Posts Tagged ‘Policy Development’

Rethinking the White Spaces decision

Thursday, September 23rd, 2010
Manneken Pis

Unlicensed operation in the yellow spaces.

I watched the FCC’s monthly agenda meeting today where it unanimously adopted its Second Memorandum Opinion and Order which will enable unlicensed operation in the TV White Spaces.  As I have said in a previous Cool Stuff,  I do not think given the way in which operation will be permitted will be truly unlicensed.  However, what I found most interesting about the meeting was what the Chairman and Commissioners said and did not say in their comments from the dais when voting out the item.

Almost universally the five:

  • Thanked Julie Knapp and his staff (This is to be expected.  I used to work down the hall from Julie, Alan and Hugh, and they are a bunch of really great, really smart fellows);
  • Stated that the Order would unleash a wave of innovation, broadband access, “Wi-Fi on steroids,”  and other Really Cool Stuff (RCS); and
  • Acknowledged, however, we have to protect the incumbent users such as broadcast TV and wireless microphones.

Insight: What was universally not said was that broadcast TV and wireless microphones are not the future.  Granted, regulators want to provide regulatory certainty and are loathe to picking winners and losers; however, this glaring absence begs the question: if all of the innovation, job growth, and economic development will come from the unlicensed use of the White Spaces, why aren’t we protecting those uses?  I cannot help thinking that we might have done this wrong and have locked in the wrong incentives for the next 40 or 50 years.

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

Spectrum Auctions in Japan?!

Wednesday, September 22nd, 2010

I was not the first to advocate for spectrum auctions, only the most vociferous.

The Japanese wireless market must be for Evan Kwerel akin to what the Duck-billed Platypus is for Charles Darwin. The Platypus is an egg-laying, venomous, duck-billed, beaver-tailed, otter-footed mammal, and would seem defy evolutionary theory.

The Japanese wireless market is well developed, with at least 5 competitors offering some of the lowest priced, highest speed, and most advanced networks of anywhere in the world. Yet, according modern economic theory, this should not be. The Japanese government has never held an auction to assign spectrum licenses. Economic theory suggests that auctions are more efficient (see, Cool Stuff) at assigning spectrum rights to their highest monetary value use than other means such as comparative hearings (currently used in Japan) or lotteries. If you are interested in auctions in Tokyo have been in Tsukiji –  the 5 AM fish market – has traditionally been your best bet.

Charles Darwin

If it walks like a duck, and talks like a duck… this makes no sense, it can’t be a mammal.

I have head rumors that the reason the Japanese government has never held spectrum auctions was not for fear of creating distortions in the market but so as not to upset the balance of power among the various ministries (i.e. Finance, Industry, Posts and Telecommunications). The US Treasury and the FCC got along fine once the FCC started sending enormous checks.

That might all change as the government of Japan is considering how it might employ spectrum auctions. A friend in Tokyo sent me a recently published copy of the Cabinet’s decision on a new strategy for growth.  Item 35 on page reads as follows:

電波の有効利用のための制度の見直し （１）割り当て済みの電波について、より必要性の高い用途に利用できるよう、既存の利用者を他の周波数へ速やかに移行させ、迅速かつ円滑に周波数を再編するための方策について平成22年度に検討、結論を得、平成23年度に措置する。 （２）再編に要するコストについて、再編後の周波数を新たに利用する者が、市場原理を活用して負担する等、オークション制度の考え方も取り入れた措置について平成22年度に検討、結論を得、平成23年度に措置する。

Tsukiji

Maguro auctions at Tskiji.

My Japanese is not so strong, but if you read this in context as Kasumigaseki Bungaku (roughly, “Beltway Literature”), as I was admonished, you can interpret this mean that the Cabinet is directing the Ministry of Information and Communications to review how market forces can be employed to rapidly and efficiently reassign radio usage rights. According to my vague understanding of what is suggested, the MIC will pursue a limited use of auctions to reassign spectrum licenses. Auction prices will be limited to the costs of relocating the existing users from the band. The MIC will then auction participant’s bids as part of its analysis in some sort of comparative hearing. License winners will have to pay their bid eventually.

Auction Theory in Tsukiji

Ken, we want you to rework the Part 15 Rules for sashimi - we'll call it “Unlicensed and Uncooked.”

Insight: To be fair, I think this is a really clever idea, but am not convinced it will work. For my Next Generation Spectrum Policy study,  I considered a very similar idea, whereby the spectrum management authority would have access to pricing information to make band-planning determinations. This idea is, in fact, the origin of the term I coined for the study, “price-guided policy.” I eventually rejected the idea before concluding the study because I became convinced that as long as you are going through the trouble to hold the auction, you might as well have it do all of the hard work up to and including assignment. I am very curious to see how this develops. I am not sure whether auctions will make the Japanese wireless market more advanced, or whether they will simply screw things up. I will keep you posted.

