Subject: [NEXTEL-1] Spectrum Series Working Paper #6 October 2002

From: Marcel <[email-masked]>
Date: Thu, 23 Jan 2003 18:28:48 -0500

Spectrum Series Working Paper #6 October 2002

Open Spectrum: The New Wireless Paradigm
By Kevin Werbach*

Almost everything you think you know about spectrum is wrong.

For nearly a century, radio frequency spectrum has been treated as a scarce resource that
the government must parcel out through exclusive licenses. Spectrum licensing brought us
radio, television, cellular telephones and vital public safety services. Along the way,
the licensing model became an unquestioned paradigm, pervading our views. We simply can’t
imagine doing anything else.

The assumptions underlying the dominant paradigm for spectrum management no longer hold.
Today’s digital technologies are smart enough to distinguish between signals, allowing
users to share the airwaves without exclusive licensing. Instead of treating spectrum as a
scarce physical resource, we could make it available to all as a commons, an approach
known as “open spectrum.” Open spectrum would allow for more efficient and creative use of
the precious resource of the airwaves. It could enable innovative services, reduce prices,
foster competition, create new business opportunities, and bring our communications
policies in line with our democratic ideals.

Despite its radical implications, open spectrum can coexist with traditional exclusive
licensing. There are two mechanisms to facilitate spectrum sharing: unlicensed parks and
underlay. The first involves familiar allocated frequency bands, but with no user given
the exclusive right to transmit. A very limited set of frequencies have already been
designated for unlicensed consumer devices, such as cordless phones and wireless local
area networks, but more is needed. The second approach allows unlicensed users to coexist
in licensed bands, by making their signals invisible and non-intrusive to other users.
Both open spectrum approaches have great value, with the specifics depending on how
technology and markets develop. Both should be encouraged. The risks are minimal, while
the potential benefits are extraordinary.

If the US Government wants to put in place the most pro-innovation, pro-investment,
deregulatory, and democratic spectrum policy regime, it should do everything possible to
promote open spectrum. Specifically, Congress and the FCC should take the following four
steps:

•     Develop rules to foster more effective cooperation among unlicensed users

•     Set aside more spectrum for unlicensed uses

•     Eliminate restrictions on non-intrusive underlay techniques across licensed bands

•     Promote experimentation and research in unlicensed wireless technology

We can glimpse the possibilities of open spectrum in existing unlicensed bands. While most
frequencies are licensed exclusively, a handful are open for anyone to transmit within
technical parameters such as power limits. [1] The unlicensed bands are limited,
congested, and devoid of any interference protection. Indeed, the most widely used, at 2.4
GHz, is so filled with devices such as microwave ovens, cordless telephones, and baby
monitors that it is known as the “junk band.” Yet this is the site of the most explosive
phenomenon in the wireless world: WiFi.

WiFi (IEEE 802.11) is a protocol for unlicensed wireless local area networks, allowing
high-speed data connections anywhere within a few hundred feed of an access point.  WiFi
deployments are growing at fantastic rates, doubling in the last year.  A market that did
not exist three years ago now generates well over a billion dollars annually, continuing
to expand despite a severe technology recession. There are thousands of public access
points in the US, and hundreds of thousands more in homes and businesses. Several million
laptops are equipped with WiFi cards, and most laptop vendors are building WiFi into their
newer models.  Investment and innovation run rampant. Venture-backed startups are
springing up to improve WiFi technology and apply it to new markets, such as residential
broadband access.

WiFi shows only a fraction of open spectrum’s potential. If the US government took steps
to facilitate the full realization of open spectrum, it would achieve several vitally
important policy goals. Moreover, it would do so by moving away from heavy-handed
regulation towards a free-market environment in which innovation and service quality
matter more than government-granted privileges.

Open spectrum is neither science fiction nor wishful thinking about human nature. Its
ideas are rooted in well-established engineering techniques and mainstream economics, and
its viability has been proven in mass-market implementations involving millions of users.
It is time to question our long-held assumptions, and explore new policy approaches that
could generate tremendous benefits for the American people.

The Battle for Spectrum Policy
For all its benefits, open spectrum represents a challenge to traditional ways of
thinking, which is bound to provoke opposition. Incumbents comfortable with the status quo
will seek to preserve the inflated values of their government-issued licenses. Licensed
users express concerns that open spectrum techniques will generate interference that harms
their businesses or important public services. Some economists who advocate turning
spectrum into private property have been unwilling to see that open spectrum is even more
market-based than the approach they favor.

These and other groups argue for actions that would hamstring open spectrum. They raise
legitimate concerns, but their worries are unfounded. Spectrum policy is full of mistaken
assumptions that have guided decision-making for too long.

Open spectrum explodes the following myths:

1)   Wireless spectrum is scarce

      Spectrum appears scarce only because our current regulatory regime puts draconian
limitations on its use. If multiple users were allowed to dynamically share frequency
bands, and to employ cooperative techniques to improve efficiency, spectrum could be as
abundant as the air in the sky or the water in the ocean.

2)   Auctions are the best mechanism to put spectrum into the marketplace

      It has become conventional wisdom that auctions are the only efficient mechanisms
for spectrum assignment, because they leverage market forces. Auctions have many benefits,
but they force service providers to pay high up-front costs and grant what amounts to a
monopoly over certain frequencies. Allowing companies to compete through innovation while
sharing the spectrum as a common resource is in many cases a superior approach.

3)   Massive capital investment is needed to exploit the spectrum

      Licensed service providers such as cellular telephone operators and television
broadcasters must build out expensive distribution networks before they can deliver
services to customers. Often, they must also pay to obtain the spectrum itself in
auctions. These huge capital expenditures must be recovered through service fees. In an
unlicensed environment, by contrast, access to the airwaves is free and the most
significant expense—the intelligent radios—are purchased directly by end-users.

4)   The future of wireless lies in third-generation (3G) systems

      3G represents a useful advance in cellular technology, but it is hardly a panacea.
Spectrum and build-out costs for 3G will be enormous. Many of the wireless data services
identified with 3G could be more efficiently delivered through short-range and meshed
unlicensed technologies, with wide-area 3G service reserved for situations where those
alternatives aren’t available.

5)   Wireless technologies are not viable solutions to the last-mile bottleneck

      The last mile does pose special challenges for wireless systems. However, these
challenges may be overcome through unlicensed systems that use long-range communications,
wideband underlay or meshed architectures. With cable and telephone wires into the home
controlled by dominant incumbents, and enormous capital required to extend fiber to every
home, open spectrum represents the best hope for a facilities-based broadband alternative.

