Posts Tagged ‘FCC’

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 »

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 »

Highest use of spectrum

Thursday, May 7th, 2009

When I was at the FCC, one of its stated policy goals was to ensure that radio spectrum was put to its “highest use”.  It now appears that one carrier is going to do precisely that, albeit not in the United States.  According to a report by Reuters, Nepal Telecom plans to extend its mobile network coverage to the summit of Mount Everest in the Himalayas.  This network will allow climbers upto the 29,035 foot summit to have access to terrestrial-based communications, without having to rely on expensive satellite phones.  This use of spectrum is an even higher use than the unlicensed spectrum employed at the Wi-Fi hotspot which China Mobile built at the Mount Everest base camp.  That’s only at 17,000 feet above sea level.

Insight:  I am not sure that this is the meaning of ‘highest’ the FCC intended when it chose the term.  Perhaps what was meant was ‘highest value use’.  However, adding that one little word opens a messy intellectual can of worms.  Does this mean highest monetary value use or highest social value use?  Monetary value is easy to determine.  Just look at who is willing to spend the most money to use the spectrum.  Social value is much harder to determine.  If we forgo social value for a monetary determination, we might have to give up such intangibles as public safety and national defense.  Good thing the policy goal has since been restated to promoting the “efficient and effective use of non-federal spectrum”.

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Posted in Optimal Regulation, Proper English, Wireless Communications | 1 Comment »

TV White Spaces and the Tragedy of the Commons

Tuesday, July 29th, 2008

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.

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Posted in Broadband, Cool Stuff, TV White Spaces, Wireless Communications | No Comments »

It says “handsets”

Wednesday, June 4th, 2008

I finally just had a chance to read the FNPRM for the rules governing the C Block in FCC’s recently concluded 700 MHz Auction and it says “handsets”! Why is this significant?

For the C Block, comprising 22 MHz in the upper 700 MHz band, the FCC created special open access provisions. The FCC will require licensees to provide a platform that is open to third party devices and applications. Specifically, licensees must allow customers, device manufacturers, third-party application developers, and others to use any device or application of their choice on their networks in this band, subject to certain limited conditions. Licensees may not “lock” handsets to prevent their transfer from one system to another, or to other services that compete with wireless service providers’ own offerings. The FCC concluded that these rules were justified because it did not find “that competition in the [mobile] marketplace is ensuring that consumers drive handset and application choices, especially in the emerging wireless broadband market…. it is easy for consumers to differentiate among providers by price, most consumers are unaware when carriers block or degrade applications and of the implications of such actions, thus making it difficult for providers to differentiate themselves on this score.”

Insight: Beware the law of unintended consequences. Here it is not the proverbial monkey wrench, but a pair of bolts, literally, which could bring the FCC’s policy to a grinding halt. Implicit in the service rules is the assumption that the band will evolve to resemble the next generation of the current mobile market in the US. But assumptions like this never last. I wonder if it is possible for clever operator could escape the open handset requirement by providing fixed services. The 700 MHz spectrum is particularly well suited to a variety of applications, one of which might be fixed broadband. In rural and suburban areas fixed wireless broadband could be an effective competitor to wireline. Presumably these areas would be sufficiently competitive that the FCC’s finding would not hold (remember it is limited to handsets, and not even service plans). Thus, if the licensee is bolting “pizza boxes” to the side of homes, would this type of network not be subject to the open access provisions? It’s unclear, but something to think about.

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Posted in Broadband, Network Neutrality, Wireless Communications | 2 Comments »

White Space and Gray Matter

Tuesday, February 12th, 2008

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.

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Posted in Broadband, TV White Spaces, Wireless Communications | 4 Comments »

A Challenge to the Next FCC Chairman: Make the US Last in Broadband Adoption

Thursday, February 7th, 2008

No matter what the outcome in November’s presidential election, about a year from now, the FCC will be anticipating the arrival of a new Chairman.  I present the following challenge to the next Chairman, whoever he/she may be: make the US last in the world rankings of per capita broadband adoption.  What?!  Stay with me for a sec.

The FCC defines “broadband” as any access technology providing at least 200kbps in one direction.  This standard was appauling when it was introduced nearly a decade ago;FN1 it is simply laughable now.   Shouldn’t this standard evolve at least a little bit over time?  Consider for a second Moore’s Law on computing per unit cost, which stipulates that preformance roughly doubles every two years.FN2    So, between January 1999 and January 2009, the price preformance of the electronics which enable a broadband connection should have increased by a factor of 32.  Thus, a resonable standard for broadband today would be 6.4 Mbps (200kbps X 2 X 2 X 2 X 2 X 2 = 6,400kbps).  Let’s say I missed my guess by a bit and an appropriate standard is 5 megs.  (Neither a particularly high threshold and about what I get at my home in a small suburb outside of Bonn, Germany.) In that same decade, the US rank in the world in terms of broadband adpotion has fallen from 3rd to 15th to 20th, by some counts.

Insight:  According to the FCC’s most recent data, in December 2006 there were 82.5 million broadband lines in the US.FN3  Using the 5 meg standard this number would drop to roughtly 11.5 million lines.FN4  The effect of reporting this as the number of broadband lines in the US would be to be to drop the US to a per capita broadband adoption rate of Slovakia or Mexico.  Only then would it be undeniable that the US is falling behind in the adoption of next generation networks.  And, only then would the FCC have the imperative necessary to take the steps which other nations are taking and “encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans,” per the FCC’s mandate. 

FN4: This is a bit of a fudge factor, but good enough for the back of the envelope.  Since the FCC only reports lines with speeds between 2.5 megs and 10 megs, I assumed that only 1/4 of the 34.7 million lines in this category were greater than 5 megs – I eyeballed this from the skew of distribution.

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Posted in Broadband | 1 Comment »