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The New Dutch Auction

Friday, May 7th, 2010

A Dutch auction is typically one where prices go down.  The auctioneer starts with a high price and then asks for lower prices.  The first person to call out gets the item at that price.  However, this is not how it worked in Holland last week.

A week ago, the Dutch telecommunications regulator Agentschap Telecom completed a spectrum auction for licenses in the 2.6 GHz band.  Five bidders spent just over €2.6 million to acquire 130 MHz of the 190 MHz in the band, but they did so in an unusual way.  Agentschap’s auction had two parts.  In the first part, bidders vied for a certain amount of spectrum.  In the second round, the bidders competed for specific 5 MHz blocks, with the option of single 5 MHz blocks of unpaired (TDD) spectrum or 2 x 5 MHz blocks of paired (FDD) spectrum.  This determined the pairing the band.  No FDD spectrum was acquired.

In this way, the auction determined whether the spectrum would be used for cellular type uses (FDD) or for WiMax-type uses (TDD).  To my knowledge, Agentschap’s auction was only the second time an auction was used to determine not just assignment but allocation as well.  In 2008, ComReg in Ireland used a very similar auction in the 26 GHz band.

Insight:  In a previous Cool Stuff, I wrote about my work to design an auction which could not determine not only who gets the spectrum rights, but what the contours of those rights are.  I called this approach: Price-Guided Radio Policy.  Now, we have two data points to suggest that this approach can work and can efficiently determine not only spectrum assignments but allocations as well.

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

The Spoon

Wednesday, May 5th, 2010
Don't try to bend the spoon.

Don't try to bend the spoon.

In the classic 1999 film The Matrix, the protagonist, Neo, played Keanu Reeves, goes to see an oracle.  In the waiting room, he happens upon one of the oracle’s child disciples who is sitting zazen and melting a metal spoon with mind.

Spoon boy: Do not try and bend the spoon. That’s impossible. Instead… only try to realize the truth.

Neo: What truth?

Spoon boy: There is no spoon.

Neo: There is no spoon?

Spoon boy: Then you’ll see, that it is not the spoon that bends, it is only yourself.  (Source IMDB)

By the same token, I have long wondered if there is no radio spectrum.  This fact is among the reasons that the unlicensed regime works so well.  It is spectrum policy, just without the spectrum

The jurisprudence underlying the Part 15 rules is that unlicensed spectrum is not spectrum at all…. It is merely an idea – a concept – a way of describing and organizing the physical world in our minds and in our actions. Spectrum is a legal and engineering construct to control for an immutable fundamental physical property… (Source: Unlicensed to Kill)

The Part 15 rules simply consider what is the maximum amount of irradiated power which can be emitted by a device without an unacceptable probability of causing harmful interference.

However, most of spectrum policy other than the Part 15 rules deals with regulating the “airwaves”.  Yet treating radio operations as spectrum or airwaves or property is a false paradigm.  This point was driven home to me a few years ago when I was an FCC staffer.  I was once filling out my timesheet at the FCC.  One of the lines on the sheet was “spectrum” and it dawned on me that I was spending more than 66.7% of my time dealing with something which had momentum, but no mass.  Somewhat paradoxically, electromagnetic energy behaves simultaneously like a wave and like a particle, carried by photons.  This is an important and powerful observation.  In fact, it was for this observation (the so-called photo-electric effect), and not General or Special Relativity, that Albert Einstein was awarded the Nobel Prize.

So, while we are regulating the airwaves, who is regulating the photons?!

Insight:  I raise this issue now because just last week the FCC announced the (re)establishment of its Spectrum Task Force.  Honestly, I am not exactly sure what implications for radio policy of considering the dually of electromagnetic radiation as both a wave and a particle might be; however, going forward perhaps the STF should undertake critical rethinking of this crucial policy area from the basics up.

Since we cannot bend the spoon, perhaps it is time we bend ourselves.

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Posted in Optimal Regulation, Wireless Communications | 1 Comment »

Keeping up with the Jitsuzumis

Saturday, April 10th, 2010

The first goal of the FCC’s recent National Broadband Plan is to ensure at least 100 million US homes have access to Internet connections with download speeds of at least 100 Mbps by the end of the decade (the year 2020).  This goal strikes me as not being a terribly ambitious.  I only have a single data point to support that conclusion, which is typically referred as an anecdote.