Thinking Different About Wireless
Open Spectrum Defined
Most wireless frequency bands are licensed, meaning that the government gives an entity
such as a radio broadcaster or the military the exclusive right to transmit on those
frequencies. [2] That license comes with restrictions on geography, power output,
technical characteristics and/or service offerings. Transmission in the band by any other
party is prohibited as “harmful interference.” This regime is considered necessary because
the alternative would be a “tragedy of the commons”: a chaotic cacophony in which no one
could communicate reliably.

The tragedy of the commons idea resonates with our intuitions. After all, too many sheep
grazing in the same meadow will use up all the grass. Too many cars on a highway at the
same time will cause traffic jams and collisions. Why should spectrum be any different?

Spectrum is different. It is different because it is inherently non-physical, and because
technologies developed in recent years make it practical to avoid the tragedy of the
commons. What these technologies have in common is that they allow more than one user to
occupy the same range of frequencies at the same time, obviating the need for exclusive
licensing. [3]

“Open spectrum” is an umbrella term for such approaches. [4] As used here, open spectrum
includes established unlicensed wireless technologies such as WiFi. It would be a mistake,
however, to conclude that the existence of WiFi proves no further action is needed to
facilitate open spectrum. WiFi was designed for short-range data communication and the
limitations of current spectrum rules.  It therefore still requires wired “backhaul”
connections to the public Internet. Moreover, current unlicensed bands and technical
standards are not optimized for efficient spectrum sharing. Enlightened policies will
allow the emergence of open spectrum systems that are self-contained, and can handle a
range of services and environments. A true open spectrum environment would allow the same
degree of openness, flexibility, and scalability for communication that the Internet
itself promotes for applications and content.

There are two ways to implement open spectrum technologies. The first is to designate
specific bands for unlicensed devices, with general rules to foster coexistence among
users. This is the approach that allowed WiFi to flourish in the 2.4 GHz and 5 GHz bands.
The second mechanism is to “underlay” unlicensed technologies in existing bands, without
disturbing licensed uses. This approach, epitomized by the ultra-wideband technology the
FCC authorized earlier this year, effectively manufactures new capacity by increasing
spectrum efficiency. Underlay can be achieved either by using an extremely weak signal or
by employing agile radios able to identify and move around competing transmissions. [5]

Both unlicensed bands and underlay have their place. Eventually, underlay approaches will
be more significant, because they can work across the entire spectrum rather than
requiring the creation of designated “parks.” Someday, if underlay is successful enough,
we may not need licensed bands at all, but that day is well in the future. The important
point today is to allow both unlicensed bands and underlay to develop based on
technological capabilities and market demand. That involves four steps: removing
limitations in existing rules, creating additional unlicensed bands, establishing rules to
facilitate additional forms of underlay, and funding research into next-generation
technologies.

By Land or By Sea
Open spectrum is actually a simple concept. It requires no flights of fancy about the laws
of physics. It sounds strange because, as the examples above suggest, we are accustomed to
thinking of the radio spectrum as a scarce physical entity, like land. Charts showing the
partitioning of the spectrum and auctions for geographically defined rights to slices of
the airwaves reinforce the physicality of spectrum. We can’t see or touch the radio
spectrum, so we envision it as something solid and familiar.

This is a mirage. There is no “aether” over which wireless signals travel; there are only
the signals themselves, transmitters and receivers. What we call “spectrum” is simply a
convenient way to describe the electromagnetic carrying capacity for the signals.
Moreover, the spectrum isn’t nearly as congested as we imagine. Run a spectrum analyzer
across the range of usable radio frequencies, and the vast majority of what you’ll here is
silence. Even in bands licensed for popular applications such as cellular telephones and
broadcast television, most frequencies are unused most of the time in any given location.
[6] This is the case because historical spectrum allocations assume dumb devices that have
a hard time distinguishing among signals, thus requiring wide bands with large separation.

With today’s technology, the better metaphor for wireless is not land, but oceans. [7]
Boats traverse the seas. There is a risk those boats will collide with one another. The
oceans, however, are huge relative to the volume of shipping traffic, and the pilots of
each boat will maneuver to avoid any impending collision (i.e. ships “look and listen”
before setting course). To ensure safe navigation, we have general rules defining shipping
lanes, and a combination of laws and etiquette defining how boats should behave relative
to one another. A regulatory regime that parceled out the oceans to different companies,
so as to facilitate safe shipping, would be overkill. [8] It would sharply reduce the
number of boats that could use the seas simultaneously, raising prices in the process.

The same is true with spectrum. Allowing users to share spectrum, subject to rules that
ensure they do so efficiently, would be far more effective than turning more spectrum over
to private owners.

The Crowded Room
If the idea that many users can coexist in the same spectrum sounds counter-intuitive,
another analogy should help. Wireless communication in the radio-frequency spectrum is
fundamentally similar to wireless communication in the acoustic spectrum, otherwise known
as speech.

Imagine a group of people in a room. Experience tells us that everyone can carry on a
conversation with his or her neighbor simultaneously, even with music playing the
background, so long as people speak at a normal volume. If someone starts yelling, he or
she will drown out other speakers, who will be forced to speak louder themselves in order
to be heard. Eventually, some portion of the room simply won’t be able to communicate over
the background noise, and each additional person who starts yelling will reduce the total
number of conversations.

We could call that a “tragedy of the commons.” We could enact laws giving only some
individuals the right to speak during defined times, ensuring they can shout as loud as
they want without interference. But that would clearly be an unnecessary solution with
significant negative consequences.

Think back to the situation where everyone is speaking in a normal tone of voice. What
allows so many conversations to occur simultaneously is that the people talking are
modulating their communications in an appropriate way, and the people listening are able
to distinguish one conversation from another. It’s the intelligence at the ends of the
conversation, not the integrity of the signal, that allows for more efficient
communication. The same is true in the radio frequencies. Intelligent devices can
distinguish among more simultaneous transmissions than simple ones. The more sophisticated
and agile the system, the more the overall carrying capacity of the spectrum increases.

One might protest that the speaking analogy breaks down when people want to communicate
across the room. Here too, there is no reason many conversations can’t occur
simultaneously. By listening carefully, people can pick out individual speakers. Moreover,
imagine that the people in the room could pass messages back and forth on pieces of paper.
By cooperating to relay the communications, they would significantly increase the number
of conversations, especially over long distances. Relaying and other cooperative
techniques can serve the same function in the wireless world. [9]

As this analogy points out, the term “interference” is problematic. Radio waves at the
relevant frequencies do not bounce off one another. They pass through each other cleanly,
like the intersecting ripples from two stones thrown into a pond. [10] The overlapping
signals simply make it harder for a receiver to distinguish one from another.

“Interference” is thus highly contingent on real-world factors. Again, this shouldn’t be
surprising. Put two television sets next to one another, and you may get a sharp picture
on one but a fuzzy image on the other. The difference is that one set has a better tuner.
Do we register “interference” when it shows up on one set, or both? Should the most poorly
designed set define the requirements for everyone else? What if there is no set in the
room but a hypothetical set with certain characteristics might experience a degraded
picture there? Under current spectrum policy, such hypothetical “interference” prevents
frequency sharing.

