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Wi-Fi? Wi-Not?

Thursday, February 18th, 2010

In the past several weeks, there have been several news articles and blog posts about the possibility of Wi-Fi being a solution to congested mobile networks.  There was a piece in Total Telecom, one by Maggie Reardon, and one by Stephen Rayment for the FT.

The argument is that the widespread adoption of smart phones and mobile Internet has congested mobile wireless networks to the breaking point.  In order to alleviate congestion on their 3G or 4G network, carriers could offload traffic onto Wi-Fi networks (including those of other operators).  This would free up the carriers’ limited spectrum resources which they obtained at auction through the licensing process.  And, it could be done more cheaply than upgrading existing cell sites. (Dana Blankenhorn at ZDNet correctly points out the inconsistency of giving more spectrum to wireless carriers if unlicensed operation is the solution. It was not so long ago that wireless carriers were crying foul that all Wi-Fi networks such as the now defunct Cometa presented unfair competition because they had not spent billions to acquire their licenses at auction.)

Insight:  Integrating mobile networks with Wi-Fi is a good idea.  It is, however, not a new one.  At a conference nearly eight years ago at Columbia University and in the ensuing paper, I suggested that wireless carriers consider incorporating Wi-Fi into their networks.  My reasoning was not so much about load balancing as it was about market segmentation.  Complementing existing 3G networks with Wi-Fi would enable carriers to offer tiered services – a best efforts service and a better than best efforts service – charging different prices for both and increasing profitability.  I also suggested it would be possible to use spectrum not licensed to the carrier such as the spectrum which has been allocated to CB Radio,  GMRS, or FRS.  A 2003 FCC rule change would allow handsets cable of operating both on mobile networks and in these bands. In this way, carriers could offer services like push-to-talk or walkie-talkies without encumbering their already burdened spectrum and networks. Users would be able to speak directly to others in their area, even users on other carriers’ networks.  Alas, there was not much economic incentive for carriers to sell such handsets because it would reduce the mobile termination revenues which carriers charge one another (and eventually their subscribers) for completing calls over their networks.  However, with the balance of market power tipping away from networks and in favor of handset providers recently, it might be possible that we would see such enabled handsets in the next few years.

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Posted in Broadband, Cool Stuff, Wireless Communications | 2 Comments »

Network Neutrality and the Samurai

Sunday, January 10th, 2010

The ITU Association of Japan just published my September keynote on Network Neutrality in the Highlights section of its January 2010 ITU AJ Journal.  The article is password protected, but if you are a member of the Association, you can get it from the website. (The article is in Japanese).

One of the points I made in the keynote (which is not in the brief article), was an analogy of Network Neutrality issues to Edō Period Japan.  The sankin kōtai laws of the Tokugawa Shogunate imposed a rule of prioritization on the Tokaido and Nakaseido roads between Edō (now, Tokyo) and Kyoto, as well as on other “kaido” emanating from the capital.  Access to Japanese roads was prioritized by social status, with only the Samurai class having access to the center of the road as their procession called a daimyo gyoretsu passed.  Lower classes were required to clear the road kneel down and bow as the Samurai passed.  Punishment for failing to clear the road was possible decapitation.

The concept of prioritization is not new, but it is universal.  It expresses fundamental and competing notions of fairness versus economic efficiency.  We think it is unfair to give preferential treatment to certain customers (those who are willing to pay more or have higher social status).  At the same time, we also think it is economically inefficient to mandate a single (or limited set of) Internet access options for everyone, including those who are willing to pay more for premium services.  When the network (or Tokkaido Road) is congested, prioritization can make users better off.  Prioritization can be accomplished based on economic characteristics, arrival order, processing load, urgency, or even social status.

Insight: Since all messages on an IP-based network travel at the same speed (the speed of light), in discussions of Network Neutrality, it is never who gets to go faster, rather which packet, or which samurai, gets to go first.  Such prioritization must be done in a way which is socially permissible and economically desirable.  Given that the penalty for breaching a classes of service restrains in Edo Japan was capital, I think I would rather get a reset packet.

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Next Generation Spectrum Regulation

Wednesday, December 9th, 2009
Spectrum band plan created by price-guided mechanisms

Spectrum band plan created by price-guided mechanisms

Winston Churchill famously said, “democracy is the worst form of government except all the others that have been tried.”  Perhaps the same can be said of spectrum auctions.  Auction mechanisms have been used starting in New Zealand in 1994 to award spectrum licenses to those who have the highest monetary value. Spectrum auctions have generally been highly effective, with the occasional failure.

