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Cordless or Wireless? Good Question

We don’t do spring here in Vermont so now it’s summer although there’s still plenty of snow gleaming in the mountains. Time for me to work outside (at least until we get our obligatory late season snowstorm).

My cordless phone is scratchy by the time I get out on the deck; it doesn’t like being that far from the base station. The WiFi isn’t great on the deck either.

I could move the base station for the cordless phone and install a repeater for the WiFi signal. Last year I used my antenna and high-power WiFi card to make WiFi work right outside. But that’s all a lot of trouble.

Instead I made my calls using my wireless (aka cellular) phone. And I put the EVDO USB modem in my computer and just used that for connectivity. Since I never use my 500 wireless minutes each month nor the 5 gigabytes per month included in my EVDO account, it doesn’t cost me anything incremental to be in my travel configuration while on the deck; and it’s a lot more convenient than making the house radios have good coverage outside.

So here’s the question: will there come a time when we don’t install our own little radios for voice and data at the end of the wires, cables, or fiber that comes into our houses? Will we just pick up the same signal from our carriers that we use when we’re traveling inside the house as well as on the deck and in the car?

Clearly WON’T happen unless the carriers lower the prices for cellular and EVDO and lift the volume limits. $99/month for unlimited talking on Verizon Wireless or AT&T is a lot more than $24.95 on Vonage which also includes reasonable rates on international calling. 5 gig would disappear pretty soon if I were doing my nightly over-the-net backups and watching MLB.com on EVDO. Moreover EVDO isn’t really fast enough for lots of web stuff.

The conventional wisdom is that eventually voice and data will come over a fiber into the house and then be distributed wirelessly thoughout the house and maybe the yard and that mobile needs will continue to be met by different technology at a higher price. Maybe the conventional wisdom is right but it’s always worth questioning.

I think there’s a strong probability that not just the last 100 feet but the whole last mile will be wireless in many places. Radio technology is advancing very quickly. There would be plenty of spectrum IFF (and it’s a big IFF) there were regulatory reform to allow use of whitespace and make much more spectrum open. As we (and our computers) spend more and more time connected, we’ll be more and more impatient with having to switch connectivity modes when we walk out the front door.

That would mean no communication wires, cables or fibers coming to most single family residences. That could also mean true competition in communication services just as cell phone service offers more choices, more competition, and more innovation than landline service does today. It’s hard to make a business case for duplicate networks to each house; much easier to make the case for competitive radios, even on the same towers.

Just a speculation.

Google’s Gigabit Gambit

Want a gig (1000 megabits per second) of Internet access bandwidth? Google says you could have it by the end of next year “from Manhattan to rural North Dakota (sic, I think they meant Vermont)” if their proposal to the FCC is accepted forthwith according to CNET’s newsblog. Not only a gig but a mobile gig, accessible by cellphone or roaming computer – no fiber required. Sound too good to be true? – it isn’t, IMHO!

Engineering is not the problem (more below). Politics, entrenched interests, and bureaucratic inertia, however, make it unlikely this dream’ll come true as quickly as it ought to despite the fact that America could lead the world in broadband penetration and accessibility within two years if the FCC accedes to the request Google made yesterday to open up “whitespace” for use by broadband devices. Rural areas – most deprived of broadband service to day – would be the biggest beneficiaries; but urban America has plenty to gain as well. Google also has plenty to gain by FCC agreement – nothing wrong with that.

How’s this possible? In short, open spectrum. But I’ll explain.

A huge swath of frequencies is reserved for over the air use. Even after TV stations give up a relatively small amount of spectrum in February of next year by switching to all digital broadcast format, there will still be enough spectrum available for channels 2 through 51 in every market in the United States; there is also unused space between channels which modern technology makes safely usable. In rural areas, as much as 300Mhz of spectrum may be completely unused; even in rural areas there are unused swaths and the space between the channels can now safely be used thanks to modern technology. In the recently completed FCC auction, Verizon promised to pay over $4.7 BILLION dollars for just 22Mhz of spectrum so 300Mhz is a really big deal.

Although this whitespace is nominally reserved for television use, no one has paid for a license to use any of it. It’s fallow, as we say in Vermont. It’s time it was grazed.

Unlike the 22Mhz band which Verizon just bought, the whitespace is a patchwork. Different frequencies are available in different places. Radios, whether in cellphones or attached to computers, which use this spectrum have to either know where they are (trivial with GPS) or have some way to listen to see what frequencies are usable locally and be able to change their frequency as you drive down the road much as you change radio stations to adapt to local conditions. Mobile phones already do this within a narrow range of frequencies; wifi has much of this technology. Google is suggesting that only radios which have passed FCC licensing criteria for safe operation be allowed to operate.

Despite the fact that the radios will be licensed, the operators will not! A cellular operator has to get a license to use a specific frequency from the FCC; a WiFi operator does not. Google calls its proposal WiFi 2.0 for this reason. Google is proposing that these frequencies b made available for UNLICENSED use (albeit with licensed radios). Experience has taught us that much more signal will be crammed into a given swath of spectrum if the spectrum is unlicensed than if it is licensed. (BTW, some smart people disagree on this and point to real instances of wifi congestion. I think this is a consequence of the relatively tiny slivers of junk spectrum wifi shares with microwave and cordless phones and will not be a serious problem in the wide open whitespaces).

