Subject: [NEXTEL-1] Up in the Air

From: [email-masked]
Date: Fri, 05 Sep 2003 07:35:44 -0400

Up in the Air

As the world goes wireless, the radio spectrum is emerging
as the most valuable resource of the information age.

By Michael Calabrese
Vice President and Director, Spectrum Policy Program and Co-Director, Retirement
Security Program, New America Foundation
and J.H. Snider
Senior Research Fellow

The Atlantic Monthly
September 1, 2003
Each economic era has a resource that drives wealth creation. In the
agricultural era it was land. In the industrial era it was energy. Today it may be

the airwaves, also known as the radio-frequency spectrum—the most valuable
resource of the emerging information economy. Economists estimate that in
the United States alone the commercial value of access to it could be more
than $750 billion. But it’s a resource that’s being managed wastefully and
inequitably, and what’s at stake is the future of technologies that can enable
the tremendous economic and social potential of anywhere, anytime access to
high-speed data networking.

The spectrum is nothing more than the range of those electromagnetic
frequencies that are useful for transmitting radio signals. It is divided into
bands and measured in hertz (Hz): the wider the band, the more
information-carrying ability it has. The illustration below shows only the prime
frequency bands. This is where the most familiar consumer services, such as
broadcasting and cell phones, are clustered.

Today the primary constraint on use of the spectrum is not capacity but, rather,
how the government manages access to it. In every nation the spectrum, like
the atmosphere and navigable waterways, is managed as a publicly owned
asset. The Communications Act of 1934 prohibits private ownership of the
airwaves and authorizes the Federal Communications Commission to allocate
frequencies to various services and to grant temporary licenses consistent
with the “public interest, convenience, and necessity.” Over the years the prime
frequencies that allow signals to penetrate buildings, trees, and bad weather
have all been allocated, exclusively and mostly free of charge, to broadcast TV
and radio stations, the military, and a host of industries and services—which
now, thanks to digital technologies, actually only need a fraction of that space.

The problem is that the government’s seventy-six-year-old allocation system –
based on zero-cost licensing and a zoning system that allocates access
according to service—gives current users no incentive to relinquish
frequencies, or to use their portion of the spectrum more efficiently. Regulators
rigidly define—and freeze in place, often for decades—the precise frequencies
an industry may use, and for what purpose. This system can hobble new
industries. Although cell-phone companies, for example, are desperate for
additional frequencies, licenses are simply not available, at any price. In 1993
Congress mandated auctions to assign new licenses, but it has not given the
FCC authority to auction or charge rent for prime portions of the spectrum that
have already been licensed. On the contrary, pressured by the broadcasting
lobby, in 1996 Congress effectively doubled the share of the airwaves licensed
at no cost by local TV stations—a giveaway then valued by the FCC at up to $70
billion, but now worth far more.

A consensus has emerged that spectrum licenses should be traded freely and
allow users more flexibility, so that companies can supply whatever services
are most profitable. But no consensus has emerged on how to get from here
to there. Granting property like rights to commercial users would make
licenses more valuable to those users, but the vexing economic and political
question is this: How can the public collect a fair return from politically
powerful
licensees who were given their share of the spectrum free?

In recent years the FCC has been less concerned with this question than with
creating a private market for spectrum access. One possible way of doing so
would be to grant commercial users complete and permanent control over the
frequencies they now borrow. The FCC is already moving in this direction.
Another possibility, popular in Congress, would be to lease frequencies for a
fixed period and allow users to provide any service during the term of the lease.

Technology, too, is changing the terms of the debate. The fastest-growing
service in telecommunications today is Wi-Fi (for “wireless fidelity”), which
enables laptops and other devices to transmit data wirelessly, over unlicensed
frequencies, anywhere within a certain area. (Wi-Fi is found at 2.4GHz, where it
shares a band—once derided as the “junk” band—with such in-home devices
as cordless phones, microwave ovens, and baby monitors.) Unlicensed
spectrum is managed like a public highway: subject to certain rules of the
road, access is open, free, and shared. The Wi-Fi boom has to date focused
on short-range mobility, but already dozens of entrepreneurs are using
unlicensed spectrum to offer high-speed wireless Internet connections over
areas up to thirty miles from a connection to the Internet backbone. This is
important for rural areas, where high-speed wire connections are often
unavailable or unaffordable.

Those who advocate expanding unlicensed access to the airwaves argue that
in the near future meshed networks of “smart,” frequency-hopping broadband
devices will provide Americans with nearly ubiquitous communication at high
speed and low cost. But because offering shared access to prime frequencies
now licensed for exclusive use would increase competition and reduce the
value of licenses, current licensees are already lining up to oppose it.

2003 The Atlantic Monthly

http://www.newamerica.net/index.cfm?pg=article&pubID=1331

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