Despite their success, auctions have some notable drawbacks such as the so-called winners curse and the fact the up-front license fees require spectrum users to raise capital beyond the princely sums necessary to build a wireless network – a barrier to entry.  However, auctions are far better than the administrative processes which have been used for nearly a century to determine spectrum assignments.  Administrative decisions tend not to be economically efficient because the regulator has limited access to information which market participants would be more able to amass and utilize. There are also problems of political independence and of regulatory capture.

While auctions have been used to determine who gets spectrum rights, they have not really been used to determine the contours of those rights.  These contours are still determined through administrative decisions.

I have just completed a major study on next generation spectrum regulation which can serve as the basis for removing certain barriers to spectrum access, allowing more effective sharing and efficient allocations.

I can think of no reason why a properly designed auction could not determine not only who gets the spectrum rights, but what those rights are.  (Think of it this way: an auction on eBay for a car could determine not just who gets the car, but the color of the car and whether it comes with, say, leather seats or alloy wheels.)  I built a mathematical model of a next-generation spectrum auction using the Shannon-Hartley Theorem as a means modeling behavior by valuing the spectrum when considering the actions of other would-be users.  In my model bidders could express their demands for not just bandwidth, but power, modulation, underlay/interference, and other characteristics.  When I ran an MS Excel-based version of the model, the result was a mix of high and low power uses in the winning bids.  The low power bidders (similar to UWB spectral densities) could in a second round be aggregated into some form of licensed commons with the coordination protocol determined in that part of the auction.  The outcome would resemble a shared use or common arrangement where no one party controlled the spectrum.  However, the most interesting thing was that because bidders could obtain spectrum allocations that more closely fit their needs, more than 40% of the spectrum bandwidth available in the auction was left unsold.  This spectrum was valued by the market to be best allocated to either public sector use or even low- to mid-power unlicensed use.

Insight:  You cannot see, touch, taste, smell, or hear radio spectrum.  Spectrum is not a thing; it is an idea – a legal and engineering construct that explains a physical phenomenon and helps us arrange our behavior accordingly.  That fundamental physical phenomenon is the fact that when electromagnetic waves are: (1) harmonic in frequency; (2) incident in time; and (3) alight on the same reception device, the ability of those waves to be used as information carriers is degraded.  This deleterious effect is known to us as interference.  Without some form of intervention, it is impossible to exclude or limit the use of a common resource such as spectrum. Without exclusion, users consume the spectrum without regard to fact that their usage causes the deleterious effect of interference for other would-be users.  Policies which help to mitigate inference with the least amount of effort will be the most socially beneficial.

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Posted in Broadband, Cool Stuff, Wireless Communications | 2 Comments »

Japan Communications’ New Business Model

Wednesday, October 28th, 2009

On my October business trip to Tokyo, I took time to meet with Japan Communications‘ CEO Frank Sanda.  I know Frank from my work on the Eamon Ryan’s Advisory Forum on Broadband.  I wanted to see Frank and his team because they just launched a new product for Hewlett-Packard.  HP will now sell netbooks in Japan which come with 100 minutes of mobile wireless connectivity. Consumers can buy connectivity on a pay-as-you-go basis from Japan Communications, but branded as an HP service.

Japan Communications built a really cool billing system to handle payment and authentication.  But, Japan Communications does not have a wireless network.  That it gets from the leading carrier NTT DoCoMo. Japan Communications leases capacity on DoCoMo’s network nationwide, and has the ability to purchase more capacity as this business grows. HP gets to determine which devices are sold and can sell the connectivity as its own.  Furthermore, Japan Communications could set up such a system to sell anyone else’s networked devices.  Say, how about a Carterfone?

While Japan Communications negotiated with DoCoMo to get on its network, it was able to do so because the Japanese Ministry for Communications and Information created which rules opened the networks of three largest wireless operators DoCoMo, KDDI, and SoftBank to wholesale. There was apparently a three-year battle at the Ministry in which Japan Communications was at the center. Japan’s policy to require wholesale access to wireless networks goes further than the US FCC’s rules for its 700 MHz auction which mandated these open these networks to foreign devices and handsets.