Moreover, innovation thrives in unlicensed spectrum. From Google’s letter to the FCC:

In short, FCC rules should specify only what is allowed, not how that result is to be achieved, or by whom. Much like the Internet itself, the agency’s specifications should as much as possible enable “innovation without permission” (although with necessary technical constraints). For example, the Part 15 rules permitting WiFi were written years before the IEEE 802.11 technology was even contemplated, much less existed. If those rules had been contingent on the pre-existence of WiFi, one of the most successful and efficient uses of spectrum in the history of wireless communications likely never would have happened.”

Google is not asking for any special privilege. However, the availability of open spectrum would not only create a huge opportunity for their proposed Android phone design but also protect them from the threat of the established carriers finding a way to establish toll booths which divert revenue from Google’s coffers to those of the carriers. Because Google has such a large stake in making open spectrum a success, they’re offering help to those who will do the actual implementation:

“Google also would be willing to provide, at no cost to third parties, the technical support necessary to make these plans happen; this could include intellectual property and reference designs for underlying technologies, open geo-databases maintained by Google, and other supporting infrastructure.”

Why won’t this happen?

Remember Verizon just promised to pay $4.7 billion and change for the 22Mhz C block; how much is that 22Mhz worth if huge blocks of unlicensed spectrum with similar propagation characteristics become available around the country? Google made a pass at this spectrum and probably forced the Verizon bid up. Was this rope-a-dope?

Don’t feel to sorry for Verizon though; they cited the upcoming rulemaking on the whitespaces as a reason why the spectrum they bought at auction should be auctioned rather than released for unlicensed use.

Americans pay more for less Internet access bandwidth than people in most developed and many developing nations. These prices will plummet per megabit when over-the-air competition becomes available. Those who benefit from this pricing will not be happy to see the competition – and they have lobbyists.

Cellphone calling costs much more than the price of providing the service. Control of spectrum lets the major carriers keep these prices up. What happens if spectrum is open? There goes another rubber tree plant.

I’ll be speaking at David Isenberg’s always worthwhile F2C conference next Monday morning at 8:30AM. Even though it’s only the day before April Fool’s Day, I’ll be giving a history lesson from a 2018 perspective of how almost all spectrum got unlicensed. The Google proposal is a milestone in that “history”.

More on open spectrum:

Internet 2.0 is Open Spectrum

Backstory of Open Spectrum Epiphany

Spectrum Serendipity

Google’s Brilliant Proposal (this one wasn’t adopted)

WiMAX vs. WiFi

In fact WiFi (technically standard 802.11) and WiMAX (802.16) don’t compete for broadband users or applications today. That’s partly because WiFi is widely deployed and WiMAX is still largely an unfulfilled promise and partly because the two protocols were designed for very different situations. However, if WiMAX is eventually widely deployed, there will be competition between them as last mile technologies.

Some people describe the difference between WiFi and WiMAX as analogous to the difference between a cordless phone and a mobile phone. Wifi, like a cordless phone, is primarily used to provide a connection within a limited area like a home or an office. WiMAX is used (or planned to be used) to provide broadband connectivity from some central location to most locations inside or outside within its service radius as well as to people passing through in cars. Just like mobile phone service, there are likely to be WiMAX dead spots within buildings.

From a techie POV, the analogy is apt at another level: WiFi, like cordless phones, operates in unlicensed spectrum (in fact cordless phones and WiFi can interfere with each other in the pitiful swatch of spectrum that’s been allocated to them). There are some implementations of WiMAX for unlicensed spectrum but most WiMAX development has been done on radios which operate on frequencies whose use requires a license.

Some more subversive types (they’re subversive so I can’t link to them) say that WiMAX is what you get when bellheads (not a nice term) try to reinvent WiFi the way they’d like it to be. It’s true that WiMAX is much more a command and control protocol than WiFi. Oversimplified, in a WiFi environment every device within reach of an access point shouts for attention whenever it’s got something to transmit. In that chaos, some signals tromp on other signals; the more powerful devices and those closer to the access point tend to get more than their share of airtime like the obnoxious kid who always has his hand up in the front of the class. In WiMAX devices contend for initial attention but then are assigned times when they may ask to speak. The protocol allows the operator more control over the quality of service provided – bellheads like control.

But it’s not clear that more control means better service than contentious chaos (I’m talking about technology but the same may apply to economies or bodies politic). The Internet and its routing algorithms are chaotic; the routers just throw away packets if they get to busy to handle them. Bellheads (and even smart people like Bob Metcalfe) were sure that design or lack thereof wouldn’t scale. They were wrong.

Same people said that voice would never work over the Internet – there’s no guarantee of quality, you see. They were wrong although it’s taken awhile to prove it. Now HD voice is available on the Internet but NOT on the traditional phone network (although it could be).

Lovers of an orderly environment and those who like to keep order were absolutely sure that WiFi couldn’t work once it became popular. Not only is it chaotic; it also operates in the uncontrolled environment of unlicensed frequencies along with cordless phones, bluetooth headsets, walkie-talkies and the occasional leaky microwave oven. But somehow it’s become near indispensable even in places where a city block full of access points contend for the scarce frequencies.

