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How to Solve the Wireless Spectrum Puzzle

November 22, 2011 - 1 Comment

By Howard Baldwin, Contributing Columnist

An interesting battle over unlicensed wireless communication spectrum has been brewing in the U.S. over the last few weeks, one that pits advocates of open public access against advocates of licensing and private control.

Here are the highlights of the ongoing debate. In September, the FCC approved a spectrum test that could ultimately promulgate access using the white space between television channels. This method, known as “super Wi-Fi,” is said to allow the signal to travel further and still accommodate structural barriers. The test ran in Lake Mary, Fla., and concluded early in November. However, the FCC has not yet released results.

Then, in October, two Stanford economics professors and an independent economist at CompassLexecon released a Google-commissioned report arguing for unlicensed spectrum use. In that report, the authors argued that unlicensed spectrum carries “huge economic value” because of benefits from “innovations that cannot yet be foreseen.” They describe unlicensed spectrum as an “enabling resource [that] provides a platform for innovation” because entrepreneurs no longer have to deal with private license holders, reducing the costs of deployment.

Interestingly, this is not a call for the government to start giving away something that it has previously licensed. Clearly, we already use unlicensed spectrum extensively. Wi-Fi uses unlicensed spectrum; that’s one of the reasons it’s become so popular. In rural areas, a subject we discussed recently, unlicensed spectrum is used for broadband access, according to the Wireless Internet Service Providers Association (WISPA).

The Challenges of Assigned Spectrum Optimization

The demand for action has already escalated. Congressional Republicans released a spectrum reform bill in July to take control of unlicensed spectrum under the guise of increasing revenue from spectrum auctions, as well as improving public safety through an interoperable broadband network. Deep within the bill, however, in section 104, is the provision of auctioning off previously unlicensed spectrum.

Others are arguing that because consumer electronics companies are manufacturing devices that take advantage of unlicensed spectrum, they must pay something to use it. Should the manufacturer of any WiFi-enabled device – say, a consumer printer or a medical device – have to license spectrum? That approach could stifle innovation, not inspire it.

As Harold Feld of the advocacy group Public Knowledge wrote last summer, about the debate over licensed and unlicensed spectrum:

“Each is a different type of economic good. Licensing encourages the development of large, centrally controlled networks that permit the licensee to recoup the investment in the license. To further encourage licensees, they receive interference protection and the use of higher power. Because these licensees hold a scarce resource, they can invest huge sums in networks and expect return on development.”

In other words, both approaches offer socioeconomic value. Arguably, auctions of licensed spectrum initially result in a revenue windfall, and allow the government to control a resource within which chaos is indeed possible.

But on the other hand, unlicensed spectrum triggers capabilities, access, and productivity in unforeseen, but no less crucial areas, bringing similar economic value — though perhaps over a longer period of time. Theoretically, choosing a middle ground and preserving both models would ensure a wider variety of economic benefits.

But could the current budget crisis force a one-sided resolution to this puzzling issue? In these tough economic times, is a government obligated to quickly auction a valuable public asset (radio spectrum) to the highest bidder? What is your opinion?

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  1. Entropy Economics published an insightful white paper, they said "Wireless capacity, coverage, and flexibility is the chief bottleneck that must be addressed –- and is today’s chief public policy concern" The document is available online