Insight: This seems like a really cool business model with implications for carriers, devices manufacturers, and application service providers around the world. I have said in a previous Cool Stuff, it is not a questions of whether wireless networks should be open or closed. Rather, there is some optimal level of openness which will maximize the carrier’s return.  A privately determined level of openness will no doubt diverge from a level of openness which represents a public optimal. However, this begs the question whether opening networks to wholesale in this way is good policy and whether the Europe and the US should follow suit.  The answer is far more complex than can be addressed in a humble blog entry.  Nonetheless, I am curious see how this market will develop.

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Posted in Broadband, Cool Stuff, Network Neutrality, Optimal Regulation, Wireless Communications | No Comments »

International Perspective – Allocating Blue and Amber Light Spectrum

Wednesday, June 17th, 2009

Westminster eForum Keynote Seminar: Emergency Services & Public Safety Spectrum
11 June 2009
Remarks as edited.

Introduction

Good morning. I would like to begin by thanking David Happy and the Tetra Association for inviting me here to speak to you.  I would also like to thank Thomas Raynsford for doing everything in his power to get me here today.  I would like to not thank the London Underground for doing everything in its power to not get me here today.

My name is Kenneth Carter.  I am an American who works for WIK-Consult in Bonn, Germany.  Our firm advises both public- and private-sector clients on issues related to network economics, strategy and policy. Previously, I was Senior Counsel in the Office of Strategic Planning at the US Federal Communications Commission and the Deputy Director of the Columbia Institute for Tele-Information at Columbia University.  I hold both juris doctorate and a master’s of business administration degrees.

It is a great pleasure for me to be here in London today to talk about amber light and blue light spectrum.  To be absolutely honest this is my second choice.  I wanted to go to Amsterdam to talk about “red light” spectrum.  I can assure you they would be talking about a different type of “siren call” at the other event.

I am here to talk to you about the US experience in trying to create a dedicated band for public safety networks and its attempt to auction that spectrum to the highest bidder.

Background

In 2007, the US Federal Communications Commission commenced proceedings to create an auction for the spectrum in the 700 MHz band for use in a nation-wide network public safety.  This part of the auction was called the D Block.  The spectrum was being released as part of the US transition to digital terrestrial television.  The FCC paired a single 10 MHz wide license with an adjacent 12 MHz wide public safety block in the band.  The auction rules specified a $1.3 billion reserve price for the auction based on 110% of the estimated cost of relocating incumbent federal users of the spectrum in order to clear the band.  The commercial winner of the license at auction would be required to negotiate with a Public Safety Spectrum Trust organization to build such a network in a private-public partnership. The commercial licensee would be permitted to use the 12 MHz of public safety spectrum on a preemptable basis.  The license came with a build out requirement to provide coverage of 75%, 95%, and 99.3% of the population in four, seven and ten years respectively.

Two prime potential candidates for this license emerged.  One was named Cyren Call, the other Frontline Wireless.  Shortly before the auction, Frontline lost the backing of its investors and was forced to withdraw. The auction proceeded and a single bid of $472 million was placed by Qualcomm.  This bid was only 35% of the $1.3 billion reserve price set by the FCC.  The auction concluded without a license being assigned.

The auction was immediately decried as a failure by the industry and the blogisphere.

Analysis

Well, what went wrong?  We don’t know for sure, since we cannot really ask Frontline’s investors.  However, at least four reasons have been put forth.

1.  Writing on the blog Wetmachine, Harold Feld lays out the case that the head of Cyren Call Morgan O’Brien may have tried to scuttle the plans with Frontline’s investors.  Cyren Call had become an advisor to the Public Safety Spectrum Trust.  This presented a certain conflict of interest.  Mr. O’Brien is alleged to have informed Frontline’s investors that the Public Safety Spectrum Trust would charge the commercial licensee $500 million in spectrum usage fees for the preemptable spectrum, over the course of the license.  These fees would be over and above what Frontline would have to pay in terms of spectrum license fees and the costs of constructing and maintaining the network.

2.  Under the FCC’s rules, there was a certain amount of ambiguity regarding the rights and responsibilities of commercial licensee vis-à-vis the Public Safety Spectrum Trust.  In the event of a disagreement in negotiations between the commercial licensee and the Public Safety Spectrum Trust, the FCC had the power to intervene and determine the outcome of that disagreement.  In the wake of the September 11th Terrorist Attacks, no public official, either elected or appointed, can be painted to look weak on public safety. So, if the Public Safety Spectrum Trust were to request something which is perhaps unnecessary and unprofitable, but not irrational, it is likely that Commission officials would side with the Trust and against the commercial licensee.