Net: I’m not convinced that WiMAX won’t suffer from its own orderliness. Did you ever fume leaving an event when an amateur cop (or a professional one) managed traffic into an endless snarl? Fact is cars at low speed usually merge better without help than otherwise. Turns out that control comes at the expense of wasted capacity. The reason that the Internet or WiFi radios can work is that the computing power necessary to deal with chaos from the edge of the network is far cheaper and less subject to disruption or misallocation than the computing power (and communication) for central command and control.

WiMAX may be too well-controlled for its own good. Moreover, if it is used only in regulated spectrum where most frequencies are idle most of the time AND licenses for the frequencies have to be purchased, it will be even less efficient than if it could contend for unlicensed spectrum.

By the way, WiFi CAN operate at distances as great as WiMAX but there are two reasons why it doesn’t. One reason is that radios operating in the unlicensed frequencies are not allowed to be as powerful as those operated with licenses; less power means less distance. These regulations are based on the dated assumption that devices can’t regulate themselves – but the assumption MAY be correct over great enough distances. The second reason why WiFi access points don’t serve as wide an area as WiMAX access points are planned to do is the engineering belief that the problem of everybody shouting at once, even if it’s surmountable in a classroom, would be catastrophic in a larger arena. Maybe.

New licensed spectrum is being made available for WiMAX and other technologies NOT including WiFi - for example, the valuable 700MHz frequencies currently used by analog over the air TV. WiMAX could have a good run because it is allowed to operate in that efficient spectrum while WiFi will eventually run out of the pitifully little spectrum that’s been allocated to it. That’s policy and politics and not engineering but could still be a reason for WiMAX success.

Why WiMAX? is about the advantages of that technology.

Internet 2.0 is Open Spectrum is an argument against licensed spectrum.

Rent vs. Buy – The Driver of Economics

We the people like to own stuff and not pay rent to use it (BTW, rent includes taxes but that’s another story). They the oligarchs like to own the stuff and charge us rent to use it. The rise of a middle class has historically meant the rise of a property-owning class. The underclass pays exorbitant rents.

The telecommunications world – or at least the US part of it – is a battle of rent vs. buy.

Economics says that ownership or rentership is all based on access to capital. Certainly capital is a huge part of the equation – can you spell “home loan”?; but it’s not the whole story. Advancing technology traditionally favors ownership. Regulation often protects the oligarchy’s perceived right to collect rents. Public or cooperative ownership of common infrastructure plays a role in encouraging or discouraging widespread private ownership of the stuff that needs the infrastructure.

A couple of examples:

Housing: It’s the American dream; ‘nuff said.

Transportation. When people walked, they owned their own means of transportation but they didn’t own the infrastructure. Some roads charged tolls explicitly; on others bandits collected rent; in some jurisdictions taxes or impressed labor paid the rent on the infrastructure to keep it repaired and keep the brigands away.

Then there were horses that most people couldn’t afford. To ride on a horse or in a  carriage, you paid rent. The upper class had horses and carriages to rent; the lower class rented or walked; the middle class – what their was of it – had just enough horses or carriages for their own use. Note that neither walking nor horses nor carriages are very practical without the common infrastructure of the roads.

Trains are invented. Almost no one owns his or her own (except for private railroad cars). Unless you’re a railroad magnate, you’re a renter when it comes to rail transport. Businesses might own their own rail cars but they paid rent to the railroad to pull them over its tracks.

Then there are trucks and cars. Yes, they are inefficient from an energy POV compared to trains. But they are delightfully free. And they can be owned, not rented. Note, of course, that they depend on an infrastructure of highways which we do pay rent to use in the form of tolls and gas tax. Travel exploded as some of the friction of transaction costs disappeared.

Communication: We use to buy stamps (rent!) to send letters. Now we OWN computers (not cheap) or Blackberries and can send email “free” or at least without paying by the message or by the kilobyte (usually). Of course we do still rent infrastructure in the form of access to the Internet and, through that rent, pay our share for the backbone of the Internet. Communication use exploded as the friction of transaction costs disappeared.

Historical note: In the early days of email, email pioneer MCI Mail charged by the “MCI Ounce” – I think it was a thousand characters. That’s when email was a distinct service with its own backbone network.

You didn’t used to be able to own phones; you had to rent them from your friendly carrier monopoly. The Carterphone decision put an end to that oligarchy rebt-collection scheme and spurred a connectivity device industry. We do own our phones now but we still pay rent for access lines and backbone network (local and long distance charges) if we’re using the Public Switched Telephone Network (PSTN). But, when our phones are hooked to the Internet, owning the phone has extra value. You can call (some) other phones which are also hooked to the Internet without paying special rent for the fact that you’re talking instead of sending email or photos. The “phone” in this case can be a computer as it is for more Skype users or a special adaptor as it is in the case of most Vonage users.

If we OWN a radio, we don’t pay any rent to reach other people DIRECTLY who have compatible radios whether these are walkie-talkies or sophisticated ham sets. We own; we don’t rent. But if we own a radio which has to connect through a network (WiFi, say, or cellular), then we still have to pay rent to the network owner for use of the radio.