Whatever rules we set will influence behavior. If “interference” is defined with reference
to a dumb receiver, vendors will try to save money and make receivers as dumb as possible.
If, on the other hand, manufacturers have no guarantee of spectrum exclusivity, they will
have the opposite incentive. They will build devices robust enough to deal with a variety
of situations, bounded by the overall technical rules for use of the spectrum band. Those
building transmitters or delivering services over the spectrum will face similar
incentives depending on the way the rules are defined. The point is not that the most
unrestricted environment is always the best. It’s that our current system, without
justification, assumes an exclusive licensing regime is the only viable answer.

Technologies of Wireless Freedom
There are three primary techniques for magnifying the efficiency of wireless devices in a
shared environment: spread spectrum, cooperative networking and software-defined radio.
These can all be used in licensed bands, though they reach their full potential in an
unlicensed environment.

Spread Spectrum

In a spread-spectrum system, wireless communications are digitized and chopped up into
pieces, which are spread across a range of frequencies. [11] If the receiver knows where
to look, it can piece the message back together on the other end. Spread spectrum means
that an individual frequency only carries a small part of each communication, so it’s only
occupied for a tiny slice of time. In the unlikely event that another message is occupying
that slot, only that small portion of the signal must be re-sent. Spread spectrum was
invented in the 1940s, and has been used extensively for military and other applications
that require robustness and resistance to jamming or eavesdropping (because only the
receiver knows how the signal is spread across the range of frequencies). Many mobile
phone services use spread-spectrum today to improve efficiency within licensed bands, but
the technique is even more powerful when used for underlay or in unlicensed bands.

Cooperative Networking

The capacity of a wireless system is influenced by its architecture. A broadcast
television network allows for many receivers but only one transmitter. By contrast,
cellular telephone systems use a network of cells and towers to allow people to both call
and receive calls. We may assume that the cellular hub-and-spoke architecture is the best
we can do, but it isn’t. If the end-user devices cooperate with one another, such as by
relaying signals of other users, the system can be more efficient. [12] With cooperation,
adding users increases supply as well as demand. One form of cooperative network is the
mesh architecture, where every transmitter also serves as a relay. A user need only be
able to communicate with another user, rather than with a central tower, to send a signal
anywhere on the network. Some cooperative networks can be deployed ad hoc, meaning that
new nodes can be added anywhere and they will automatically become part of the network.

Software-Defined Radio

Every radio can be tuned to pick up a certain range of frequencies, and it takes some
amount of time to change the tuning. Traditionally, these characteristics are fixed in the
radio hardware. Thus, for example, the same radio can’t pick up both FM radio and mobile
phone transmissions, or both 2.4 Ghz and 5 Ghz wireless LAN signals. Software-defined
radios, by contrast, can tune dynamically over a wider range of frequencies. A
software-defined radio can receive or transmit different kinds of wireless transmissions
automatically. If it is a so-called “agile radio,” it could adapt to the local environment
and seek out open frequencies to communicate. Even in licensed bands, most of the spectrum
is empty most of the time. Agile radios could take advantage of that empty space, moving
out of the way when another transmission appears.

All of these areas are the subject of extensive academic research and corporate R&D.
Nonetheless, the licensed spectrum model has been the dominant paradigm for so long that
there is a surprising amount we simply don’t know about how radios work. For example, we
don’t know as a theoretical matter what the maximum capacity is of a geographically
defined system filled with randomly distributed radios.

We do know that many of our intuitions are wrong. Research has shown that many factors we
believe should decrease the capacity of a system—adding more transmitters, creating more
alternative paths for signals to travel, or putting receivers in motion, for example—can
actually increase capacity. [13] This occurs because the more data a smart receiver has
about the surrounding environment, the better it can do in distinguishing the desired
signal.

The commercial viability of any system using these techniques will depend on business
conditions. That is one reason government policies should advance both designated
unlicensed bands and underlay approaches that coexist in licensed bands. Under any
scenario, though, open spectrum is not a fantasy, but a concept based on proven
techniques. It is time for our policies to catch up with the state of technology.

The Myth of Scarcity

To take advantage of the fantastic potential of open spectrum, we must change our spectrum
policies. With a few exceptions, existing laws and regulations are rooted in historical
anachronisms.

Since the passage of the Federal Radio Act in 1927 and the Communication Act in 1934,
virtually everything about wireless has changed. What began as a technology for
ship-to-shore communication became the foundation of the radio, broadcast television,
satellite and cellular telephone industries, as well as supporting private radio services,
public safety communications, military communications, wireless data networking and a host
of other applications. The amount of spectrum considered usable has increased
dramatically, as more sophisticated devices have been developed. Analog services are
giving way to digital, allowing for additional features and efficiency.

Everything has changed except for one very important thing:  We still regulate the radio
spectrum based on the technology of the 1920s.

Spectrum licensing arose in the 1920s because of a historical phenomenon. Radio receivers
of the period were primitive. They couldn’t distinguish well between different
transmissions, so the only way for multiple users to share the spectrum was to divide it
up. In 1912, nearby ships hadn’t responded to the Titanic’s distress calls, prompting
calls for regulation. By licensing spectrum to broadcasters, with wide separation between
bands, the government could ensure that receivers could identify which signal was which.

The exclusive licensing model was almost certainly the right approach when it was
developed. It has been in place for so long, during which there has been so much
commercial innovation in use of the wireless spectrum, that we take it for granted. When
you think about it, though, our approach to spectrum is the exception rather than the
rule. We shrug at intense government regulation of communications over the airwaves that
would be unconstitutional in other media. After all, wireless communication is speech.
Under the First Amendment, the government faces a high burden in justifying any law that
defines who may communicate and who may not. Yet Congress and the FCC routinely determine
who may broadcast on certain frequencies, and they regularly shut down those, such as
“pirate” radio broadcasters, who fail to observe those rules.

The rationale for limiting speech over the airwaves is that there is no alternative.
Spectrum is scarce, so the argument goes, so either some may speak or none will be able to
get their message across amid the cacophony of interfering voices. [14] As discussed
above, though, that scarcity is not an immutable property of a physical spectrum resource.
It’s a historically and technologically contingent judgment.

Needless to say, much has changed since the 1920s. And indeed, there has been a major
shift in the government’s approach to spectrum assignment. Auctions have replaced outright
grants, competitive hearings, and lotteries as the tool of choice. Beginning with Ronald
Coase’s seminal 1959 article, “The Federal Communications Commission,” [15] economists
have argued persuasively that competitive bidding is the most efficient way to assign
scarce licenses among competing users. Starting with the personal communications service
(PCS) auctions of 1994, the FCC has raised over $30 billion for the US Treasury and
delivered substantial new spectrum to the marketplace in this manner.