3.  This problem may have been compounded by issues of personality.  FCC Chairman Kevin Martin’s pick to lead the newly formed Public Safety Homeland Security Bureau was Derek Poarch.  Chief Poarch was previously head of the police department of the University of North Carolina, Chairman Martin’s undergraduate alma mater.  Given, that Chief Poarch had no track record in Washington spectrum policy matters, Frontline’s investors had no means to anticipate whether he would handle matters equitably in regard to the negotiations with the Public Safety Spectrum Trust.

4.  Finally, the commercial licensee could potentially be exposed to unlimited liability for tort claims arising from the operation of its network.  During the September 11th Terrorist Attacks, the New York City firefighters inside the Twin Towers perished because they did not receive the evacuation order due to the fact that their radio equipment did not function properly inside the high-rise buildings.  Many police officers heard the call over their radio system and evacuated safely.  The prospect of that type of law suit and the associated liability is something that most investors would reasonably shy away from. This is especially true when coupled with the fact that there is some chance that the preemptable spectrum would not “fail safe”, allowing commercial uses to interfere with public safety uses.

In the D-Block auction, it is not necessarily the market which failed.  Rather the outcome was determined by the decisions of a few handfuls of investors in a single firm. Or maybe even the actions of a single individual.  In sum, there was probably too much uncertainty and too many restrictions for Frontline to conclude it could earn a positive return on its investment in order to bid for this spectrum.

The result is that today, June 11th,  is the last full day of analog terrestrial broadcasting in the United States and tomorrow, when the US switches to DTV and the analog frequencies become available, Americans will still be waiting for their national public safety network.

Conclusion

So, what are the lessons for the United Kingdom?  If a nation is to pursue market-based or price-informed spectrum policy for public safety, it must do so extremely judiciously.  It must be aware of how all incentives and uncertainty might affect or distort the outcome.

Generally, I am a proponent of price-guided spectrum policy.  Market forces are generally highly effective at allocating rights to their highest monetary value recipients. They can rationalize administrative determinations of who, what, and how much.  However, they do not work particularly well for public safety concerns.

In fact, markets run the risk of creating perverse incentives for public safety.  This is because, unlike other economic goods, there are no good substitutes for the inputs or outputs.  An actuarial can calculate a value of a lost life.  But, if it is your life, the value is infinite, perhaps a little more for your children.  Similarly, public safety can have no substitute for its radio communications.  You can really long telephone cord on the back of each fire truck, ambulance, and police car?!

Since we cannot leave it to the market to decide how much of the good ” public safety” to produce, we must address as a policy matter the trade-off between the possibility of administratively allocating a block of spectrum which is in some way too much or too little.  The cost of getting a determination which is “suboptimal” may pale in the face of the possibility of a failed allocation.  Thus, it may instead be more efficient to make an administrative determination about the spectrum assignment award it to a government entity which will take responsibility for construction and operation of the network.  Now, some part of that might be outsourced, but still the Government maintains the responsibility.

In the UK, you will soon have to make an allocation for the next generation public safety networks – the “son of Tetra”.  Ofcom will have to comment the production of a business case for that allocation.  Perhaps it is preferable not to let the perfect be the enemy of the good and may an acceptable, albeit suboptimal allocation.

A year ago, I coauthored a White Paper for Motorola and EADS urging the allocation of two additional 15 MHz wide blocks from the Digital Dividend to a pan-European, dedicated band for mission critical broadband networks for public safety.  This is inline with the US allocation from its Digital Dividend; however, the US already has 97.2 MHz nation-wide for public safety.  Europe, by comparison, has only 10 MHz.

It would seem to me that commonsense alone tells you that additional spectrum is needed since the principal duty of the State is the protection of its citizens, and for the UK to be at the very forefront of developments.

I thank you for your time and attention, and look forward to your questions.