The great battles over net neutrality, separation of network infrastructure from services, and regulation of radio frequencies are mostly important to the players because of the implication on rent vs. buy. There are only two reasons left why we still pay special rents for voice: the owners of much of the infrastructure like collecting these rents and the owners of much of the infrastructure also have the regulatory clout to slow down competition like VoIP. Nevertheless, it won’t be long (says I) that voice communication everywhere and anywhere will be as free of arbitrary rents as email. Voice is data in all but the regulatory environment.

Is it quite possible – even happening in some places – that access networks whether wire, fiber, or over-the-air will become common property or community infrastructure. Then owning an access device will free us from having to pay access rent (but beware of taxes). BTW, this doesn’t have to mean public ownership, it could mean a condominium right in infrastructure; it could mean that access right is purchased along with the equipment which does the accessing.

Rent vs. Buy is a theme I’ll come back to. However, if you’re planning a new business and want to know whether you’re perpetuating the past (which can be a good short-term strategy) or inventing the future, ask yourself whether you’re helping your customers buy their way out of paying a rent.

Prediction: Google WILL Bid for 700MHz Spectrum and WILL Win

There is an excellent business case for Google bidding megabucks in the upcoming 700MHz auction and investing even more to get a network up and running. I think Google is well aware of the value to them if they win and the harm they’d suffer if the duopoly wins instead. Google can make big bucks with a nationwide third network AND make things better for all Internet users AND improve the United States’ pathetic competitive position in the contest for broadband access. Hope this post doesn’t end up post-tagged “wishful thinking”.

Pessimists know that the spectrum which’ll be vacated by broadcasters in February 2009 is worth more dead than alive to the telco/cableco duopoly: it can potentially be used to provide a competitive service which will hasten the end of their landline phone business, force the mobile phone business to be open and much less profitable, end the telcos hopes of using their access monopoly to muscle their way into content ala cable, and end the cablecos hopes of using their current lock on content distribution to muscle their way into telephony. Oh yeah, and if a new open network with great roaming capability, high bandwidth, and low prices comes along which doesn’t have to say “Mother, may I?” to the owners of the wires that come into our houses today, there goes the duopoly’s ability to charge high prices for inadequate Internet access service.

So no question it’s worth the telco/cableco duopoly members bidding big bucks to make sure no one radical gets hold of this spectrum. The “use it or lose it” provisions that the FCC has proposed actually allow the winner to hold every square inch of territory and every hertz of spectrum for eight years with NO use and NO buildout before they forfeit anything. Not bad on a ten year license. Sure, they’ll build in the places where it’s profitable for even over-stuffed monopolies with high overhead to build and they’ll be careful not to create any surplus capacity anywhere which might rock the club.

How’s Google supposed to bid against that? And, if Google wins, it actually has to assure that a network gets built. It can only lose by a slow buildout or letting the capacity lie fallow. The negative to Google of not having third network is that the owners of the access duopoly may well find some way to dam and then collect tolls on Google’s revenue stream.

But there’s also a huge positive opportunity for Google and one it appears that the company is well-aware of. The opportunity, very specifically, is to resell whatever spectrum Google wins on a “shared spectrum” basis. When radio spectrum is licensed slice-by-slice to different users, most of it goes unused. In a letter to the FCC sent before the auction and before its “ultimatum letter”, Google said:

“As has been pointed out by various studies, the vast majority of viable spectrum in this country simply goes unused, or else is grossly underutilized. Our nation typically uses only about five percent of one of our most precious resources, and even that minimal use is inefficient compared to what is technically possible today…”

Google was asking the FCC to clarify that the winner of the auction would be able to resell spectrum as a wholesaler. Unofficially, the FCC did just that in remarks from the Chairman and all of the commissioners. If Google wins, they can resell as a wholesaler – the traditional carriers have dared them to bide enough to win and do just that.

For reasons I blogged about more fully here and here, spectrum to which there is open access and for which there is contention gets much better overall usage than spectrum allocated in slivers. WiFi and Bluetooth are brilliant demonstrations of the efficiency of chaos in allocating a scarce resource. Actually, so is the Internet itself. The fact that WiFi and Bluetooth frequencies are totally unlicensed has certainly helped fuel innovation in their use but nominal licensing fees without expensive usage monitoring or bookkeeping won’t break the model. Google could charge a small fee as part of the sale of consumer devices which use the frequencies and/or lease or auction rights to contend for the frequencies to providers in relatively small geographic chunks and make more money overall than a traditional carrier running a closed network. Google suggested this strategy in its letter to the FCC so is certainly considering it.

Google can compete both for traditional cellular business – at the wholesale level – and for wholesale Internet access business and suck the remaining value out of the landline voice business – all by licensing the rights to contend for “it’s” spectrum. Many small sales and very reasonable prices will yield more overall revenue than a few large sales at high prices because the overall usage of the spectrum will be enough more efficient to create more capacity to sell. Low prices will pull demand from the traditional networks. Low prices create new uses and new usage. We’ve seen that result with the wired Internet; we will see it in a radio access network.

