Communications Insights: Trends and Cool Stuff

For more than nine decades, lawyers, engineers, and economists have argued that radio spectrum regulation is needed due to the fact that 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 their usage’s impact on the benefits obtained by other would-be users.  They, therefore, tend to overuse the spectrum, causing interference to other users.  This reduction in social welfare due to overuse is referred to as the Tragedy of the Commons.However, we can now observe from the debate surrounding the TV White Spaces that the ability to exclude certain users is not sufficient to remedy the Tragedy of the Commons. A relatively small number of over-the-air TV households are able to use these spectrum bands without regard to the costs their use imposes on the rest of Americans.  Indeed, according to the most recent FCC statistics, in 2005 only about 14% (See Appendix B, Table B-1) of US TV households receive their TV over-the-air. The remaining 86% get no direct benefit from this spectrum.

The National Association of Broadcasters is now opposing tests the FCC is currently conducting which will measure the impact of unlicensed use of the White Spaces on digital TV reception. In order to protect digital TV receivers, potential White Space users must be excluded, and the NAB is throwing its weight around to ensure that outcome.  According to a quote from NAB spokesman Dennis Wharton, “We’re not going to be engaging in threats or anything, but about 70 members of Congress have already sent letters in expressing concern.” Well, as I wrote in a previous entry on Cool Stuff, at least one of those 70 letters is total bunk. Nonetheless, the cost to all of society of affording interference protection to this minority must also be considered.

Insight: If the NAB’s argument is accepted without scrutiny, the 14% of TV households will prevent the other 86% of US TV households (plus the TV-less households) from using those radio frequencies for broadband Internet, baby monitors, new forms of low-power broadcast, and other RCS (really cool stuff).  This lost benefit will not be compensated.  The exclusion of certain competing uses is necessary but not sufficient to ensure that society reaps the maximum benefit from the radio spectrum.  A means through which spectrum users can bear the costs they impose on others by excluding them is also necessary.

Google’s Larry Page spoke at a recent New American Foundation event, calling for “Wi-Fi on steroids” for the TV White Spaces.  Every time I hear this, I cannot help but think, “Oh great, a radio that is hyper-aggressive, muscle-bound, and impotent.  Why would I want such a technology?!” All joking aside, I approve the sentiment, but a little more careful analysis is need.There is here a unique window of opportunity to allow new uses of the TV spectrum which is currently inefficiently used.  For the past 9 decades, the FCC has regulated high power uses of the radio spectrum, such as broadcasting.  The FCC has also for the past 7 decades permitted low power uses, with increasing success.  The TV White Space presents the opportunity to permit medium power uses of the spectrum - something between Wi-Fi and TV.  However, neither the high-power of low-power paradigms seems to fit.  Licensed approaches typically allocate use to a single entity which makes decisions about use.  As a result, much remains unused at any given time.  The rules created are hard to change and do not afford much flexibility in terms of decisions regarding use by the licensee.  In contrast, unlicensed approaches strictly limit the radio energy which a device can radiate into the ether.  By controlling the emissions, the rules limit the possibility of harmful interference.  These rules create a much more flexible set of permission, but due to the stringent power limitations ranges of the radio devices can be extremely short.  What is needed is a new form of coordinating spectrum uses for medium power applications, which holds the benefits of both approaches while minimizing the potential downsides.

Insight:  Fortunately, some of the FCC’s best and brightest have been working this issue.  In a previous Cool Stuff, I wrote about my FCC Working Paper, which lays out ideas for the implementation of economic congestion etiquettes which would allocate spectrum use in real time to its highest monetary value uses.  This approach could significantly improve the value society receives from the use of the radio spectrum, without the need for dangerous pharmaceuticals.

I am very pleased to announce that the FCC has just published a suite of papers which I worked on while I was there. This work sought to tackle some of the intractable problems facing spectrum policy. For nearly a century, spectrum policy has focused on “scarcity” and resolving “harmful interference”. This was largely due to limits of the technology of the day. Now radios fueled by semi-conductor processing power, are enabling spectrum policy to evolve. We can now focus on a much more efficient principal of “use coordination”. The first paper in the series, OSP Working Paper #41, examines the Tragedy of the Commons and how economic protocols might be employed to alleviate this problem, while preserving the openness and innovation associated with unlicensed operation. It achieves this by coordinating competing demands on the spectrum. There are several different means for assigning priority to allocate use. However, allowing would-be users to express their willingness to pay seems to be the most economically efficient. Through an economic coordination protocol, usage at any given time is awarded to those with the highest value. OSP Working Paper #43, looks at how the set of rights which underlie this regime can be assigned through auctions.

