KERRIGAN: Apps for an edge

Smartphones to push the pace

R ecently, a national business journal asked small-business owners to identify their “most valuable business tool.” Nearly three-quarters chose the Internet; up nine points in just one year. Technology and the Internet have become integral to small-business operations, as online tools foster greater productivity, reduce costs, and expand revenue-generating opportunities. In particular, applications for use on smartphones and mobile devices are having a significant impact on small-business productivity and growth.

A research report called Saving Time and Money Through Mobile Apps conducted by my organization, found that small-business owners who use mobile apps estimate they personally save an average of 5.6 hours weekly. Seventy five percent of small businesses using mobile apps report employee time savings as well - an average of 11.33 hours on a weekly basis. The report conservatively estimates that small businesses are saving almost 1.1 billion hours annually just by using mobile apps. The report also estimates that greater mobile-app adoption by small businesses could lead to an additional 3.54 billion hours in time saved on an annual basis.

This means entrepreneurs can spend more time on higher-value activities - like increasing revenue and innovation - rather than in the minutia of administrative tasks or other time-sapping activities. Our study found that nearly 50 percent of small businesses that use mobile apps have been able to spend more time raising business revenue; 51 percent say their firms are more competitive; 36 percent reduced overhead costs; and 10 percent were even able to add employees because of mobile-app usage. Every job counts in this fragile economic recovery.

The results of this report, including the findings that smartphone and mobile device use will continue to increase, should push policymakers to focus on spurring better, faster wireless communication. But how? Through federal funding for deployment? The nation’s ballooning deficits won’t allow that to happen, nor is this a smart option. The key is to foster a policy environment that maximizes and promotes private-sector investment. Here are a couple of steps the government can take to spur greater investment, and in turn help build out the infrastructure needed to increase network capacity and improve wireless service:

Get serious about the wireless spectrum crunch.

Last November, the Federal Communications Commission (FCC) warned that our wireless capacity was not keeping pace with Americans’ surging demand for mobile data. FCC Chairman Julius Genachowski warned that without action, the problem would “stifle American innovation and economic growth.” He’s right. According to data from Nielsen Mobile, from March to May of this year, 55 percent of new cellphones purchased were smartphones. Cisco’s 2011 Visual Networking Index, found that global mobile data traffic grew 2.6-fold in 2010, nearly tripling for the third year in a row. Furthermore, the Index projects that global mobile data traffic will increase 26-fold between 2010 and 2015. Two-thirds of the world’s mobile data traffic will be video by 2015, while mobile-connected tablets will generate as much traffic in 2015 as the entire global mobile network in 2010. Because of this explosive demand, the FCC should move faster in two areas. It should make more spectrum available for wireless use so providers are not facing a capacity crunch (and they can do this through open auctions, which will help generate revenue to put toward the deficit), and it can facilitate policies that support industry efforts to meet this demand.

What about the AT&T-T-Mobile merger?

As the saying goes, “First, do no harm.” It is widely acknowledged that T-Mobile is the “sick man” of the wireless industry. Last year, it was the only major carrier to lose subscribers and its German parent, Deutsche Telekom, refuses to deploy high-speed service in the United States. Against this backdrop, AT&T’s purchase is the only realistic way for regulators to jump-start 4G deployment nationally. As an added benefit, the company has pledged an additional $8 billion in capital expenditures, which should help maintain jobs in the telecommunications sector.

Some consumer groups are naturally up in arms, but it seems that most other key constituencies - from farmers to Silicon Valley innovators to venture capitalists to small-business owners - are supportive. In a letter to the FCC and U.S. Department of Justice noting the benefits of the merger, 76 U.S. House Democrats highlighted the need for ubiquitous, wireless broadband across the nation, particularly in rural and underserved areas of the country. Such wireless broadband infrastructure “will provide a robust platform for the development of new technologies, applications, products and services by America’s most innovative companies,” they wrote. Indeed, the U.S. created and remains the leader in mobile applications. We must maintain that edge.

Wireless communication is a stunning American success story. During the past decade, even as the industry consolidated (remember Nextel? Alltel?), average prices declined by 50 percent. Meanwhile, the average smartphone retail price after contract discount is at an all-time low.

Regulators and Congress can spur wireless growth through smart policy, but mostly by staying out of the way. They should avoid the temptation to dictate business models to this rapidly changing industry, which is thriving on private investment. Now is not the time to stunt such needed activity.

Karen Kerrigan is president of the Small Business & Entrepreneurship Council.

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