This strategy may let Google avoid the expense of a national buildout. Radios using Google frequencies by virtue of Google licenses could go on existing towers and new towers built by others to take advantage of the new opportunity. There is no reason for all those radios to be part of a “network”; they just need the same Internet connections any ISP needs. Google may provide some of the backbone but it’s certainly not necessary for them to do that everywhere.

It will be even more profitable for Google to wholesale the spectrum coming up for auction than it would be for the cablecos and telcos to keep the spectrum safely out of competition with their existing networks. If Google can license a “network” into existence rather than build it themselves, they’re spared that expense and we get coverage everywhere faster.

Ergo, Google DOES have a good business case to outbid the other guys. And they’ve got the money. Hope it happens.

Time to Write the FCC

Within the next month the Federal Communications Commission is very likely to issue final regulations governing the auction of valuable 700MHz spectrum, which, by law, must start at the beginning of 2008. Now’s the last chance to have a voice in this process and it’s worth taking a minute to respond.  This post has some suggestions for responses.

The good news is that the Commission recognizes that this auction is essential for helping improve broadband access in America in general and in rural areas in particular.  Moreover, the commissioners are close to unanimous in agreement that more competition in broadband access is the answer to our dismally poor ranking in broadband access compared to other countries. I posted previously about Chairman Kevin Martin’s comments; here’s Commissioner Michael J. Copps as quoted in the FCC request for input:

“Certain it is that we desperately need a third broadband pipe to challenge the current telco-cable duopoly in our metropolitan areas, as well a first broadband pipe in many rural areas. It is this duopoly and lack of rural availability that have caused the United States to continue its slide in the world when it comes to broadband—witness the OECD ranking that came out just the other day taking the United States from 12th to 15th among the nations. And as I have noted before, I don’t think any of us should be relying on wireless companies owned by wireline broadband providers to provide this much-needed competition.”

The rule-making has actually narrowed down to a few issues so comments will have the most effect if they address these issues and not others that have already been left on the table for another day.  For example, the spectrum WILL be sold and will NOT be made open spectrum (which I would have preferred); Congress has mandated that.  The current holders of huge swatches of current licenses (the wireless operators who are in turn owned by telcos) WILL be allowed to bid for more spectrum, but the terms under which they are allowed to bid are all important.  Unlike most issues before the FCC, there has been substantial public input and it seems to be having an effect.

Below my suggested text are some explanations and decoding which the FCC won’t need but may be helpful in deciding whether you agree with the positions I’m suggesting you support.

My suggested paragraphs below are for those of you who are not actively involved in this issue and aren’t about to study and suggest specific remedies.  If you choose to send some or all or some versions of these to the commissioners, you will be giving them valuable input on the goals you want them to achieve but not entering into the lowest level debate on how to achieve these goals. To email all of the commissioners, please copy this list of addresses into the TO: field of your email:

KJMWEB@fcc.gov
Michael.Copps@fcc.gov
Jonathan.Adelstein@fcc.gov
dtaylortateweb@fcc.gov
Robert.McDowell@fcc.gov

Re: 700MHz Auction Rules

To: Chairman Kevin J. Martin
Commissioner Michael J. Copps
Commissioner Jonathan S. Adelstein
Commissioner Deborah Taylor Tate
Commissioner Robert McDowell

Congratulations on recognizing how important this auction is in assuring both that Americans obtain broadband access equal or better to any other country in the world and that the benefits of broadband access be extended to all Americans regardless of whether they live in the city or the country.  The country will be strengthened socially, economically, and against all kinds of disasters when it is connected fully.

Congratulations also on recognizing that greater competition in providing broadband access is an essential mechanism for improving the quality and reach of broadband service in America. Please do NOT assume, however, that all that we need is a third competitor (which, as some of you have recognized in your comments, would be the FIRST competitor in many rural areas).  It is essential to structure the rules so that multiple competitors offering broadband access can emerge in every part of the country.

This valuable spectrum must be available to those who will make the best use of it; it must not be purchased by the incumbent wireline providers and then retired or used sparingly to prevent competition with their existing services; it must not languish unused even when its purchasers had the best of intentions. To this end, I support each of the following positions which the FCC has asked for comment on.

  1. Considerable amounts of spectrum in both the upper and lower 700MHz bands must be offered in geographies no greater than MSAs and RSAs.  This step will assure that those most willing and able to provide service in each local area are able to purchase the right to do so.  Moreover, this is not an undue hardship to those like Google who may become competitors on a national basis.  These new entrants in their filings have shown much knowledge of technologies which would let them assemble a national footprint with different frequencies available in each area.
  2. There must be an even shorter period than suggested by the FCC for “use it or lose it.”  There is great danger that this valuable public resource will go unused.  Three years should be the maximum time period allowed.
  3. Even where large regions are offered as a whole, “use it or lose it” must be enforced at the MSA and RSA level and not aggregated across the whole region purchased.
  4. Google’s proposal assuring dynamic resale possibilities should be adopted as either a specific rule or a clarification of existing rules to assure that bidders know that they will be able to innovate in ways to increase the yield and lower the price to end users of the spectrum they acquire.
  5. Rules defining “open access” should be adopted covering all spectrum purchased by substantial incumbents and, in any case, a minimum of 30MHz of the spectrum to be auctioned.
  6. Rules defining basic “Net Neutrality” should be imposed on all spectrum purchased by substantial incumbents.

