Subject: [NEXTEL-1] The Battle for Wireless Radio Spectrum Regulating the Airwaves

From: [email-masked]
Date: Mon, 02 Aug 2004 13:56:19 -0400

The Battle for Wireless Radio Spectrum Regulating the Airwaves

By Dave Molta
Aug 5, 2004

We've had about a hundred years to figure
out how best to regulate this invisible resource.
Are we getting any better at it?

Where economics intersects politics, the great battles are waged. And
make
no mistake about it: Wireless radio spectrum is an extremely valuable
economic asset, and as a clear public good, it logically falls under the
control of governmental regulators. We've had about 100 years to figure
out
how best to regulate this invisible resource. Are we getting any better
at
it?

Supporters argue that spectrum auctions not only facilitate commercial
competition but also line government coffers. Surely, if companies are
willing to spend millions or billions of dollars on spectrum licenses,
they
will deliver valuable services to earn a return on their investments.

In the United States, the Federal Communications Commission began
auctioning radio spectrum licenses in 1994, and many of its approaches
have
been adopted by other governments. Auction winners receive an exclusive
license to use a chunk of radio spectrum in a specific market, but
because
nationwide carriers needed complementary licenses in multiple markets,
an
ascending auction was conceived that let companies bid on spectrum
licenses
for multiple areas in rounds. By imposing caps on the amount of spectrum
any one company could own, the FCC has also facilitated competition. The
result has been lower costs for basic services like voice and the more
recent rollout of cellular packet data services.

Not Quite Perfect

Unfortunately, it's not always smooth sailing. Given the money at stake,
some participants gamed the system by using code bidding to pass
messages
(don't bid on my spectrum and I won't bid on yours, for example),
artificially reducing bids. The FCC fixed this problem, but there have
been
others.

One of the most visible was the commission's battle with NextWave
Telecom,
which won a $4.7 billion PCS spectrum auction in 1996 but filed for
bankruptcy before paying the government. The FCC's decision to reauction
the spectrum was overturned by the U.S. Supreme Court, prompting a
settlement earlier this year.

Elsewhere, the commission's inability to free up spectrum for emerging
3G
services illustrates the zero-sum equation faced by regulators. The most
desirable spectrum was allocated years ago, much of it for services like
broadcast video that seemed more strategic than they do today. There's
no
way to avoid political fallout from entrenched interests when the rules
are
modernized, but that's the only way to address emerging needs like
competitive broadband access.

Another big problem is interference, which can't easily be prevented
when
the goal is to waste as little spectrum as possible. The FCC's July
decision to relocate Nextel out of the 800-MHz band, where it was
causing
interference to police and fire communication systems, was well reasoned
but drew widespread criticism. Emergency services groups resented the
fact
that they would need to move some of their gear, and Nextel's
competitors
objected to its receiving highly desirable spectrum in the 1.9-GHz
range.
The debate will inevitably end up in court.

Last, and perhaps most significant, is the FCC's role in establishing
policy regarding licensed versus unlicensed spectrum. The commission
favors
the expansion of unlicensed spectrum, and recent initiatives to more
than
double the amount of unlicensed spectrum in the 5-GHz range is great
news
for those who favor that technology's ease of implementation. But
there's
no effective way to resolve disputes when one unlicensed wireless system
interferes with another. Recently, FCC Chairman Michael Powell applauded
voluntary restrictions enacted by California service providers, but such
an
approach isn't viable long term.

Be wary of those who offer simple solutions to complex problems. There's
no
alternative to regulation. It's an issue of who writes the rules and how
they're enforced--economics and politics. That reality should lead to an
interesting second hundred years of radio.
Dave Molta is Network Computing's senior technology editor. Write to him
at
dmolta @ nwc.com

http://www.networkcomputing.com/showitem.jhtml;jsessionid=UAVMPV0YFEPWSQSNDBGCKHY?articleID=25600447

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