Insight: Of all the work I have done in my professional career, this is the product of which I am most proud. The future of spectrum policy will be one of “use coordination”, where the “exclusiveness” of a license will be determined at an auction along with which entities are assigned the license. We are back to First Principles. This work holds the promise to wrestle the spectrum from the hands of a few powerful entities and put it back in our hands. In addition, it is likely to increase efficiency and hence the benefit we all receive from its use. The beauty of the system is that if the current spectrum arrangement is the most efficient, then it will emerge as such. At the very least, we will have exposed society to a huge upside with very little downside risk. It also would allow us to grant priorities to those whose ability to pay is diminished, such as public safety and financially disadvantaged users.

As a body of work, it has far reaching implications. At the recent FCC field hearing on network management (viz. Net Neutrality), there was much reasonable debate on what constitutes reasonable network management. There were many views as to how to handle competing demands on limited network resources. To my mind, the most efficient way will be some variation on willingness to pay, perhaps through an economic coordination protocol.

Congressman Jerrold Nadler recently published an Op-Ed in the New York Times. His analysis is so off-the-mark, I felt compelled to respond.

I want to begin with some terminology. He describes the White Spaces as being the “intervals between television channel frequencies.” This could mean the geographic separation between grade contours, the guard bands, or even the blanking intervals in NTSC progressive interlace. At any rate, white spaces are “white” because at a given time and place the frequencies are not being used as carrier waves. If the spectrum is not being used then, by definition, there cannot be interference. And not just interference alone, but harmful interference is the statutory level of protection.Now I am not sure about the previous white space tests, as I lack the engineering experience to adequately review the opinions. But, I have see arguments suggesting the are conclusive and ones stating that they are not dispositive. Either way, technology will eventually overcome these issues. There are, however, more glaring failures of Rep. Nadler’s arguments.

“Microsoft, Google and others are asking permission to use white spaces — free of charge — for millions of unregulated and unlicensed devices for personal networking systems that they would like to sell, including P.D.A.’s, wireless broadband devices and even toys. These devices could disrupt the new digital TV signals that government and industry have spent so much time and money to promote.”

This is misleading by misstatement and by omission. Misstatement: unlicensed devices are not “unregulated”. Omission - the broadcasters did not pay for their spectrum either. Moreover, who cares what the broadcasters sunk costs might be. Suppose Google and Microsoft will spend more to develop more important technologies.

Rep. Nadler goes on to say, “And because these personal devices would be unregistered, there would be no effective way of recalling them or curtailing their use, much less assuring that standards were adhered to their manufacture.” If you read the FCC Part 2 and Part 15 rules you will find that this is dead wrong. When I was at the FCC, I spent a lot of time working on precisely this issue. Before any radio device, be it licensed, unlicensed, or licensed-by-rule, can be imported or marketed in the US, it must be certificated to comply with FCC standards. In addition, users of unlicensed devices have “no vested right to continued operation.” So, if in the future, the FCC decides that white spaces are best left white, it has the power to make operating these devices a crime. When Wi-Fi is outlawed, only outlaws will have Wi-Fi.

Further, without a single iota of economic evidence, Rep. Nadler values digital terrestrial TV over all other uses of the spectrum. Moreover, he values co-primary access according to his own wants and desires. It is a cute device when he argues for the protection of football games and Broadway musicals alike, but this too is misleading. Who is to say that a football game or Broadway show (both of which take place in large controlled Faraday cages) is more important than my wireless email?! I don’t like football, but I like email. How about public safety? I think that’s a better use of the white space. And, would it not be better public policy if we were helping “[l]ow-income households, the elderly and people living in multifamily buildings who don’t have cable service and rely on antenna systems” to get online with cheap unlicensed broadband access, and not to watch more TV?

Finally, if the Broadway star and star quarterback are counting on unfettered spectrum access (a concept whose time has come and gone) they should pay for that access. Otherwise, they should share the spectrum with the rest of us who get great value out of unlicensed use.  Both types of spectrum access will and must coexist in the future.  The future of spectrum policy will not be about “scarecity” or “interference” so much as it will be about coordination of use.

Insight: People, I cannot stress this enough, use your gray matter before you talk about the white space.