Thank you for you consideration.

Crib sheet for comments:

  1. MSAs and RSAs are Metropolitan and Rural Statistical Areas.  There are hundreds of these in the country, three in Vermont alone.  The major telcos would  prefer to buy the whole country at once or huge regions.  When they do this, history shows that only the largest markets get service quickly and rural markets get service never.  It is desirable to let large competitors as well as small competitors to the mega telcos emerge; but modern technology makes it possible to patch together a national network even if you end up with different frequencies in different markets.
  2. The right to use these frequencies is being auctioned off but they are a valuable national resource.  The right NOT use them should NOT be for sale.  The position I’ve taken is extreme and unlikely to be adopted but the more pressure on the FCC for a short period the better. 
  3. The FCC has indicated a willingness to apply performance criteria on a local level even when the region purchased is large.  They need support here against those who’d like to warehouse frequencies
  4. I posted more discussion of the Google proposal here.
  5. More on “Open Access” is here.
  6. Net Neutrality is very hard to define.  There is a real danger that any definition of it would be used by the incumbents, who are skilled in court and in the regulatory arena, to suppress innovative competitors.  On the other hand, we only need to be protected against monopoly behavior by those who share the access duopoly so it’s reasonable to impose this restriction only on them (and, in this case, only on new spectrum they may purchase).  They don’t have to bid if they don’t want to play fair.

Good News from the FCC

Yesterday the Federal Communication Commission announced some proposed rules and a comment period for the very important upcoming auction of 700MHz frequencies which television broadcasters are scheduled to vacate in February 2009. The news is about as good as it could possibly be for using these frequencies to greatly enhance the quality and availability of broadband access in the United States – although it could have been a lot better if Congress had permitted this spectrum to be opened up like WiFi frequencies instead of auctioned off. 

According to CNET: “Since Congress decided in 1997 to re-auction the 700MHz spectrum used to transmit analog TV signals, communication policy makers have viewed this sliver of the airwaves as a panacea to all the nation's broadband-access problems.”  Just as a reminder, this spectrum is ideal for access use since it goes through walls and leaves and travels about far times further than the frequencies usually used for wireless Internet access today.

The critical question is what the rules of the auction will be. Will the rules, for example, permit existing megacarriers and cable companies to buy up all the available bandwidth and perhaps prevent it from being used to compete with their DSL and cable broadband offerings? Will huge national blocks be auctioned off and then, perhaps, lie fallow in rural areas?  Will there be requirements that winners of the auction actually offer services over the “airwaves” they buy? Will there be any net neutrality requirements placed on incumbents?  The FCC didn’t actually decide any of these issues but they did give them prominence in the list of what they are asking for comment on.

Equal in importance to the questions the commission asked are the statements of the commissioners, particularly Chairman Martin who has not been known as an advocate of competition for established telcos:

“One important factor spurring both increased broadband availability and reduced prices is competition among broadband platforms. 

“In much of the country, however, consumers have a choice of only two broadband services: cable or DSL.  And in some parts of the country, consumers don’t even have that choice.  The most important step we can take to provide affordable broadband to all Americans is to facilitate the deployment of a third ‘pipe’ into the home.  We need a real third broadband competitor.  And we need a technology that is cost-effective to deploy not just in the big cities, but in the rural areas, as well.  All Americans should enjoy the benefits of broadband competition – availability, high speeds, and low prices.

“The upcoming auction presents the single most important opportunity for us to achieve this goal.  Depending on how we structure the upcoming auction, we will either enable the emergence of a third broadband pipe – one that would be available to rural as well as urban American – or we will miss our biggest opportunity…”

He’s right that we need more broadband competition and that this auction is key to making sure we have it.  He’s wrong, I think, to assume that the answer is a single third competitor as he seems to imply; it may be establishing a way for many companies to compete.  But, even if we got just a third competitor, we’d be much better off than we are today with an effective duopoly in urban areas and no service in many rural areas.

A coalition of Consumer Federation of America, Consumers Union, Free Press, Media Access Project, New America Foundation and Public Knowledge has asked the FCC to auction half the available bandwidth with the restriction that the winner must agree to provide “open access”.  They are claiming preliminary victory (justifiably) since the FCC has included this proposal in the request for comments.

Open access means that winner agrees not to block or discriminate against any types of traffic (basically net neutrality) and allow free connection of devices in its spectrum with just a requirement that the devices not interfere with network access by others. Moreover, open access in the coalition definition also means that the winner must make at least half of its capacity available at wholesale on a non-discriminatory terms. If implemented (which is difficult) and enforced (hasn’t always happened) , these provisions would turn this new spectrum into a platform for competition from many parties.

Harold Feld, senior vice president of Media Access Project, a nonprofit law firm representing the coalition before the FCC, is quoted in the CNET article: “Pretty much everyone agrees this is the last big piece of spectrum to be auctioned off for the foreseeable future. And if you don't get the rules right, the existing players could control the auction and then nothing in our wireless broadband future will change. But if they do get them right, there is great potential for some dynamic innovation.”

