One question with many answers
Spectrum may be a finite resource, but it is a scarce commodity today only because of outdated Federal Communications Commission policies, some of which were created more than a half-century ago. That’s the consensus of an expert panel being convened for a moot court on spectrum policy reform to be held March 25 during IWCE 2004 in Las Vegas. Still open for considerable debate is what to do about it.
Panelists scheduled to participate in the moot court are Michael Calabrese, vice president of New America Foundation; Thomas Hazlett, senior fellow with the Manhattan Institute for Policy Research; Dr. Gerald Faulhaber, professor of public policy and management at the University of Pennsylvania’s Wharton School; and Peter Pitsch, director of communications policy for Intel Corp. Dale Hatfield, adjunct professor in the interdisciplinary telecommunications program at the University of Colorado and the former chief of the FCC’s office of engineering and technology, will moderate. (Hatfield authored the October 2002 report commissioned by the FCC that identified the operational and technical issues slowing enhanced wireless 911 deployments nationwide.)
Pitsch estimated about 80% of the most valuable spectrum — from 300 to 3000 MHz — falls under the FCC’s command-and-control policy regime, which allocates spectrum according to what the commission believes is in the public interest. Each moot-court panelist agrees the command-and-control model is outmoded and grossly inefficient. “Assigning the airwaves by service has stifled competition, restricted citizen access to the airwaves and retarded innovation,” Calabrese said.
While the FCC seemingly has acknowledged the point by periodically endorsing a liberalization of its policies, its rules still reflect an iron-fisted approach, according to Hazlett. “The economists believe that the more you can relax the central planners’ control and the more you can assign the control of the airwaves to private competitors in the marketplace, the better off you are. That’s something the FCC mostly disagrees with in its practice,” he said.
Hazlett reminded that the FCC in 1999 identified 189 MHz of spectrum for “liberal” use; by the time the commission issued its spectrum policy task force report — which called for 100 MHz to be set aside for such use — three years later, “not a single megahertz” had been allocated, he said.
“In fact they didn’t even mention a previous plan had been put out, and then they cut the plan in half,” Hazlett said. “They want to appear progressive, but they don’t want to cede control. They always want to move incrementally, and incumbent and public-interest advocates are always telling them there’s a reason to move slow.”
Some panelists want the FCC to adopt an economist-centric “property rights” approach — also known as “licensed flexible” — that would allow holders to lease or sell underutilized spectrum. Meanwhile, others urge the commission to open more spectrum to unlicensed shared use — the so-called “commons” approach supported by engineers — and rely on technology to solve interference problems.
“Food and housing are more important than spectrum, and the market provides those. I don’t want the government providing food — if it did, we’d have to eat multi-fiber bran all the time,” Faulhaber said in support of the property-rights approach. “If someone needs a swath [of spectrum], you do a deal. Spectrum would move to its most highly valued use. Exclusivity is the key to solving interference problems.”
Not only would the property-rights approach create incentive for rights holders to lease or sell spectrum to those who value it more, it also would motivate current rights holders to use their spectrum more efficiently, in order to create additional capacity that could be leased or sold off later, according to Hatfield. “It’s like if I came to your house and said I would like to live in one of your rooms. You wouldn’t be apt to do it. But if you were to receive some money, you might consider it,” he said.
Hatfield pokes holes in the theory that public-safety organizations would suffer if the command-and-control regime succumbed to a property-rights model. “Why should we give free spectrum to the police department [when we don’t] give free gasoline?” he said. “The police department doesn’t own its own telephone company. Why shouldn’t it buy its mobile radio services from a commercial operator?”
But technology advances already have made the property-rights approach obsolete, according to Calabrese. Smart radios have the ability to sense which frequencies within a band are being utilized and jump to those that aren’t being used, a concept Calabrese calls “opportunistic sharing.” (The FCC opened a Notice of Inquiry in December 2003 to study smart radio technology.) In addition, ultra-wideband radios operate using very low power over a very wide spectrum band, enabling users to avoid interfering with license holders. “We need to gradually open more spectrum to unlicensed sharing, so we can encourage these technologies to take off,” Calabrese said.
Hatfield acknowledged the need to place some spectrum in the commons category. “We don’t let land go strictly to the marketplace,” he said. “We hold some in commons for things like highways. If all of the land was in private hands, we wouldn’t be able to drive our cars from one point to another. We need common streets.”
He also recognized the “tremendous growth” of unlicensed services such as Wi-Fi but cautioned that Citizen’s Band radio began as an unlicensed service and problems quickly followed. “You have to have rules. CB radio was a commons and worked fine in the beginning. You didn’t even need a license — all you had to do was go to the store and get a radio,” Hatfield said. “But then people started acting crazy.”
Specifically, users started to boost power, according to Faulhaber. He said CB users would start out with a 12-watt transmitter — within the rules — but then would boost it to 100 watts, which created so much interference that television sets were affected. “If everybody played nice and if everybody’s hardware was just the right thing, everything would be fine. But that’s not the way real people work,” Faulhaber said.
Even the ubiquitous cordless phone, which operates at 5 watts — well below the interference threshold — has had its share of similar problems. “Some guy in Taiwan started marketing a 300-watt phone that he said could be used 50 miles away,” Faulhaber said. “It could, but it also interfered with airport radar systems.”
Pitsch believes it’s too early, and perhaps unnecessary, to choose one regulatory approach over the other. Instead, he suggested that government policymakers make additional allocations to both unlicensed and licensed flexible, because not enough is known about either approach at this point to determine which is optimal, and both present different political hurdles that must be overcome.
“So the smart and prudent thing to do is move from category one to categories two and three,” he said. “Let’s not put all our reform eggs in one basket.”
Editor’s Note: Next month, writer Doug Mohney will examine the issues surrounding the UHF band, the largest and arguably most valuable band under the FCC’s command-and-control regime.