.

He said the goal is to take a 50-page privacy policy and make it understandable and "absorbable" by the consumer.

Ramsey echoed the need for everyone to understand the business model and its reliance on data, and that they understand not only their rights, but their responsibilities given that they were leaving behind a digital footprint.

Cassidy countered that he seemed to be saying that developers owned the data. Ramsey said it was not a case of ownership, but where that data resided and what it was being used for.

Reed said they needed the government help in reforming outdated privacy protection laws being applied to the cloud, laws that discourage business.