Related posts:

Spectrum Serendipity

Internet 2.0 is Open Spectrum

Notes from Tortola – Who Owns the Network?

In a few hours we’ll pick up our charter boat and begin sailing the usually benign waters of Sir Francis Drake Channel. To be here in time, I had to come yesterday.    Daughter Kelly and I have already made some $1.29/minute Verizon mobile calls (both sides paying the fee because we were roaming!) back and forth to each other so that we could rendezvous.

Today and for the rest of the trip, we’ll use walkie-talkies for inter-crew communication. It’s our “network”; it’s free. But I did buy the equipment, which was very cheap in this case.

I called Mary once on my Verizon phone to say I was safely here but we didn’t really talk until I had a WiFi connection and could use Skype to call her on our home line which happens to be Vonage. That call cost $.021/minute so we could afford to catch up on a whole day apart.

Getting a WiFi connection was only possible because I made an initial investment in network “infrastructure”. Of course I already have a PC which is also my GPS, my writing tool, and lots of other things; it’s a key part of my network infrastructure even though I wouldn’t have bought it just to make phone calls. The PC has a WiFi card but I couldn’t log on to the free WiFi here or at the hotel even though I could see the network. Neither the bartender nor the desk clerk knew why and I couldn’t figure it out.

But, as posted previously, I’d taken the precaution of enhancing my network with a long-range WiFi card plus antenna from Ubiquiti. It can see dozens of hotspots from my hotel room, many of them free and open.  This network extension was the key to my being able to make cheap calls.

It’s tempting to claim that rational economics are at work and these are examples of trading higher capital expense for lower operating expense. In the case of the walkie-talkies, that’s certainly true (and a very interesting early example of the value of open radio spectrum). In the case of Skype, however, most of the savings comes because use of our own local access networks lets us bypass tollbooths set up by the owners of the traditional access networks.

The photons carrying Mary and my gossip back and forth have to travel just as far when I use Skype as when I use Cable & Wireless (the incumbent here which charges its residential customers $.55/minute to call the US) or when I use Verizon Wireless, which uses C&W towers. Even a few years ago when I was last in the wholesale phone business, the cost to complete a call in most of the US – another last mile toll – was less than $.01/minute.

The simple reason why Verizon and C&W charge so much is that they can; they have last mile monopolies on which they’ve erected toll booths.  Owning edge network equipment – PCs and WiFi radios – lets us bypass the toll booths and pay Skype “only” a 100% markup on these calls.

These toll booths are, to say the least, lucrative. That’s why cellular carriers want to provide you with a cellphone – one they can lock so you can’t avoid their access toll by avoiding their access network. That’s why it is so important to Verizon to win its patent fight against Vonage. That’s why most cell phones with WiFi don’t allow you to use the WiFi in voice mode (you might Skype!). That’s why governments around the world have been convinced, bribed, or otherwise cajoled into passing laws which protect these monopolies against the technical bypass which is now easy.

Ironically, the huge markups the incumbent charge make it and easier and easier decision to build your own access network and use your own equipment.

Other posts in this series:

Dollars or Cents – WiFi to the Rescue

SIMitry

Calling Home for American Dummies

Spectrum Serendipity

The facts:

  1. In rural areas we don’t have very many over the air television stations;
  2. in rural areas we don’t have enough choices (if any) for broadband Internet access.

The happy conclusion: fact #1 can lead to the a solution to the problem posed by fact #2. The radio frequencies (spectrum) not being used by the television stations which aren’t here are ideal for use to provide very high quality Internet access at a reasonable price.

Over-the-air UHF television operates today in a frequency band from 470 to 806MHz not counting 608-614MHz which are used for radio astronomy. After February 7, 2009, which is the deadline for switching to digital TV, over-the-air broadcasters will no longer be allowed to use the frequencies over 698Mhz and new frequencies have been assigned to existing licensees.  The freed-up spectrum will be allocated to a number of new uses including public safety and “new wireless services”.  There is a fierce fight going on over how this auction should be conducted.  These frequencies are justifiably referred to as “beachfront property” since signals on them travel long distances and penetrate not only leaves but also walls.  That’s why they were used for TV to begin with.

Rural areas will have to fight hard to make sure that the auction does not result in frequencies being bought nationally and built out only in urban areas.  If past experience is any guide, that is exactly what is likely to happen.  But that is not the subject of this post.

The FCC has announced its reallocation of frequencies 470-698MHz (Channels 14-51) for over-the-air TV use post 2/7/09. Each over-the-air channel uses 6MHz of bandwidth.  These channels occupy frequencies which are even better for Internet access than the higher frequencies the FCC is getting set to auction off. Much more importantly, most of these channels are not used and not needed for broadcast TV in rural areas.  For example, only eight channels are allocated to stations based in Vermont because that’s all the channels there were claimants for.  By contrast, there are seven channels allocated to stations physically located in New York City. Bad for over-the-air TV watching here in Vermont; potentially great for wireless Internet access.