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Posted in Broadband, DTV Transition, Wireless Communications | 1 Comment »

Network Neutrality in Europe and the Ski Lift Line

Tuesday, January 27th, 2009
Source: WIK-Consult, photo courtesy of alexindigo, Flickr.com

Source: WIK-Consult, photo courtesy of alexindigo, Flickr.com

My study for the BNetzA (German telecoms regulator) on Network Neutrality in Europe has finally published.  (Don’t worry, it’s available in English).  In this study, we look at Network Neutrality – the catch-all phrase that emerged in the United States over the past decade to reflect a number of potential behaviors that some consider to be anticompetitive – and what the implications for European regulators might be.

The report reviews the economics that underlies the Network Neutrality debate, including price discrimination, network externalities, transaction costs, switching costs, two-sided markets, and the economics of vertical foreclosure. It also briefly reviews the technical aspects of quality differentiation for IP traffic (including packet delay, jitter and loss). It provides background on a number of alleged deviations in the U.S. (including Madison River and Comcast), and assesses the Network Neutrality concerns that have been raised in Europe (for example, by the BBC’s iPlayer). In the end, we conclude that Network Neutrality manifests itself very differently, and much less problematically, in Europe than it does in the United States.  The report also considers the ways in which the changes proposed to the European regulatory framework as part of the ongoing “2006 review” might strengthen the hand of European regulators, and at what cost.

Insight: Putting aside the regulatory analysis, I think that the two most important and far-reaching aspects of our analysis are the taxonomy of network relationships we created and the way we describe end-to-end latency in IP networks.  In order to describe the nature of relationships in an interconnected-multilateral-all-IP network world, we characterize relationships among network participants and service providers as being one three dimensions: vertical, horizontal, or diagonal. (See Section 2.3 in the report).  I am also very pleased with how we use ski lifts to explain of queuing and link delays in end-to-end latency. (See Figure 1 in the report).  It is my hope that these two approaches will make the debate more objective and approachable, and help to reduce the ever-present hyperbole.

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Network Neutrality is Dead. Long live Network Neutrality.

Tuesday, December 30th, 2008

In the past few weeks the Wall Street Journal has posted two opinion pieces online (here and here) basically claiming that Net Neutrality was dead. The blogs exploded, claiming that reports of Net Neutrality’s demise were greatly exaggerated: David Isenberg, Tim Karr, Harold Feld, Gigi Sohn, Google’s Rick Whitt, DSL Reports, and Rob Frieden to name a few. These really smart telecom policy wonks picked apart the numerous errors in the WSJ pieces errors. (I do have to correct one glaring error in the Gordon Crovitz piece. The specter of Net Neutrality regulation has not caused a low level investment in broadband access and the US’s low rankings in the international adoption statistics. I hope that would strike you as obvious.)

The basic thrust of their arguments was a content-cashing-versus-content-transmission distinction. What Google is doing is moving and distributing its content closer to the end recipients in an effort to improve delivery speed and quality. It was not seeking preferential treatment in terms of the transmission of its traffic. From a service perspective, I am not sure there is much of a difference.

What is truly at the core of the debate is common carriage versus private carriage. These are not new ideas. Common Carriage traces its origins to the Roman Empire. As such common and private carriage express competing notions of fairness and economic efficiency. We think it is unfair to give preferential treatment to certain (read wealthy) customers. At the same time, we also think it is economically inefficient to mandate a single (or limited set of) Internet access options for everyone, including those who are willing to pay more for premium services. So, how do I determine which means of achieving differentiated services is economically permissible and socially desirable?

Insight: To my mind this is not so much a question of network practices (i.e., routing versus caching), but of market power and market failure. Don’t get me wrong. I am a proponent of Net Neutrality. However, the most effective way to promote welfare-enhancing differentiation from anti-competitive discrimination is the presence of effective, sustainable competition. This is, by no means, a guarantee. As David Isenberg correctly points out, the US has four major wireless carriers, but no truly open mobile networks. (As I have argued in a previous Cool Stuff that wireless devices are not a perfect analogy to wireline Internet). Nonetheless, in the absence of competition to constrain the behavior network providers, some form of regulation will be required. Once the regulator is required to dictate allowable and unallowable network practices, all of the options are unattractive. In the light of the incoming administration, we should be considering how best to (re)introduce effective, sustainable competition.

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Posted in Broadband, Network Neutrality | 1 Comment »

Marketing FFTH

Wednesday, November 26th, 2008

In my last Cool Stuff post, I wrote about FFTH (or fiber from the house).  In the past week, I have had the chance to refine my idea, and I even had a chance to read the very good paper by Slater and Wu, Homes with Tails.  The more I think about the subject, the more I come to the conclusion that main issue is syndication of the risk of stranded investment.  The strategies which deal directly with spreading this risk have the greatest chance of succeeding.

