Wednesday, March 26, 2008

The Great "White Spaces" Challenge

Google (and its technology partners) are facing the great "white spaces" challenge - the next big spectrum allocation battle - from the politically powerful NAB (National Association of Broadcasters) and others.

On the one hand we have the over-the-air TV broadcasters (who rarely offer much worth the bandwidth it takes to beam it into our living rooms) insisting that the spectrum will "suffer" from the use of unlicensed wi-fi like devices operating near THEIR frequencies.

On the other hand, we have pretty much the rest of the country clamoring - no, make that screaming - for the opportunity to deploy "innovative" wireless communications devices and services, "stimulate" our economy, and make "better use" of nearly the very SAME spectrum - all on an unlicensed basis with little if any regulatory enforcement of that use. (Which, IMHO, is a somewhat worrisome scenario to begin with considering the historical track record over the years of the FCC's ability to "protect" the natural resource we call the RF spectrum, AND, the purported "better use" and "innovation" that the "white spaces" proponents claim they'll make with the resource.)

This spectrum battle should prove VERY interesting to say the least. Let's hope the regulators make the right decision - whatever "right" is deemed to be these days.


Saturday, March 22, 2008

FCC staffer: This place is hell; silent protest planned

Interesting blog post about life at the Federal Communications Commission....


A Federal Communications Commission employee called me on Friday and said that this Tuesday, the third anniversary of Kevin Martin's tenure as Chair of the FCC, at least some staff will arrive at work dressed in black. A "silent but expressive protest" is what they're calling the move. What for? I asked. "Because this place is hell," came the reply.

A super-politicized environment

It appears that a critical mass of FCC grunts are sick of what they experience as a super-politicized work life in which just about anything that they want to do has to get the go-ahead from the top, that being Kevin Martin. "Nothing happens in the Commission without the approval of the Chairman's office," my source told me. "It is incredible. We have become so political."

Do you have any sense of the logic of these directives from the Chair? I asked. "Nope," came the reply. "It seems as random as he got up this morning and ate his breakfast and just decided to do it."

Why are FCC employees upset about this? Not because they disagree with Kevin Martin's perspective on this or that FCC issue, but because, according to my source, he and his top subordinates demand that staff skip proper procedures and leapfrog various rules, even Congressional mandated rules, on a day-to-day level.

"In the past I may or may not have agreed with the outcome, but at least the proper procedures were followed. Now they tell us 'what are the media reform groups going to do: file a class action lawsuit? Just do it.' But ethically I have to sleep at night. It's not the decision, it's how the decision is reached. The situation has become arbitrary and capricious."

So....what else is new? This just points out how more and more obvious it is that some changes are needed in the way top brass at the FCC conduct themselves when attending to spectrum matters and other regulatory business that impacts us all.


Wireless "Property" Rights - The Next Frontier of Spectrum Policy Reform

Phil Weiser and Dale N. Hatfield, frequent contributors of papers on wireless spectrum policy, have recently released a new article titled Spectrum Policy Reform and the Next Frontier of Property Rights.

Here is an abstract of their paper for your review and contemplation.

The scarcity of wireless spectrum reflects a costly failure of regulation. In practice, large swaths of spectrum are vastly underused or used for low value activities, but the regulatory system prevents innovative users from gaining access to such spectrum through marketplace transactions.

In calling for the propertyzing of swaths of spectrum as a replacement for the current command-and-control system, many scholars have wrongfully assumed the simplicity of how such a regime would work in practice. In short, many scholars suggest that spectrum property rights can easily borrow key principles from trespass law, reasoning that since property rights work well for land, they can work well for spectrum rights as well. But as we explain, spectrum is not the same as land, and a poorly designed property rights regime for spectrum might even be worse than the legacy model of spectrum regulation.

This Article addresses three central questions that confront the design and implementation of property rights in spectrum. First, it suggests how policymakers must develop a set of rights and remedies around spectrum property rights that reflect the fact that radio signals defy boundaries and can propagate in unpredictable ways. In particular, if policymakers simply created rights in spectrum and enforced them like rights in land (i.e., with injunctions for trespass), they would invite strategic behavior: spectrum speculators would buy licenses for the sole purpose of suing other licensees when their transmission systems created interference outside the permissible boundary (i.e., act as spectrum trolls).

Second, it rejects the suggestion that policymakers establish a unitary property right for spectrum, arguing that policymakers should zone the spectrum by establishing different levels of protection against interference (i.e., an ability to transmit signals with more latitude) in different frequency bands.