Prof. Jitsuzumi's Class

One of these is not like the others.

During a business trip to Japan last year, I traveled to Fukuoka to visit my good friend Prof. Toshiya Jitsuzumi.  (According to Wikipedia Fukuoka is Japan’s eighth most populous city and its second youngest).  Prof. Jitsuzumi invited me to give two talks: one to Kyushu University’s Faculty of Economics and one to his undergraduate students in communications economics.  To the undergraduates, I gave a lecture about the policy and economics of Next Generation Access Networks in the European Union.  I found Prof. Jitsuzumi’s students to be bright and engaging.  In the middle of the lecture, the students had some trouble understanding one of my stats on the number of homes passed by fibre optic access networks in the EU.  At first, I thought the confusion was due to my weak Japanese language skills.  After a bit of back and forth, I discovered the source of the confusion.  Prof Jitsuzumi’s students all have fibre optic connections to their homes.  I was the only one in the room who did not have a fibre optic Internet connection to his home (NB: I live in a suburb of Bonn, Germany).  The source of the confusion was that they were questioning why one would want to count homes passed.  This is not obvious if you and all your classmates  already has a fibre optic connection.

Insight: Granted Prof. Jitsuzumi’s class is not a representative sample set, but I can’t help feeling that the FCC is trying to catch the US up in ten years to where Japan is now.  From what I have been reading on the listservs, given current pace of deployment of FiOS and DOCSIS 3.0, the market will accomplish this goal on its own.  This fact begs the question what is need for governmental intervention.  Instead, the FCC should propose a more ambitious goal (one that might have a higher risk of failure) and devise a road map necessary for achieving that goal.  Perhaps this will come out in follow on work to National Broadband Plan.

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Posted in Broadband, Optimal Regulation | 2 Comments »

Obama’s Inaugural Address and the Optimal Government

Saturday, January 24th, 2009

This past week, I watched, with great excitement the Inauguration of Barack Obama as the 44th President.  In the following days, a read and listened to many blogs and news accounts of his Inaugural Address, some touting it as an exemplary piece of oration and others calling it flat, especially in light of Mr. Obama’s skill.

There was, however, one passage which to my mind received too little attention:

The question we ask today is not whether our government is too big or too small, but whether it works, whether it helps families find jobs at a decent wage, care they can afford, a retirement that is dignified.

Where the answer is yes, we intend to move forward. Where the answer is no, programs will end.

And those of us who manage the public’s dollars will be held to account, to spend wisely, reform bad habits, and do our business in the light of day, because only then can we restore the vital trust between a people and their government.

Nor is the question before us whether the market is a force for good or ill. Its power to generate wealth and expand freedom is unmatched. (Source: NYT)

Insight: If Mr. Obama truly adopts this approach to government, then it represents a major step forward for the United States and the welfare of its people.  This efficiency frontier for government is something I have written about before in Cool Stuff (The Transition and Irish Broadband Forum).  Defining the contours of this efficiency frontier is the next generation of policy research and debate.  I commend Mr. Obama for taking a truly bipartisan approach to government (“I won” comments aside).

I wonder if this explains the hit I got on my blog from a Starbucks in Washington, DC.

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Next Generation Spectrum Policy

Wednesday, March 5th, 2008

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 principle 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.

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Posted in Broadband, Network Neutrality, TV White Spaces, Wireless Communications | No 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 »

Irish International Advisory Forum on Broadband

Wednesday, February 6th, 2008

I am very please to announce that I have been appointed to an International Advisory Forum on Next Generation Broadband Networks.  Minister Eamon Ryan of the Department of Communications, Energy and Natural Resources established this Advisory Forum of senior telecoms experts and CEOs from around the world in order to advise him on the optimum role for Government in the development of Next Generation Broadband in the Republic of Ireland.

Insight:  As side for being a fantastic opportunity for me, I think this is right approach to policy formation, broadband or otherwise.  Policy makers should always pursue the “optimum role for Government.”

Classical conservative political though holds that “government is the problem,” and that a laissez faire approach is best.  Conversely, liberal politics hold that the profit motive is a sufficiently corrupting influence that in the absence of rules constraining the market place, the private sector will steal everything that is not nailed down. I am a lawyer, so I see these two statements as not mutually exclusive and both possible true.  I am also an MBA, so I can also see that there is some tradeoff between the two approaches.  And, if there is a tradeoff, it follows that there must me some optimization: one rule too many and government throws up barriers to entry to the market place; one government employee too few and the Invisible Hand can get into the Invisible Cookie Jar.  Thus, the policymaker should always be managing regulation to this efficiency frontier.

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Posted in Broadband | 6 Comments »