Just to review FFTH, is where the homeowner buys his own Internet connection.  Under the simple scenario, Joe the Fiber Layer comes to Joe the Homeowner and offers to build him his own fiber optic Internet connection.  The cost of this construction is highly sensitive to the number of homes which take the offer in a given area.  Using Slater and Wu’s numbers regarding the Verzion FiOS roll out, the capital cost for a fiber to the home connection is about $7,000 if 20% of homes passed take the service and on the order of $3,000 to $4,000 at a 40% take-up rate.

Insight:  There is a marketing strategy which plays perfectly to this problem.  Suppose Joe the Fiber Layer comes to Joe the homeowner and makes the following offer, “I will build you your own fiber Internet connection for $5,500.  However, if 5 other homes on your line buy FFTH, I will send you a check for $500; if 10 more take it, I will send you a check for $800; 20, $1,500; etc.” I can imagine that in everywhere in America there would be neighbors leaning across the hedges saying, “Dude, we just got our FFTH connection.  It is AAAAAWSOME! You totally have to get one of these!”  Word-of-mouth is the best marketing, but peer pressure is better.

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Posted in Broadband, Cool Stuff | 4 Comments »

FFTH: Fiber From the House

Wednesday, November 19th, 2008

A while back, I was asked by a client how to stimulate the deployment of a fiber to the home infrastructure given the enormous risk of stranded investment and given a potentially capital-constrained incumbent. I suggested FFTH – fiber from the home. I was not being facetious, at least not totally.

When I gave my answer, I was thinking about the Netherlands. One of the major investors in fiber to the home projects in the Netherlands is a real estate developer. The reasoning is simple. Houses with access to broadband Internet services sell for a premium over comparable house without. (Lehr, Osorio, Gillett and Sirbu did an excellent TPRC paper measuring the magnitude of that premium, which I cannot find). In addition to making money as a fiber access provider, the real estate developer could capture the benefit of increased property values created by the availability of broadband Internet access.

I mentioned my FFTH idea to David Isenberg at the recent CITI 25th Anniversary Gala, and to his credit, David mentioned me in his blog posting (thanks, David). In addition, Sascha Meinrath and Michael Calabrese at the New America Foundation have organized an event for this Friday to examine the idea of FFTH. Calling it “Home with Tails”, Tim Wu and Derek Slater examine in a forthcoming paper whether this is a “customer centric” means for driving broadband adoption. Further, FFTH might possess other benefits. Eli Noam has suggested that private ownership of the access potion of the broadband network would help to solve the network neutrality problem.

Insight: When I suggested FFTH, I was not thinking about Network Neutrality and other consumer issues. I was merely thinking about distributing the risk of potentially stranded investment. However, since the idea of FFTH seems to have some merit I wanted to put a finer point on it, examine some of the potential downsides, and the policies which might be necessary to make FFTH possible.

Think about this. Instead of getting a cable modem or FiOS from Comcast or Verizon, Joe the Fiber Layer knocks on your door and offers to build you a fiber loop to the nearest Internet access node. And for less than it would cost to have Joe the Plumber remodel a bathroom (somewhere between $2,000 and $7,000), you would have your own fiber connection which greatly increase the value of the whole house at resale time.

The first thing necessary for the policies which to enable a FFTH business model is full and open interconnection to the nearest feasible Internet access point. This might be a remote terminal, street cabinet, or cable node. Creating effective access at this level is not necessarily an easy task. This may be small engineering spaces with powering and other serious engineering concerns. Thus, it might be able to accommodate every Joe or Jane the Fiber Layer who wants to put their customers’ equipment in those access points. Further, it would be simply impossible for each homeowner to have someone dig up the streets or hang fiber everywhere.

Here in Germany, we have some experience with policies for privately owned access networks. Back about 20 years ago, or so, a political decision was made to separate cable delivery from in-building plant. An artificial classification of access Level 3 and Level 4 was created. Level 4 network providers owned the cable wires inside individual buildings and there are some 700 of these companies still in existence. Level 3 providers were restricted for offering in-building wiring. This arrangement has lead to certain economic inefficiencies and may have some effect in hampering cable deployment in Germany. Thus, any policy designed to enable FFTH should not create artificial classifications and unreasonably prohibit network from providing services further up or down in the network. And who knows, you might someday find a major incumbent seeking unbundled access to your private fiber loop.