Finally, this Article discusses what institutional strategy will best facilitate the development of the property right and its enforcement, concluding that an administrative agency - be it a new one or a reformed FCC - is better positioned than a court to develop and enforce the rules governing the use of spectrum so as to facilitate technological progress and prevent parties with antiquated equipment from objecting to more efficient uses of spectrum. (End abstract)

There is absolutely no doubt that U.S. spectrum policy (and stronger enforcement of new or legacy regulations concerning use of this important resource) needs urgent reform. Hopefully, this paper will help shed some much needed light on the challenges involved as well as generate meaningful discussion on the subject.


Saturday, March 1, 2008

FCC Mulls Value vs Efficiency of Licensed vs Unlicensed Wireless Spectrum

After being silent on spectrum matters for almost 5 years, the FCC's OSP (Office of Strategic Planning and Policy Analysis) has issued 3 new working papers on potential spectrum management policy now being evaluated.

Working Paper #41, “Enhancing Spectrum’s Value Via Market-informed Congestion Etiquettes”

Working Paper #42, “Modeling the Efficiency of Spectrum Designated to License Use and Unlicensed Operations,” examine ways in which spectrum designated to licensed and unlicensed use can be more efficiently used.

Working Paper #43, “A Market-based Approach to Establishing Licensing Rules: Licensed Versus Unlicensed Use of Spectrum,” examines the feasibility of employing a market mechanism to determine whether spectrum should be designated to either licensed or unlicensed use.

According to the Commission's press release:

Working Paper #41, “Enhancing Spectrum’s Value Via Market-informed Congestion Etiquettes” and Working Paper #42, “Modeling the Efficiency of Spectrum Designated to License Use and Unlicensed Operations,” examine ways in which spectrum designated to licensed and unlicensed use can be more efficiently used.

Combining economic theory and experimental analysis, Working Paper #41 (and its more theoretical companion Working Paper #42) evaluates the ability of different wireless spectrum congestion etiquettes to promote the efficient use of wireless spectrum in the presence of licensed and unlicensed operations. Under the examined environment, theory predicts that society leaves half of the value it can receive from spectrum “on the table.”

One new approach utilizes various types of user information to address the inefficient use
problem. Assuming a close similarity between the naturally occurring environment and the experimental one, analysis reveals that the average efficiency of the existing etiquette employed in most unlicensed equipment is 42%. In comparison, experimental analysis reveals that the average efficiency of one market-informed etiquette - the Informed Greedy Algorithm - is 70%.

This and other results form the factual basis for generating an entirely new type of spectrum allocation wherein a given band of spectrum is treated as a common pool resource in the absence of excessive spectrum congestion, but is treated as an excludable private good in the presence of such congestion.

Working Paper #43, “A Market-based Approach to Establishing Licensing Rules: Licensed
Versus Unlicensed Use of Spectrum,” examines the feasibility of employing a market mechanism to determine whether spectrum should be designated to either licensed or unlicensed use.

Working Paper #43 addresses the issue of how best to identify the most desirable allocation rules for spectrum. This OSP paper focuses on issues associated with licensed use and unlicensed operations. Spectrum designated to unlicensed use is made freely available for uses that comply with appropriate technical standards. Spectrum allocated to licensed use is typically assigned to license owners through an auction. Moreover, winners of the auction are granted the right to exclude non-payers from using their spectrum. The allocation between licensed and unlicensed use, however, is based on the FCC’s judgment, which in turn relies on information provided by interested parties seeking to use the spectrum.

One method of reducing the incentive that parties have to exaggerate the value they place on a
given licensing regime involves creating a market for such rules. The study examines the feasibility of using a “clock auction” to determine, based on bids submitted by market participants for the corresponding licensing rules, the efficient allocation of a given amount of spectrum between licensed and unlicensed spectrum use. This study finds that market forces, in the form of a clock auction, can be used to determine the efficient assignment of license rules (i.e., those associated with licensed use and unlicensed operations) to spectrum.

If you are at all interested in or concerned about the FCC's future spectrum allocation and management agendas, these papers deserve your attention - and your input.
Catherine Bohigian is Chief of the Office of Strategic Planning and Policy Analysis. Elizabeth Andrion is Deputy Chief. The Commission's Chief Economist, Greg Crawford, also makes his home in OSP and he reports to the Chairman on economic issues. Ms. Bohigian, Ms. Andrion, and Dr. Crawford can be contacted by phone at (202) 418-2030.