THE QUESTION OF SPECTRUM: TECHNOLOGY, MANAGEMENT AND REGIME CHANGE ( and a little Public Safety)

1. THE QUESTION OF SPECTRUM: TECHNOLOGY, MANAGEMENT AND REGIME CHANGE(and a little Public Safety) Gerald R. Faulhaber Wireless Broadband: Is the US Lagging? USC Center for Communication Law and Policy October 25, 2005 Question of Spectrum@USC-DC

2. Review of the Spectrum Debate • Commons vs. Property: • Round 1:Adam Smith vs. John Perry Barlow: Hurray for our side! • Round 2: Is there common ground? More than you might think • Round 3: Roll up our sleeves and do the hard work: define the problem carefully, assess transaction costs, dispute resolution, etc. of each regime. Which regime delivers the goods? • This paper plus Goodman, Werbach, Speta, Hatfield/Weiser… Question of Spectrum@USC-DC

3. Parsing the Problem • “Property Rights vs. Commons” mis-specifies; it’s all just different forms of property rights. • Four parts: • New Technology: agile radio, UWB, mesh networks • But these work under either regime. • Spectrum Use: what is it being used for? High power, low power, two way, directional, …. • Some uses call for exclusive use, some for commons • Spectrum Management: Are bands managed for exclusive use or commons (Part 15)? • We all agree…We need both! Question of Spectrum@USC-DC

4. The Core Issue • Overarching Legal Regime • Traditional Regulated Command and Control We all agree…Yech! • Fully Commons Cannot accommodate any exclusive use that we all agree we need) • Fully Property Rights (including public & private commons) • Mixed Commons/Property Rights, overseen by regulator • Only feasible candidates: c) and d) • Evaluate costs and benefits of each • Assume the “end state” for each (transition for a later paper) • Assume technology evolves as forecast. • Assume regulation and the courts behave as they always have. • Transaction costs, dispute resolution, incentives to economize, incentives to adapt new technologies. Question of Spectrum@USC-DC

5. New Results - 1 • Property rights moves dispute resolution to the courts (away from regulators) • Property rights accommodates open access provision • Central Park is owned by NYC, maintained as regulated open access facility • But defining property rights well is difficult • “Commons” is really gov’t ownership and gov’t control of all spectrum … still regulation! • And it’s regulation that’s the problem, not licenses • “We’ll solve interference with hardware”..not in this universe! • Like bootleg CB radio? Bootleg cordless phones? WiFi/cordless? Question of Spectrum@USC-DC

6. New Results - 2 • Commons advocates point to new technology and imply we need a commons to deploy it. • This is false; all the new technologies can be deployed in either a property rights or a commons model; technology is regime-neutral. • But the new technologies are necessary (but not sufficient) for a commons regime to be functional. • Greatest deployment of new technology in spectrum in last 10 years has been cellular, not WiFi Question of Spectrum@USC-DC

7. New Results - 3 • Exclusive use does not lead to tragedy of the anticommons (i.e., holdout problem) • Commons advocates claim aggregation of individual properties for one big property (e.g., commons) victim of the holdout problem (e.g., mall and park developers) • But this assumes contiguity to anchored property; new technologies largely eliminate this problem. SDR means we can stitch together non-contiguous bands for a single application • …and didn’t the PCS firms solve this problem in the 1990s when they created national networks…using the market? Question of Spectrum@USC-DC

8. New Results - 4 • Tragedy of the commons is not in congestion, it’s in enforcement. • If everyone has a stake in radio commons peace, then who has incentive to punish offenders? No one. • With lots of excess capacity today, no need for concern about congestion…but tomorrow? • When it’s free everyone will use it, and use it up • And how come commons advocates tell us they need more, more, morenow, when new technologies should mean we can conserve on bandwidth and use less, less, less! • FCC has created huge swathes of Part 15, yet we hear calls for more! Question of Spectrum@USC-DC

9. New Results - 5 • Power mix: even with high-powered agile radios, can’t mix high and low powered devices in the same commons • Low power works well in commons; UWB the poster child for spectrum underlays; but we already have this • High power agile radios downright dangerous; their agility means interfering radios cannot be identified and prosecuted • Should be called “hit and run” radios; without stringent controls agile radios will be the AK-47s of the wireless world, under any regime! • Today, interfering radios generally easy to identify and hold accountable. This may not be true in the future. Question of Spectrum@USC-DC

10. New Results - 6 • But regulation is the key difference between the two overarching regimes, and the performance of regulation has been disastrous; WHY? • “as long as there is a regulator to complain to, market participants will complain and the regulator will be forced to respond. The scope and intensity of regulation inevitably expands to meet the demands of market participants.” Question of Spectrum@USC-DC

11. Old Results Redux • Faulhaber-Farber proposed non-interfering easement for all propertied licenses • Anyone can use any spectrum provided they do not interfere with licensee. • Definition of interference, detection issue, etc. • NIE give commons advocates all the functionality they claim they want. So why is there still an argument? • But is non-interference really feasible, especially with agile radio? I now have deep reservations about this. • Defining, detecting and enforcing true non-interference may be quite costly Question of Spectrum@USC-DC

12. Conclusions • Transactions costs less with property rights • Actual transaction fees higher, but regulatory costs much lower; holdup problems not an issue with new technology • Dispute resolution costs less with property rights • Judicial resolution costs lowered using injunctive relief (rather than nuisance); regulatory resolution has proved itself a nightmare • Social norms? Literature shows that social norms work only in exceptional circumstances. • Property rights encourages economizing, deploying new technology; commons accepts new technology but little incentive to deploy. • And if non-interfering easements really work, then what is left for commons advocates to advocate, except property rights with NIE? Question of Spectrum@USC-DC

13. A Word about Public Safety • …much on our minds in the wake of Katrina • But always a concern • Calls for the FCC/Feds to “do something” about public safety spectrum • Interoperability: police/fire/EMT. How come we still don’t have it after 9/11? • “We need more spectrum; where’s the 700 Mhz stuff?” • “We don’t have the money” • Maybe the Feds should be deploying zowie new technologies, like mesh WiFi, WiMax, blah, blah. Question of Spectrum@USC-DC

14. Some Interesting Facts • Interoperability among police/fire/EMT is a local issue; can be decided and implemented at municipal/county level • Handsets and systems for full integration are easily within reach, and have been for 20 yrs. • Municipalities/counties don’t need anyone’s permission to do this • Can be accomplished by moving toward modern digital systems with multiband handsets/systems, protocols • Political issues of control dominate the debate at local level Question of Spectrum@USC-DC

15. Spectrum and Money • Moving from analog to digital systems could increase channel capacity 2-5 times • Move to digital now underway but incomplete • There is always money; what matters is what you spend it on • Sussex County, DE first responders • Lots of money (contributions), well-supplied with fire houses, engines, life-saving stuff: but analog radios, no interoperability and no plans for either Question of Spectrum@USC-DC

16. Zowie Technologies • Zowie technology advocates are using Katrina as the poster child of Zowie for disaster relief • But post-Katrina Zowie was custom tailored system which would not meet public safety needs • Katrina was a special case, in which infrastructure was destroyed; the answer is easy (and non-Zowie): satellite phones. • Solutions to public safety issues: • Analog  Digital: increase channel capacity, reduce handset weight. • Local adoption of interoperable systems: multichannel • These are local political decisions; what is lacking is leadership and will, not technology or spectrum Question of Spectrum@USC-DC