Most of the debates around spectrum policy today involve variations of the auction idea.
Some parties advocate secondary markets [16] or moving from licenses to fee simple
ownership, [17] while others propose combining auctions with annual lease fees after the
initial license period. [18] These debates, intense though they may be, occur within the
safe confines of the dominant exclusive licensing paradigm. If we have decided to license
wireless frequencies, there are important questions about how best to do so. But why take
licensing for granted?

A Spectrum Commons
Capacity-magnifying techniques such as spread spectrum, cooperative networking and
software-defined radio make it possible to see spectrum as something other than a physical
resource to be licensed. Portions of the radio spectrum could instead be treated as a
commons.

A commons, like the air we breathe and the language we speak, is a shared, renewable
resource. It is open to all. It is not completely free or inexhaustible, but it can seem
that way if individuals follow rules to prevent over-grazing. A commons is entirely
compatible with competitive capitalism. The key is that the marketplace occurs among users
of the commons; the commons itself cannot be bought or sold. We have no trouble accepting
the automobile and trucking industries, even though they depend on public roads and
highways that are free to use and maintained by the government.  And we accept that even
though anyone can drive on the highway, everyone has to observe speed limits, seatbelt
laws, and other safety rules. Those public roads even coexist with private toll roads, but
we don’t think that privatizing all the roads would improve the quality of transportation
in the US.

A spectrum commons works just like the highways. Government defines the scope of the
common resource and sets limited rules to facilitate efficient use. That means setting
aside unlicensed frequencies, adopting rules to facilitate new “underlay commons,” setting
power limits or other technical standards, and responding to any breakdowns.

The beauty of a spectrum commons is that is creates the right incentives. Exclusive
licensing and propertization create spectrum monopolies, which seek to maximize the rents
they can collect. Forcing licensees to buy spectrum at auction ensures it goes to those
who value it highly, but it forces the winner to recoup its up-front investment, biasing
the way it makes use of the spectrum. As noted above, exclusive licensing also encourages
receiver manufacturers to make their devices as dumb as possible, while a spectrum commons
has the opposite effect. In a commons environment, companies can respond to marketplace
demands by tailoring new services, since the costs of entry are minimal.

Open Spectrum in the Real World
The WiFi Explosion
Arguments about the benefits of open spectrum have in the past been largely theoretical.
Techniques such as spread-spectrum were widely employed, but primarily in licensed bands
or in military applications. Academic research showed the benefits of a spectrum commons.
Without mass-market commercial examples, though, few were convinced the idea could fly in
the real world.

Such real-world validation arrived in the form of WiFi and related wireless local area
network (LAN) technologies. WiFi is a marketing and certification term promulgated by the
Wireless Ethernet Compatibility Alliance, an industry trade group. It refers to the
802.11b and 802.11a wireless Ethernet standards defined by the Institute for Electrical
and Electronic Engineers (IEEE). [19] 802.11b, which was the first to take off
commercially, operates in the 2.4 GHz Industrial, Scientific and Medical (ISM) band and
delivers data speeds up to 11 megabits per second. 802.11a operates in the 5 GHz U-NII
band and offers connections up to 54 megabits per second. [20] Standards work in this area
is ongoing, with proposed standards including 802.11g, which delivers higher-speed
connections in the 2.4 GHz band, and 802.11e, which adds quality-of-service mechanisms to
support high-quality voice and video delivery.

The IEEE issued the final 802.11b standard in September 1999. The first mass-market
commercial implementation, Apple’s AirPort technology, went on the market that year. Since
then, the market has grown rapidly, with expected sales of some 10 million PC/laptop
adapter cards this year. Vendors such as Cisco, Linksys, D-Link, Netgear and Proxim are
doing a brisk business selling access points for home networks, adding value to
residential broadband connections. On the enterprise side, wireless LAN deployments
doubled last year, with more than one million access points now in use in 700,000
companies, according to the Yankee Group. [21] Cahners In-Stat sees the WiFi hardware
market generating over $5 billion in 2005, and that doesn’t even include service revenues.
[22]

WiFi Applications

Though WiFi was originally developed for corporate LANs, it has garnered attention for two
applications: hotspots and community access points. Hotspots are wireless access points
deployed in high-traffic locations such as hotels, airports, and cafes. Typically, the
facilities owner contracts with a company that installs the necessary equipment and
Internet connection, with the revenue split between them. Sometimes the service provider
keeps all the revenue, with the facilities owner benefiting from additional traffic the
access point generates. End-users usually pay a per-minute or monthly access fee to
connect to the Internet through the hotspot.

Over 4,000 hotspots have been deployed in the US, as well as in Europe and Asia. Most
major hotel chains have announced plans to deploy WiFi hotspots, as have major US
airports. The most prominent hotspot arrangement is MobileStar’s deployment in Starbucks
coffee houses around the country. MobileStar filed for bankruptcy, but its assets were
purchased by VoiceStream and its hotspots are now supported under its T-Mobile brand.
T-Mobile and Hewlett Packard recently announced that WiFi will be available in 2,000
Starbucks by the end of 2002. [23]

Community access points are similar to hotspots, but they are made freely available to
anyone in the area. Typically, community access points are established by individuals or
groups such as BAWUG in the San Francisco Bay Area, NYCWireless in New York City, or
Personal Telco in Portland, Oregon. Many hook without permission into corporate networks
or home broadband connections. An increasing number, however, are funded by governments,
universities, and non-profits who see a benefit in providing widespread wireless Internet
access. Athens, Georgia offers free WiFi connectivity throughout its downtown area, funded
by the University of Georgia, while Intel sponsors free WiFi connections in Manhattan’s
Bryant Park.

Hotspots and community access points have generated significant media attention, and for
good reason. However, they are only one element of a WiFi market that includes several
other major applications.

Campus Networking

Major corporations are deploying WiFi networks across their corporate campuses to provide
ubiquitous connectivity for their employees; universities are doing the same for their
students and faculty. Unlike the consumer access points, these deployments typically have
beefed up security and reliability. WiFi is one of the few remaining growth areas in the
depressed data networking sector, a fact not lost on vendors such as Cisco. Leading
information technology services companies such as IBM have developed expertise integrating
and installing these corporate networks.

Industrial Applications

Manufacturers such as Boeing are using WiFi to network their factories and warehouses.
Such environments don’t lend themselves to wired connections. The ability to track
inventory and access internal corporate documents from anywhere can generate substantial
cost savings and efficiency benefits for these companies, who take advantage of the
maturity and low cost of WiFi equipment thanks to its consumer applications.