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Posted in Broadband, Cool Stuff | 3 Comments »

John McCain Claims to have developed the policy creating Wi-Fi and mobile phone

Thursday, September 18th, 2008

It is not often that my work squarely lines up with Presidential politics; however, it seems that work I am currently doing relates to statements made by Sen. John McCain on the campaign trail. I am en route to the 19th European Regional International Telecommunications Society Conference in Rome. Of the two papers I am scheduled to present, one is a paper chronicling the history of the US FCC’s Part 15 rules. These are the set of rules which enable devices such as Wi-Fi in the United States. Based on my research for this paper, Sen. McCain’s recent statements from the campaign trail are demonstrably false.

In a written response to Science Debates 2008’s questionnaire for the two major party’s Presidential candidates, the McCain campaign stated:

I am the former chairman of the Senate Committee on Commerce, Science and Transportation. The Committee plays a major role in the development of technology policy, specifically any legislation affecting communications services, the Internet, cable television and other technologies. Under my guiding hand, Congress developed a wireless spectrum policy that spurred the rapid rise of mobile phones and Wi-Fi technology that enables Americans to surf the web while sitting at a coffee shop, airport lounge, or public park.

While the first two sentences are factually correct, the assertion that Sen. McCain’s “guiding hand” led to these policies is false. The policies which led to the creation of Wi-Fi (the IEEE’s 802.11 suite of standards) were a set of rules originally crafted in a 1985 FCC Report and Order. This rulemaking permitted low power, unlicensed use of spread spectrum radios in the 2.4 GHz band in which the standards 802.11 b & g currently operate.  (The 5.8 GHz band, which 802.11a uses, was opened by the Commission in a 1996 proceeding).  The first commercial spread spectrum product was a radio LAN which was introduced by Telesystems in 1988. The IEEE did not ratify the first 802.11 standard until 1999.

While it is true that the FCC is an independent regulator with delegated rulemaking authority from Congress, it is completely specious for Sen. McCain to claim credit for these rulemakings.  At the time of the 1985 rulemaking Sen. McCain was not Chairman of the Senate Committee on Commerce, Science and Transportation. Indeed, in 1985, Sen. McCain was serving in the House of Representatives.  Further, the 1985 Order was based on a 1979 consultant’s report commissioned by the FCC.  MITRE, the firm which drafted the report, recommended permitting the technologies which Wi-Fi uses in certain spectrum bands (the ISM band).  This was certainly not Sen. McCain’s idea, but Wallace C. Scales, the report’s author.

Similarly, Sen. McCain’s the claim that he guided the Congressional policy making which lead to the widespread adoption of cell phones is equally bogus.  The original cellular telephony spectrum licenses were allocated and assigned by the FCC in the early 1980s.  However, the true stimulus which, “spurred the rapid rise of mobile phones,” was the 1993 Omnibus Spending Act.  This law granted to the FCC the power to assign spectrum licenses by “comparative bidding” – auctions.  Through these first auctions the FCC allocated and assigned Personal Communications Services (PCS).  These licenses were designed to compete with the pre-existing cellular licenses and led to the fantastic success of mobile communications.  While this law was in fact drafted by Congress, it was done so by a Democratically controlled one.  Thus, in 1993 (and 1985) Sen. McCain was not the head of any Senate Committee.  (Just as a historical footnote, Sen. McCain was the only Republican in both the Senate and the House to vote against the 1996 Telecommunications Act).

Insight: Most candidates stretch the truth, embellishing their records or being one of the many fathers to success.  However, the absence of penalties for a candidate’s false statements distorts the electoral process – even those little tiny deceptions which go unnoticed by except by the wonkiest of policy wonks, like me.  The highest office comes with it the fiduciary duty.  Thus, we must hold candidates, “not to mere honesty alone, but a punctilio the honor most sensitive,” as Justice Cardozo admonishes us.   Allowing our candidates even the most minor of misstatements and misrepresentations creates a giant incentive for politicians to try to con us.  This leads to the “adverse election” of unqualified candidates who, once in office, establish bad policies.  We deserve better from our political process and should hold our candidates for elected office to the highest standards of “truthiness”.

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Posted in Broadband, Wireless Communications | 1 Comment »

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