Subject: [NEXTEL-1] Spectrum Policy - Property or Commons? 3/1/03

From: Marcel <[email-masked]>
Date: Sun, 05 Jan 2003 11:48:36 -0500

What:
Should spectrum be treated as property
or a commons?

Who:
Stanford Law School
Center for Internet and Society
and the Manhattan Institute

When:
Saturday, March 1, 2003

Where:
Stanford Law School, Stanford, CA, USA

Why:
"...[S]pectrum policy is a central component of the great digital
migration for all Americans." -- Michael Powell

Spectrum policy is undergoing a fundamental reorientation in the
United States and elsewhere.

An emerging consensus holds that the traditional system of
governmentally-allocated spectrum rights inhibits innovation
and competition. The central question now facing policy makers is
what form of spectrum management should replace the existing
system.

Wireless innovations are changing the way we live.
We are evolving from the wired world to a wireless one, where
information is exchanged seamlessly through the air we breathe.
Wi-Fi, drive-by infofueling, location enabled systems and
"mesh-style" networks - the possibilities are limited
only by the limits on innovation.

An emerging consensus holds that one of the greatest limits on
innovation is the government's method of allocating portions
of electromagnetic spectrum. Since its discovery, small chunks of
spectrum have been auctioned off to the highest bidder,
or given away to commercial interests in exchange for their
submission to government regulation. Laws prohibit the resale of
spectrum, which means that unused spectrum cannot be transferred
to others who want it, and is therefore wasted.

As a result, would-be innovators never know if spectrum will be
available for their new inventions. Consequently, they can't
factor it into a business plan, or build new wireless applications
in their garage knowing that the necessary spectrum will be
available to their future customers.

In an effort to encourage innovation, critics of the current model
have proposed radical - and radically different - reforms. Some
say spectrum should be treated like 'property', giving purchasers
the same rights afforded any property owner, including the right
to exclude others from using it, and the right to transfer
ownership. In contrast, proponents of a 'commons' model argue that
spectrum is like a stream that belongs to all of us, and that
current technological innovations allow sharing of the resource-a
practical, not moral, argument.

Nobel Prize winning economist Ronald Coase
(http://coase.org/aboutronaldcoase.htm) criticized the FCC's
spectrum policy
in 1959, arguing that rules preempting private ownership of
spectrum led to catastrophic inefficiencies in the market. Both
the 'property' and 'commons' proponents claim that Coase's theory
supports their model, and that each view best promotes market
efficiency and innovation.

At "Spectrum Policy: Property or Commons?" leading figures in this
debate will explain their views on today's wireless technology and
market conditions, and discuss the complex implications of the
competing models. Then they'll debate their positions before a
blue ribbon panel of judges:

 FCC Chairman Michael Powell,
(http://www.fcc.gov/commissioners/powell/)
renowned economist Harold Demsetz,
(http://www.econ.ucla.edu/demsetz/)
and Ninth Circuit Court of Appeals Judge Alex Kozinski
(http://www.appellate-counsellor.com/profiles/kozinski.htm)

The aim of the day will be to explore both paradigms, their
relationships to the work of Ronald Coase, and the vital
unanswered questions facing the future of spectrum management.

To register, visit:
http://cyberlaw.stanford.edu/spectrum/register/

For more information:
http://cyberlaw.stanford.edu/spectrum/

Stanford Center for Internet & Society
http://cyberlaw.stanford.edu/

Crown Quadrangle,
559 Nathan Abbott Way,
Stanford, CA 94305-8610
Phone: 650.723.5674

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From: "sparkie_rf <[email-masked]>" <[email-masked]>
Date: Sun, 05 Jan 2003 19:17:55 -0000

> Should spectrum be treated as property

The only thing that can be said with any certainty re:Spectrum 
Policy is that the FCC will continue to screw it up.

It seems to me that if policy shifts from a property focus to a 
commons focus, then the folks who ponied up billions should receive 
a FULL REBATE.

The commons idea should be dismissed as just a 60's FreeLove/LSD 
flashback. Just look at the chaos, the lengthy deliberations etc, 
re:Nextel and the PS community. Who will arbitrate interference 
problems under a commons plan? Not the FCC, speed is anathema to a 
bureaucracy's DNA. It will never work, great idealogy, but stupid 
practically. Why? Because intentional frustration is a very 
successful and profitable business strategy. Just look around.

The spectrum debates are all moot anyway, because their is no 
shortage of spectrum. Just like every other area of telecom, 
wireless suffers from OVERCAPACITY. Spectrum is deeply misunderstood 
by far too many telecom executives. 

CDMA technology is actively DESTROYING the value of spectrum.

Greater efficienies mean that as the amount of industry spectrum has 
been held constant for the past few years, the "on-air" available 
erlang(voice capacity) count is exploding. Industry capacity is 
growing very rapidly, and the percentage of spectrum that still sits 
fallow is massive. Thus the industry has plenty of room to grow, 
with no problems.

Nextwave will/should win its SCOTUS case very soon, that means just 
over 20% of the nation's PCS spectrum inventory will no longer be 
tied up in court, first the first time since 1996. Watch out. The 
nextwave folks are different for every other wireless company, they 
are entrepreneurs. It should be interesting.

Ask yourself this one simple question: If the FCC allocated more PCS 
spectrum what benefits would accrue? None. In fact more spectrum 
would irreparably destroy the industry. Here's why: Just as too few 
competitors is not a good thing, so is the condition of too many 
competitors. The wireless industy already has too many competitors, 
some markets have 8 competitors. Allocating more spectrum will ONLY 
prolong the necessary consolidation, it will eliminate all industry 
profits. Which of course is why the capital markets have been closed 
to the telecom industry for some time now. No capital = no new build 
outs + additional spectrum = spectrum hoarding = no real benefit.

This is of course why the industry ran away from the illegal 
Nextwave auction. They FINIALLY realized that they had grossly 
overpaid for an asset that will ONLY Depreciate in value. This is 
the curse, the unintended consequence of digital technology. During 
the analog hayday and until mass adoption of digital 2G systems, the 
value of spectrum has ALWAYS increased. Now that incremental 
penetration rates are slowing, the value of spectrum is in steady 
decline.

The dumbest thing a business can do is OVERPAY for a declining asset 
with no future appreciation prospects.

Yes I know some individual companies don't have enough 
spectrum, but last time I checked the FCC wasn't supposed to favor 
specific players. Especially when the players w/o enough falled to 
avail themselves of the most efficient technologies. Thus for the 
FCC to allocate more spectrum now, it would amount to picking 
industry winners. Not good.