Virtual ISPs

Several companies are linking together the scattered hotspots through roaming
arrangements, creating nationwide virtual networks. Examples include Boingo, Joltage,
Wayport, and NetNearU. Some of these companies encourage individuals and small businesses
to establish new access points, offering to share revenues from wireless access with them.
A New York Times report earlier this year stated that several major technology and
communications companies including Intel, Microsoft and Cingular Wireless were evaluating
creating a nationwide WiFi roaming network, known as Project Rainbow. [24]

All this activity has taken place in an already-crowded unlicensed band, without any
protection against interference from other users. WiFi is an existence proof for the
validity of the open spectrum argument.

Other Unlicensed Technologies
WiFi is not alone. Several other unlicensed wireless data technologies are either
commercially available or nearly so. Each has technical characteristics that lend
themselves to particular market opportunities, though there are many areas of potential
overlap. The beauty of an unlicensed environment is that hardware vendors and service
providers need not go through a gatekeeper such as a cellular carrier to gain access to
spectrum. If the technology works, and there is a market for it, the equipment can simply
be deployed.

802.11 Variants

WiFi is a particular protocol designed for local-area network applications. Several
companies are trying to marry the cost economies of standards-based 2.4 GHz radios with
proprietary software and hardware to support additional capabilities. There are also
competing standards to WiFi, including HomeRF and the European HyperLAN2, but these have
generally lost out to WiFi in market adoption and will likely fade away.

Ultra-Wideband

As described above, ultra-wideband (UWB) systems use such low power that they can underlay
beneath existing licensed spectrum bands. Because of the power limitations, current UWB
implementations have limited range, but they offer significant capacity. Vendors such as
Time Domain and XTreme Spectrum are building chipsets to deliver 100 Mbps or more over
short distances. After a long and bitter fight, the FCC authorized UWB underlay for the
first time in February. [25] The FCC’s initial rules put strict limits on UWB systems, but
the Commission committed to reviewing and potentially loosening the restrictions if
interference fears do not materialize.

Bluetooth and Other Personal Area Network Technologies

WiFi works in a local area, but many wireless applications need only a range of a few
feet. Personal-area networking (PAN) encompasses situations such as transmitting between a
mobile phone and a headset, sending data between a phone and a personal digital assistant,
and printing from a laptop to a printer in the same room. For these scenarios, WiFi may be
overkill in terms of power requirements and chip costs. Bluetooth is an unlicensed ad hoc
2.4 GHz standard for such applications. It has been slow to roll out, leading to
speculation it would lose to WiFi. However, it now looks as though Bluetooth will find a
niche, primarily replacing wires in short-range situations.

Unlicensed Metropolitan-Area Networking

At the other extreme from PANs are metropolitan-area networks (MANs), which cover entire
neighborhoods or cities, though often designed primarily for business connections. The
IEEE is developing standards, 802.16, for wireless MANs using the 10 GHz - 66 GHz
spectrum. Though these are initially targeted at licensed spectrum, the same concepts
could be applied in an unlicensed environment. Motorola offers a proprietary unlicensed
system called Canopy that is designed for the metropolitan area. Canopy, or some variant
of it, might become the basis for the 802.16 standard in unlicensed bands.

Lessons of WiFi
The success of WiFi shows that spectrum sharing works in the real world.  Without
heavy-handed control by government or by service providers who have incentives to maximize
only their own welfare, an entire industry has emerged. That industry has developed with
no legal protections against competing uses. Despite repeated warnings of a “meltdown,”
only isolated anecdotal cases of congestion among WiFi users have been reported. Companies
such as Intel and Microsoft are devoting substantial resources to these technologies,
which they would be unlikely to do if they were seriously concerned about a tragedy of the
commons.

Moreover, wireless LAN technology is evolving and diversifying rapidly. Vendors are
beginning to deliver hybrid 802.11a/b chipsets, and devices that add software intelligence
to WiFi are coming on the market. Innovation in the WiFi world follows the computer
industry curve of Moore’s Law, [26] because it is based on improvements in hardware. WiFi
devices become cheaper and more sophisticated every year, just like personal computers
(but unlike most telecommunications services). They are standards-based components sold in
a competitive market, at volumes that allow for economies of scale. Those new devices
become part of the network as soon as users purchase and install them. Capital investment
is spread among users, rather than shouldered upfront by a network operator. By contrast,
3G services can only be deployed after service providers build and upgrade expansive
network infrastructure and proprietary hardware.

Limitations in WiFi devices are being addressed through market forces. For example,
first-generation WiFi equipment has a relatively weak built-in security mechanism known as
Wireless Equivalent Privacy (WEP). For users concerned about security, such as
enterprises, third parties and hardware vendors quickly developed supplemental security
solutions that integrated with standards-based WiFi deployments. Meanwhile, an enhanced
security standard, 802.1x, was recently ratified by the IEEE.

A key to the success of WiFi is that it uses a different business model than traditional
telecommunications and broadband services. Because the network grows incrementally with
every new access point and every device capable of receiving WiFi signals, there is no
need for incentives to convince a monopoly service provider to build out expensive
infrastructure. No one needs to predict what the killer applications of the technology
will be, because users will find them on their own. With a licensed service, the network
operator must invest in delivering services in the hope that customers will pay enough to
recoup that investment. With WiFi, services grow bottom-up through market forces.

There are many things WiFi cannot do. For example, as a short-range LAN technology, it
can’t provide universal coverage over a large area, and it isn’t designed for mobile
scenarios such as connecting from a car. For these applications, WiFi gracefully coexists
with licensed services. Vendors such as Nokia are building equipment that supports both
WiFi and licensed wide-area cellular services, allowing users to switch automatically to
the best network for their current needs. Licensed mobile operators are beginning to enter
the WiFi hotspot business, including T-Mobile, Sweden’s Telia, and Japan’s NTT DoCoMo.

Open Spectrum and the Last-Mile Bottleneck
Unlicensed technologies could play an important role in residential broadband adoption.
Today, incumbent cable and local telephone companies dominate the residential broadband
market with cable modem and digital subscriber line (DSL) services. These companies
control the two primary wires into homes. To deploy high-speed services, they must upgrade
their networks, which requires significant investment. Most incumbent service providers
now charge $45 to $50 per month for broadband connections. They frequently place
significant limitations on the services, including highly asymmetric bandwidth,
prohibitions on home servers, prohibitions on virtual private network connections, and
limits on streaming video usage.

The operators claim these restrictions are necessary for their broadband offerings to be
economically viable, even though equivalent services in other countries are priced
significantly lower. Though subscribership is increasing and new technologies are reducing
the costs of broadband infrastructure, many companies have actually increased their prices
during the past year, as competition dried up.

The fundamental problems in the residential broadband market are the same as in wireless.
Service providers must build expensive networks and define the services for which they
think users will pay, then charge high rates to recover their costs. Most cable modem and
DSL providers market their services as providing faster Web surfing than dial-up access.
Many end-users simply don’t find this compelling, especially at $50 per month. Unlike the
open WiFi market, there is no room for innovators to roll out new service offerings or
better technology, because everything must go through the network owner.