But – hold your hat – there is no current plan to make these channels which are “reserved” for TV use available for any other use.  Presumably this is because someday someone may show up and want to start another over-the-air channel here. This dog in the manger approach is terrible public policy.  The channels which aren’t in use here and in other rural areas could be a huge part of the solution to our lack of good Internet access. To repeat, many of these channels are idle today; even more will be idle in 2009.  They ought to be used.

Allowing for the fact that channels in use in contiguous parts of New York, Massachusetts, New Hampshire, and Quebec restrict the use of some frequencies in some parts of Vermont and even allowing for the unlikelihood that some new over-the-air TV stations will be started here despite the existence of cable, satellite, fiber-to-the-home, and the Internet, there is probably more unneeded frequency in this band available for immediate use in Vermont than in the whole slice of spectrum the FCC is getting ready to auction off.

FCC action is required to make that spectrum available. Microsoft, Google and others have suggested one technical solution for accommodating the fact that different frequencies are available in different locations. Broadcasters have predictably been critical of this proposal; they think it is “their” spectrum even if they aren’t using it or paying rent for it. Big telcos and cable companies aren’t eager for this spectrum to be put to uses which would challenge their effective duopoly control of Internet access.

To much of America, what happens with the unused frequencies could be and should be much more important than who manages to grab off the relatively small amount of frequency that will go in the planned auction.

More on Frequency Regulation – It Matters

Spent the morning immersed in FCC filings on the subject of some of the frequencies which will be freed up in 2009 by the switch to digital TV- 76 to 88 MHz, 174 to 216 MHz, 470 to 608 MHz, and 614 to 698 MHz..  Turns out there’s a lot going on.  How the FCC – and perhaps Congress – handle disposition of these frequencies will be extremely important to US competitiveness in a global economy as well as critically important to better broadband service – particularly but not only in rural areas.

The key issue, which I wrote about some earlier this week, is the disposition of the “whitespace” – should it be available for unlicensed use or auctioned off to licensees? Should mobile device be permitted to use the whitespace frequencies or just fixed devices?

Whitespace consists of:

  • spaces between broadcast channels which used to be needed as a buffer in analog days,

  • frequencies which can’t be used for broadcast TV in particular locations because broadcasting on them would interfere with broadcast in a adjacent locations but could be used by lower-power applications without causing interference,

  • frequencies which aren’t used in particular locations because nobody happens to have a broadcast facility in that location which uses them.

In 2004 The FCC issued a notice of proposed rule making saying that most of the whitespace would be made available for unlicensed use. They got lots of comments; they made no rules.  In October of last year the FCC essentially reopened the question in a further notice of proposed rule making.  There are some new questions in this further notice about how devices in whitespace avoid interfering with licensed signal since the whitespace available is not the same everywhere and, in particular, how mobile devices could detect which frequencies are available for them to use as they move about.  Unfortunately, the presumption that the whitespace will be made available for unlicensed use is weakened in the most recent FCC document.

There are three reasons why it’s important that these frequencies be available on an unlicensed basis: innovation, better broadband availability, and better use of the available frequency spectrum.

In an excellent comment filed with the FCC by a number of organizations including The Consumer Federation of America and Common Cause, the chart below shows how innovation has flourished since frequencies have been opened up for unlicensed use:

Devices

Note the flat line of devices being invented to use the licensed frequencies vs. the explosion of devices including WiFi, BlueTooth, and many other technologies we now take for granted in the unlicensed space. We really don’t want to deny ourselves a part in the wave of innovation that can happen on the ex-TV frequencies.

Internet accessibility has exploded thanks to WiFi and the use of other unlicensed radio spectrum for fixed access by WISPs.  This happened even though only “junk” frequencies – those shared with microwave ovens, for example – were made available for unlicensed use.  The former TV frequencies are “good” frequencies.  They go through leaves and walls; they go further.  A common estimate by informed sources is that using the now unlicensed junk frequencies for a wireless buildout requires six to eight times as many towers as would be required if the former TV frequencies could be used.  This is particularly important in rural areas where wireless will be the last mile for many for a long time to come and where there are many leaves to penetrate.  The chart below from dailywireless.org shows some examples:

Channels

Finally, unlicensed use is the best way to use the “swiss-cheese” of whitespace which will be available.  Licensees won’t bid much for a frequency available only in one spot or which may later go into use.  On the other hand, the new generation of devices proposed for unlicensed use in these frequencies adaptively use whatever is available wherever they are.  It’s serendipitous that there’s the most whitespace in the same places where there’s the most need for better Internet access.

Two bills have been introduced in the Senate to speed up what seems to be an interminable FCC process.  A bill from Senators John Kerry (D–MA) and  Gordon Smith (R-OR) would require the FCC to allow unlicensed use of this spectrum within 180 days of enactment.  Another bill from John Sununu (R-NH) has a 90 day deadline but allows the FCC to reserve some of the frequencies for licensed use.  Note that if you are automatically sensing unused frequencies you actually can start before 2009 when more frequencies will become available.

The FCC comment period is now over but there is no indication of what action the FCC will take when.  The legislative spurs may well be necessary.

Eventually, I think, almost all frequency will be open (unlicensed).  We need these good frequencies opened now. 

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