|
"With other industries fighting for the finite raw material of
spectrum, the GPS industry must continue to generate and
update its economic valuation work or risk being marginalized
in policy debates." Bartlett Cleland |
As
reported by Inside GNSS: The nation’s leading GPS experts are struggling to quantify how the
world’s premier navigation and timing system affects the U.S. economy,
an effort critical to building a political firewall around GPS spectrum
in the face of ballooning demand for broadband capacity.
“It is an impossible question,” said James Schlesinger, chairman of
the National Space-Based Positioning, Navigation, and Timing (PNT)
Advisory Board. “It’s methodologically harder than evaluating the Gross
Domestic Product. What we are being asked to do is calculate something
that is incalculable.”
The research challenge was highlighted in
comments by Jules McNeff, vice-president at Overlook Systems Technologies, in the current issue of
Inside GNSS:
"In the case of GNSS services, these [benefits] are more difficult to
quantify because they are both direct and indirect, include second- and
third-order benefits, and are not simply revenue streams from direct
subscription services. They are spread across all economic sectors and
represent revenues from increased efficiencies in logistics and related
economies of operation, improved safety, reductions in personnel costs
and exposure to hazards, and others."
|
Alternative data from a similar market report. |
The PNT advisory board, which agreed to look at economic impacts last
year at the request of the National Executive Committee for Space-Based
PNT (ExCom), spent part of its December meeting weighing reports from
three researchers it had commissioned to find and assess data on GPS
benefits and spectrum valuation that others had already gathered. One of
the most recent studies discussed was Issue 3 of the
GNSS Market Report, a study released by the European GNSS Agency (GSA) a few months ago.
GSA found that the annual shipment of GNSS devices worldwide jumped
from 125 million in 2006 to roughly 850 million in 2012, said Nam Pham
of ADP Analytics. By 2022 that is expected to grow to 2.5 billion units a
year, bringing the total number of GNSS devices in circulation to
around 7 billion — enough for every person on the planet to have one.
The total global revenue for GNSS devices was forecast to grow to $143.9
billion by 2022 from $59.4 billion in 2012.
According to the GSA study, the GNSS market is dominated by
location-based services (LBS), said Pham, a category that includes
GNSS-enabled consumer products such as smart phones, tablets and digital
cameras. The GSA found that though such devices make up the vast
majority of the GNSS devices, they likely will be responsible for only
47 percent of the revenue from 2012 to 2022 — a scant lead over the 46.3
percent generated by rail and road applications. Surveying and mapping
is expected to produce 4.1 percent of revenue for the period followed by
agriculture and aviation/marine uses at 1.4 and 1.3 percent
respectively,
Of the global activity in 2012, North America generated more than 70
percent of the aviation revenue and nearly 60 percent of that from
agriculture. Thirty percent of LBS revenue was from North America, while
surveying and road applications came in at around 25 percent each, rail
at roughly 15 percent, and maritime applications at around 10 percent.
Direct revenue is only one of the economic factors for any given
industry, said Pham. Companies buy raw materials and hire workers who in
turn use their wages to buy homes and other goods. Pham estimated that
GNSS manufacturers contributed $32 billion in output and $6.8 billion in
earnings to the U.S. economy, generating more than 105,000 total jobs
in the process. He based his figures on the 2011 U.S. Census Bureau
Annual Survey of Manufacturers.
Work with the Data You Have, Not the Data You Want
The European study, however, appeared incomplete to at least one member of the board — an assessment with which Pham agreed.
“There is something missing there,” said board member James Geringer,
a former governor of Wyoming. “I think of all the other downstream
applications . . . any of the aerial imagery that uses GPS. It is a
meaningless service without the GPS or other coordinate references,”
Geringer said. The geospatial information system (GIS) firm ESRI, where
he serves as director of policy and public sector strategies does $1
billion in annual business by itself, he said, adding, “You’ve got a
great big hole in there somewhere, it seems to me.”
Geringer’s point illustrated the shortcomings in the available data
at the heart of a wide-ranging discussion within the board, which was
weighing how to approach the question and at what point it should
present numbers — even preliminary numbers — to the ExCom.
It is like trying to measure the value of energy, Schlesinger said.
Even so, the European study appears to be one of the best available
in that it is recent — it was released in October of this year — and
broad in scope.
Most of the economic studies on GPS tend to be very narrowly cast and
5 to 15 years old — so old they fail to capture the benefits of new
applications and rapid shifts in technology, said spectrum expert
Bartlett Cleland,
Cleland presented the result of a literature review on the market
research. Among those new applications, he said, are GPS-enabled
clothing, including shoes that help you find your destination, and
GPS-based sports analytics that teams can use to assess and improve
their play against a specific opponent.
Moore’s law that computing power doubles and costs are halved every
18 months is “roughly applicable” to the GPS industry, Cleland said, and
is a realistic guide for how often you need to do new studies on an
industry.
“About every 18 months you have to reshuffle the deck,” he said.
Getting Equipped for the Spectrum Gold Rush
The need for better data on PNT’s economic impact was made clear during
the fight over LightSquared’s proposal to repurpose spectrum near the
band used by GPS, thereby creating what tests eventually showed would be
debilitating interference to GPS receivers. The economic data presented
by the wireless broadband industry at the time seemed to give the
telecom companies the upper hand in the policy debate, said Geringer.
|
GPS signal strength is below the normal noise thresholds of
the spectrum. Additional 'noise' in the form of competing
communication signals make the GPS signal more difficult
'dig out' of the spectrum. |
Many studies support the argument that broadband needs more spectrum,
said Cleland. The number of studies is partly due to the industry being
well organized.
Interest in the subject is global, he said, and some broadband
companies have the cash to support economic-benefit research for their
industry. For example, he said, a report from the International
Telecommunications Union and the United Nation’s Educational, Scientific
and Cultural Organization details the global economic effects of
broadband with GDP numbers, penetration to growth rates, and analysis of
ancillary benefits such as eradication of poverty or increased
educational opportunities. Related reports are also available as well
from the Telecommunications Industry Association and even individual
companies such as CISCO.
|
LightSquared's potential interference ended up with the FCC
denying them a license, and a lawsuit against several of
the industry players from Harbinger Capital. |
“With other industries
fighting for the finite raw material of spectrum,” Cleland said, “the GPS industry must continue to generate and
update its economic valuation work or risk being marginalized in policy
debates.”
That fight is only going to become more intense as companies scramble
to capture consumers who want “everything, everywhere,” said John
Kneuer, a former National Telecommunications and Information
Administration chief and a spectrum policy expert. Wireless carriers are
trying to provide content inside the home, cable companies like Comcast
and DISH are devising ways to deliver content outside of the home, and
applications providers like Google and Amazon are maneuvering to become
content conduits.
The broadband industry is converging on a ‘singularity” where all the
companies are competing with each other to control the same customers —
and it all rides on the availability of spectrum, said Kneuer.
The Advisory Board will continue its work into next year, said the
board’s vice chairman, Brad Parkinson, while cautioning against the
expectation that they could come up with a single number that policy
makers could use for an ‘elevator speech.’
The sum of the economic effects of GNSS throughout the world “is
certainly many tens of billions of dollars per year, but the analysis to
date tends to be based on cost rather than value,” Parkinson said.
‘There is a good reason for that. It is really hard to come up with the
total value. Hence, we tend to undervalue the GPS contribution.”
Although Cleland said that he didn’t see why “GPS doesn’t sit right
alongside a lot of these technology issues in importance,” he said it
was unlikely that the pressure on GPS spectrum will ease.
“The broadband debate and the need for spectrum will never end,” said Cleland. “It will never end.”