As noted above, standard WiFi technology provides only short-range connections, to a range
of approximately 300 feet. This is insufficient for most residential broadband
deployments. To deliver broadband to a home, the home must connect to a high-speed
Internet trunk, which can be shared among many customers. Having a fast WiFi connection in
a house doesn’t substitute for DSL or a cable modem, because the wired connection is still
necessary to reach the public Internet.

Despite these limitations, there are several approaches that could allow unlicensed
wireless devices to deliver last-mile broadband service. Companies such as Nokia (with its
Rooftop system), MeshNetworks and SkyPilot have created systems that use a meshed
architecture. In other words, rather than connecting to a central hub, each device can
send information to every other device it can see. Information can be routed through the
network using many different paths, depending on capacity, line of sight, and other
characteristics. The mesh approach gets around limitations that hobbled previous
fixed-wireless systems in the last mile. Other companies such as Etherlinx and Motorola
have created proprietary technologies on top of WiFi radios to allow significantly
increased range in traditional point-to-multipoint deployments. Motorola claims its Canopy
technology can serve up to 1,200 subscribers from a single access point at a range of up
to two miles, operating in the unlicensed 5 GHz band. Unlicensed wireless connections
could also serve as “tails” at the end of existing phone, cable, or fiber infrastructure
in residential neighborhoods.

All these configurations have their limitations. As with any wireless service, connection
quality depends on physical geography and the local spectral environment. As a result,
it’s unlikely unlicensed technologies would represent the majority of broadband
connections in the near future. Even if they take a small share of the market, however,
wireless last-mile systems would foster significant competition and innovation. Wired
broadband providers would have to improve their offerings or lower costs to compete.

Demand Pull

Unlicensed wireless technologies will impact the broadband market even if they aren’t used
as the primary connection method. Large numbers of WiFi access points are being deployed
for home networking. Users install these devices in their homes to share broadband
connections among several computers, share peripherals such as printers, or give
themselves untethered Internet access anywhere in their house. Digital consumer
electronics devices are beginning to incorporate WiFi connections as well. For example,
Moxi Digital, which recently merged with Digeo, a company funded by Microsoft co-founder
Paul Allen, incorporates an 802.11a transmitter in its personal media center. This allows
the Moxi box to stream high-quality audio video among TVs and stereos throughout a house.
Intel is spearheading a standards effort to allow WiFi to interoperate with FireWire (IEEE
1394), a wired standard popular for digital media applications.

As home networks and related devices proliferate, they will create a “pull” for broadband
applications. WiFi hardware is becoming sufficiently cheap for hardware manufacturers to
include it without significant effects on device prices. As users buy laptops and consumer
electronics hardware with high-speed wireless connections built in, they will find new
uses for it, such as sending music files from their computer to their stereo system, or
sharing pictures downloaded from the Web. Many of these applications will benefit from
broadband connections into the home. Wireless devices will therefore stimulate broadband
demand even when the last-mile connection is wired.

Policy Recommendations

Open spectrum is not inevitable. Technologies now available or under development will lay
the groundwork for a radically more open and more efficient wireless environment, but
without the right policy framework, those technologies may never see the light of day.
WiFi, exciting though it may be, cannot simply evolve into the full realization of open
spectrum. If the US wants to enjoy the benefits of open spectrum, it must take steps to
facilitate it.

First, Do No Harm
Despite the promise of open spectrum, there are many threats to the continued growth of
unlicensed wireless. Open spectrum profoundly threatens the status quo. It represents a
new form of potential competition for existing wireless services, and for wired services
as well. Moreover, it runs counter to conventional assumptions about which policies are
truly market-based. Absent a clear understanding of open spectrum’s implications,
policymakers may take actions that would prevent it from reaching its potential.  The FCC
and Congress must ensure that the following threats from incumbent industries do not
undermine the future potential of unlicensed technologies:

Requests for Regulatory Protection

Sirius Satellite Radio filed a petition with the FCC earlier this year seeking
restrictions on WiFi based on trumped-up concerns about interference with its adjacent
licensed satellite transmissions. Though Sirius hadn’t even launched its service and the
potential for interference was minimal, it wanted significant limitations and new device
requirements placed on the thriving WiFi industry. The Sirius petition was withdrawn after
it provoked serious objections. Nonetheless, it gives a sense of how licensed users could
seek to hamstring unlicensed alternatives. Wireless operators facing new competition from
unlicensed devices may similarly rely on scare tactics and legal maneuvers to prevent
unlicensed services from encroaching on their markets.

Spectrum “Propertization”

If the FCC were to give spectrum licensees full ownership rights, it would significantly
decrease the likelihood that spectrum would be available for unlicensed uses. Companies
that pay for control over frequencies will want to recoup their investments, which means
excluding competing users.  Even if “band managers” could operate toll-gated frequencies
for unlicensed use, the transaction costs involved would be substantial.  Worst of all,
propertization is a one-way street. Once spectrum becomes private property, converting
some of it to unlicensed “parks” or even eliminating restrictions on band sharing could
require costly eminent domain proceedings. Giving spectrum licensees greater flexibility
or opportunities to engage in secondary market transactions may make sense, but the step
from there to further propertization would have significant negative consequences.

Backhaul Discrimination

Unlicensed wireless data devices must at some point connect into the public Internet. For
traditional point-to-multipoint systems such as WiFi, an access point serves as the local
hub and connects to a wired data connection such as a T-1 line to deliver traffic to the
Internet. Bringing data from a local point of presence to a central aggregation point is
known as “backhaul.” It typically involves facilities of incumbent local exchange
carriers, because their networks span virtually every city. Because of the lack of
competition, backhaul is expensive. Moreover, if telephone companies see unlicensed
wireless devices as competitive, they may seek to prevent them from connecting into their
networks.  An advantage of meshed networks and systems that combine short-range unlicensed
“tails” with long-range unlicensed “backbones” is that they cut down on the need for wired
backhaul connections. Until such alternatives are widely available, the government should
reject rule changes that would make it easier for telephone companies to discriminate in
provision of wireless backhaul, and should police against anti-competitive behavior.

Affirmative Steps
At the same time, policymakers should take affirmative steps to facilitate open spectrum.
Most current unlicensed wireless services, including WiFi, operate in the 2.4 GHz and 5
GHz unlicensed bands. These bands are relatively narrow, at high frequencies that limit
their propagation, and subject to many established competing uses. Though unlicensed
devices can coexist in seemingly crowded spectrum, their ability to do so is not absolute.
Moreover, WiFi’s software protocols don’t have the adaptive and cooperative
characteristics of truly scalable unlicensed networks. Current FCC rules have done a
reasonable job of setting conditions that allow for innovation and market growth, but more
is needed.

