Subject: [NEXTEL-1] A 'Commons' Misconception

From: Marcel <[email-masked]>
Date: Sat, 22 Feb 2003 22:57:34 -0500

A 'Commons' Misconception
By Arnold Kling
02/21/2003

In The Mystery of Capital, Peruvian economist Hernando De Soto argues that poorly
defined property rights contribute to poverty in underdeveloped countries. In those
countries, poor people live in houses to which no one has clear title. As a result,
they do not benefit from improving their property, and they cannot use it as collateral
for loans.

In De Soto's words, housing without property rights is "dead capital."

In the United States today, companies that license spectrum are like Third-World
squatters. They do not have clear title to their spectrum, so that any attempt they
make to innovate must run the gauntlet of the Federal Communication Commission's
regulatory process. As a result, spectrum in the United States is "dead capital." Call
it dead air.

The Wireless Last Mile

What the United States needs today is more spectrum allocated to spread-spectrum
wireless. With enough spectrum available, the problem of "the last mile" for
broadband Internet could be solved using wireless networks. Moreover, wireless
voice-over-IP could result in meaningful competition to both the wireline and cellular
telephone industries.

There is plenty of unused and under-used spectrum available. The problem is that
the licensees are not permitted to allocate their spectrum to the wireless Internet. If
you are a TV licensee, then you must use your license for television. If you are a
satellite licensee, then you must use your spectrum for satellite transmissions, etc.

The FCC's Spectrum Policy Task Force explains the issue by describing three ways
of determining spectrum use.

1.Clear Title. In this case, the spectrum licensee would have clear, specific
rights to use spectrum for any purpose, and to sell it to others. A spectrum
license would be like title to property. The task force calls this the "exclusive
use" model, which I think is a misnomer, because it sounds as though
spectrum licensees would assign their spectrum to an exclusive use. Instead,
what it means is that licensees would be free to assign their spectrum to any
use, including to multiple uses.

2.Commons. In this case, no one would own the spectrum, and anyone could
use it, subject to regulations that would keep any individual or device from
impeding other users.

3.Command-and-control. This is the current system, where licensees must
use spectrum for specific purposes according to FCC regulations.

The task force recommends that the FCC "should expand the use of both the
exclusive use and commons models throughout the radio spectrum."

A Commons Misconception

A common misconception among advocates of spread-spectrum wireless is that
only the commons approach will lead to more spectrum allocated for wireless
network applications. Their dogmatic viewpoint sets up an unnecessary conflict with
what is an easier path to spread-spectrum wireless, namely, the clear title approach.

One way to picture the result of the "clear title" model is to imagine what might
happen if a company like Intel could buy a large swath of spectrum. In the next
decade, Intel would like to sell lots of software-defined radios, which are a critical
component in spread-spectrum wireless. As owners of spectrum, they would want to
make sure that software-defined radios could achieve their maximum potential,
which in turn would mean that Intel would make its spectrum available for
spread-spectrum wireless use. Since Intel makes money on hardware, it is possible
that it would not choose to charge for spectrum use itself.

The "clear title" approach would rapidly get the FCC out of the business of spectrum
regulation (which is why the FCC staff puts a lot of effort into coming up with phony
reasons why it would be difficult to implement). It would also rapidly lead to
spectrum being allocated away from inefficient uses (such as VHF television) to the
wireless Internet.

One possible path to greater spectrum use for the wireless Internet is to "underlay"
wireless Internet applications in the same band as existing applications. For
example, it may be possible to implement a wireless Internet application in the
same band as a television station, provided that the wireless application uses low
power and conforms to other specifications. If the television station had clear title to
its spectrum, it could sell the "underlay rights," which would obviate the need for the
FCC to get involved in adjudicating the underlay issue.

To implement the "commons," the FCC first has to confiscate spectrum from
existing licensees, which is not going to happen in the foreseeable future. In
addition, the FCC must determine the rules that regulate the Commons, which
means years of hearings, comment periods, and so forth. Instead, a private owner of
spectrum could set standards tomorrow.

To implement the "clear title," all the FCC has to do is give licensees clear title. That
means defining the exact band and geographic area each current licensee owns.
Once title is defined, then spectrum can be bought and sold in a capitalist frenzy.
Although collectively, the value of licenses may fall (because spectrum will be used
more efficiently), individually each licensee will have no reason to complain. That is
because each licensee will be getting a "better" license, one that allows the licensee
to continue using the spectrum as it does now or allocate it to something else or sell
the license.

Turn the Boats Around

The Spectrum Task Force Report pays wonderful lip service to the view that
"command and control" regulation is inferior and will retard the wireless Internet.
However, the recommendations are complex, reflecting the interests of regulators,
lobbyists, and consultants in keeping their hands in the spectrum regulation
process. Unfortunately, the "commons" advocates play into the hands of the
bureaucrats by encouraging this politicization of spectrum.

During the Vietnam War, humorist Mort Sahl satirized liberals who were disillusioned
with the war but who argued that it would be difficult for the United States to
extricate itself. Sahl imagined a teen-ager saying, "Gee, Dad, why don't we just turn
the boats around?"

The Spectrum Task Force Report makes it sound as if it will be very difficult for the
FCC to extricate itself from the current spectrum allocation system. Its
recommendations are a recipe for an even more intricate regulatory morass. Instead,
the FCC should "turn the boats around" by implementing the clear-title approach.
The market will take care of the rest.

http://www.techcentralstation.com/1051/techwrapper.jsp?PID=1051-250&CID=1051-022103A

--
    "NEXTEL-1 IT'S NOT JUST NEXTEL"
  Note The New address
Subscribe to Nextel-1: http://www.groups.yahoo.com/subscribe/NEXTEL-1

  "NEXTEL2 FOR iDEN SOFTWARE DEVELOPERS"
Subscribe to Nextel2: http://www.groups.yahoo.com/subscribe/NEXTEL2

  "WIRELESS FORUM HOMELAND SECURITY GROUP"
     The Complete Resource for Wireless Homeland Security.
Subscribe to WFHSG:  http://www.groups.yahoo.com/subscribe/WFHSG

Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/