The US government should follow a four-step program to make open spectrum a reality:

•     Develop rules to foster more effective cooperation among unlicensed users

•     Set aside more spectrum for unlicensed uses

•     Eliminate restrictions on non-intrusive underlay techniques across licensed bands

•     Promote experimentation and research in unlicensed wireless technology

All of the elements are important. WiFi, other unlicensed technologies in designated
bands, and underlay are all part of the answer. Furthermore, the mix will change over
time. Existing unlicensed bands are delivering value today. However, newer approaches
designed from the ground up for open spectrum will be the long-term winners. The only way
to allow market forces to determine the best solutions is to give alternative approaches a
chance. By announcing its intention to move forward with a comprehensive open spectrum
agenda, the US government would give investors and technologists the confidence to devote
resources to new ventures that make open spectrum a reality.

1)  Fostering Effective Cooperation
The first step is to enhance existing unlicensed bands, which were not designed with open
spectrum in mind. The FCC should work with the private sector and the technical community
to identify minimal requirements to facilitate efficient spectrum sharing. In the near
term, this could include service rules for the 5 GHz band to allow for continued growth of
wireless data networking applications. These should not pre-determine technology or
applications, but could include general requirements such as mandating that devices be
capable of two-way packet-switched communications. The FCC should also identify
restrictions in its existing rules, such as outmoded prohibitions on repeaters, that could
be removed to allow for greater spectrum sharing.

In the future, as it establishes new unlicensed bands and eliminates underlay
restrictions, the FCC could define additional “rules of the road,” either as requirements
or as advisory “best practices.” For example, companies could be encouraged to build
devices that modulate their output based on actual conditions, or that repeat traffic for
other users, allowing for meshed architectures.

Whatever rules are adopted should be developed in consultation with industry
representatives and technical experts to ensure they do not over- or under-specify
standards. Reasonable accommodations should be made for uses of spectrum other than data
networking, including scientific activity such as radio astronomy. Different rules may
apply to particular bands or techniques. Whatever decisions are made will need to be
reviewed periodically as conditions evolve.

2) Expanded Unlicensed Spectrum
Improving existing unlicensed bands isn’t enough. Most are so narrow and congested that
their utility for open spectrum is limited. Furthermore, the high frequency of the most
prominent unlicensed bands limits signal propagation. Lower-frequency spectrum that
penetrates weather, tree cover, and walls would provide significant advantages for
services such as last-mile broadband connectivity.

The FCC should identify additional spectrum bands that can be designated for use as
unlicensed “parks,” with a particular focus on frequencies below 2 GHz where propagation
is best. The FCC will need to consult with other relevant agencies such as the Department
of Defense, Federal Aviation Administration, and Department of Commerce; technical and
scientific organizations such as the National Academy of Sciences and Institute of
Electrical and Electronics Engineers; and the private sector. Furthermore, the U.S.
government should work through the World Radio Conference and other international fora to
create global unlicensed bands wherever possible.

There are many possible sources for additional unlicensed spectrum. The 5 GHz unlicensed
band could be expanded relatively easily, a move that would also help bring the U.S.
allocation in line with other countries. Because of its limited propagation
characteristics, however, 5 GHz should not be seen as a long-term solution. Creating
unlicensed spectrum parks elsewhere would involve relocation or other accommodation of
existing users. That is a process the Commission has engaged in repeatedly in the past.

3) Remove Constraints on Underlay
The FCC took a major step forward with its February approval of ultra-wideband. The
Commission wisely rejected overblown fears about interference, relying on technical data
and prudent restrictions on UWB deployment. However, the Commission’s initial rules still
put unnecessarily severe limits on where and how UWB can be used. Assuming that experience
shows the fears about interference ungrounded, the FCC should loosen its restrictions
without delay.

The FCC should look at other ways to facilitate underlay of unlicensed communications in
existing spectrum bands. Underlay can be achieved either through weak signals or adaptive,
agile receivers. As technology advances, the FCC could consider a rule allowing underlay
in certain bands, so long as devices check the local environment before transmitting and
vacate a frequency within a certain number of milliseconds if a licensed service appears
there. Underlay could also be used as a transition mechanism in bands where there are
limited numbers of incumbents. Those incumbents could be allowed to remain in the band,
but without the current guarantees against interference.

4) Drive Technology Development and Adoption
The government should seek out additional mechanisms to encourage the development and
deployment of unlicensed devices. These could include liberalizing rules for experimental
licenses, funding research projects, and using government procurement power to drive
adoption of WiFi or other technologies. The Defense Advanced Research Projects Agency
(DARPA) of the Department of Defense has a distinguished history of supporting
cutting-edge research in data networking, including the packet-switching technology that
led to the Internet. DARPA has long funded research into meshed wireless networking,
ultra-wideband, and software-defined radio, because of their military applications. These
efforts should be continued, and every effort made to ensure smooth transfer of the
resulting technologies to civilian applications.

The FCC and other relevant agencies should review their rules to identify unnecessary
restrictions that keep unlicensed devices out of existing programs. For example, the FCC
doesn’t allow the use of Schools and Libraries subsidies for unlicensed networking
devices, because they do not involve a communications “service.” Of course, government
should not try to pick winners among competitors in the marketplace, but rather work in
tandem with the private sector to ensure innovative technologies can reach their
potential.

Alongside these steps, the FCC and Congress should continue their broader efforts to
foster investment and competition in communications. Open spectrum will flourish in a
growing market.

A Near-Term Opportunity in 700 MHz
The forthcoming return of analog television spectrum provides an opportunity to put some
of these policies into practice. Congress has directed the FCC to auction the 700 MHz
spectrum now occupied by broadcast channels 60-69, though the auction has been delayed
several times. Because of its propagation characteristics, the 700 MHz spectrum could make
an excellent unlicensed wireless park, a scenario that simply could not be contemplated
when the original plans for return of that spectrum were drawn up. Congress should take
advantage of the opportunity and designate some or all of the 700 MHz spectrum for
unlicensed devices. As a transitional mechanism, the FCC could allow only underlay uses
that do not intrude on incumbent licensees.

Conclusion

We are living under a faulty set of assumptions about spectrum. Licensing may have been
the only viable approach in the 1920s, but it certainly isn’t in the first years of the
21st century. We take it for granted that companies must pay for exclusive rights to
spectrum, and that once they do, they must invest in significant infrastructure buildout
to deliver services. We also take for granted a pervasive level of regulation on how
spectrum is used, which would be intolerable for any other medium so connected to speech.
We assume that market forces, if introduced into the wireless world at all, must be
applied to choices among monopolists rather than free competition. We make these
assumptions because we can’t imagine the world being otherwise.

Open spectrum technologies forces us to rethink all of our assumptions about wireless
communication. By making more efficient use of the spectrum we have, it can effectively
remove the capacity constraints that limit current wireless voice and data services. By
opening up space for innovation, it could lead to the development of new applications and
services. It could provide an alternative pipe into the home for broadband connectivity.
And it could allow many more speakers access to the public resource of the airwaves.

Today, we stand at a crucial point. Our policies could fritter away open spectrum’s
historic opportunity, either through inaction or harmful limits on new technologies. Or we
could listen to what the market and technology are telling us. Computers have made
wireless devices vastly smarter than they were in the past. It’s time for our policies to
become smarter as well. Promoting open spectrum is the most democratic, deregulatory,
pro-investment, and innovation-friendly move the US Government could make.

Endnotes

--------------------------------------------------------------------------------

* Kevin Werbach is a technology consultant, author, and founder of the Supernova Group. He
has served as the Editor of Release 1.0: Esther Dyson’s Monthly Report, and as Counsel for
New Technology Policy at the Federal Communications Commission.

--------------------------------------------------------------------------------

[1] The most prominent unlicensed bands are in the 900 MHz range, the 2.4 GHz range and
the 5 GHz range.

[2] Some bands are licensed for shared use, meaning that more than one entity is permitted
to transmit. In such cases, though, other users are still prohibited from using the
spectrum.

[3] See, e.g., Kevin Werbach, “Open Spectrum: The Paradise of the Commons,” Release 1.0,
November 2001, available from the author or at http://www.release1-0.com; Yochai Benkler,
“Open Spectrum Policy: Building the Commons in Physical Infrastructure,” presentation at
the New America Foundation conference “Saving the Information Commons,” May 10, 2002,
available at http://www.newamerica.net/Download_Docs/pdfs/Doc_File_122_1.pdf; Yochai
Benkler, “Overcoming Agoraphobia: Building the Commons of the Digitally Networked
Environment,” 11 Harvard Journal of Law and Technology 287 (1998), available at
http://www.law.nyu.edu/benklery/agoraphobia.pdf.

[4] The phrase is far from perfect. “Open” is a notoriously vague term in the computer
world, and unlicensed wireless systems don’t necessarily have the same characteristics as
open source software or open technical standards. The word “spectrum” evokes the physical
image of discrete frequency bands that open spectrum seeks to overcome. Nevertheless, open
spectrum is most widely used term for what we are describing, so we employ it here.

[5] Underlay is similar in some ways to low-power radio stations that can broadcast
without harming high-power commercial stations in the same band. However, because it uses
intelligent devices and modulation techniques, open spectrum underlay is even less likely
to have any noticeable effect on licensed users.

[6] Among the 68 channels reserved nationwide for broadcast television, an average of only
13 channels per market are actually in use.  The remaining “white space” is set aside to
ensure antiquated analog receivers can distinguish among the channels.

[7] Futurist George Gilder made a similar analogy in his pioneering series of “telecosm”
articles in the early 1990s. See George Gilder, “Auctioning the Airways,” Forbes ASAP,
April 11, 1994 (“You can no more lease electromagnetic waves than you can lease ocean
waves”). See also Rich Karlgaard, “2002 Hangs on These,” Forbes, January 21, 2002.

[8] The key is the relative absence of scarcity. Some ocean resources, such as certain
fish stocks, were once abundant but have become scarce due to overfishing. In those cases,
economic and regulatory mechanisms to allocate the scarce resource make sense. With
spectrum, we are far away from this point of scarcity.

[9] Technologist David Reed calls this “cooperation gain.” See David P. Reed, comments in
FCC Docket No. ET 02-135 (July 23, 2002), available at
http://www.reed.com/OpenSpectrum/FCC02-135Reed.html

[10] I first heard this analogy used by David Reed.

[11] This paper uses the term “spread spectrum” in a general sense. An even broader term
is “wideband,” which covers any method that employs a wide channel

[12] See Reed, supra note 9; Tim Shepard, “Decentralized Channel Management in Scalable
Multihop Spread-Spectrum Packet Radio Networks,” MIT dissertation (1995), available at
ftp://ftp.lcs.mit.edu/pub/lcs-pubs/tr.outbox/MIT-LCS-TR-670.ps.gz (describing one scalable
architecture).

[13] See Reed, supra note 9, at 13-18.

[14] See Red Lion Broadcasting Co., Inc. v. Federal Communications Commission, 395 U.S.
367 (1969).

[15] Ronald Coase, “The Federal Communications Commission,” 2 Journal of Law and Economics
1, 17-35 (1959).

[16] See Comments of 37 Concerned Economists, FCC Docket No. WT 02-230, February 7, 2001.

[17] See Thomas Hazlett, “The Wireless Craze, The Unlimited Bandwidth Myth, The Spectrum
Auction Faux Pas, and the Punchline to Ronald Coase’s ‘Big Joke’: An Essay on Airwave
Allocation Policy,” AEI-Brookings Joint Center for Regulatory Studies Working Paper 01-02,
January 2001; Arthur De Vany, “A Property System for Market Allocation of the
Electromagnetic Spectrum: A Legal-Economic-Engineering Study,” 21 Stanford Law Review 1499
(1969); see also Jora Minasian, “Property Rights in Radiation: An Alternative Approach to
Radio Frequency Allocation” 18 Journal of Law and Economics 221 (1975).

[18] See Reply Comments of New America Foundation, et al. in FCC Docket No. ET 02-135,
July 22, 2002.

[19] WECA originally used WiFi to designate 802.11b, and WiFi5 for the higher-speed
802.11a standard. To avoid customer confusion, the group has changed its policy and will
now issue the WiFi compatibility mark to devices using both standards.

[20] These are theoretical peak speeds. Under real-world conditions, 802.11b delivers
several megabits per second and 802.11a delivers several tens of megabits. By comparison,
wireline broadband connections over cable or copper phone lines (DSL) typically deliver
data speeds of 1 megabit per second or less.

[21] See Stephen Lawson, “Wireless LAN Use Growing Fast,” InfoWorld, August 1, 2002.

[22] See “Wi-Fi: It’s Fast, It’s Here -- and It Works,” BusinessWeek, April 1, 2002.

[23] “VoiceStream Expands Wi-Fi Access in Starbucks,” Wall Street Journal, August 21,
2002.

[24] John Markoff, “Talks Weigh Big Project on Wireless Internet Link,” New York Times,
July 16, 2002.

[25] See Revision of Part 15 of the Commission’s Rules Regarding Ultra-Wideband
Transmission Systems, ET Docket No. 98-153, First Report and Order, FCC 02-48, February
14, 2002.

[26] Moore’s Law, named for Intel co-founder Gordon Moore, holds that microprocessor
performance doubles roughly every 18 months. It has held true for more than thirty years.

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