Spectrum, Congress and Opportunists

Yesterday, as reported in the Wall Street Journal, Senator Kerry of Massachusetts is now chairman of the Senate Communications, Technology and the Internet subcommittee which gives him a platform for promoting a new set of agenda in the broad technology area. The WSJ states:

" Kerry is addressing a dinner with hundreds of cable executives....“We’ve got to develop a coherent, comprehensive national approach to broadband service in this country,” Kerry planned to say. “We have to view the $7.2 billion broadband investment in the stimulus package as a down payment on a national strategy to deliver broadband to rural Americans who can’t access it and urban Americans who can’t afford it.”...Already, Kerry and Republican Sen. Olympia Snowe of Maine have co-sponsored legislation that would require the government to inventory the nation’s airwaves and see if the spectrum is being used efficiently. The report would be the first step toward future government action to remove “spectrum squatters,” freeing airwaves for high-speed Internet or other wireless services."

Let us briefly examine the last statement regarding the tasks of creating "inventory" spectrum and "remove "spectrum squatters"". Frankly these statements and conclusions of Senators Kerry and Snowe are, in my opinion grossly misguided technically, but alas these are politicians, and are in another sense a grab for the property of others which we see is becoming a common thread of the current Administration.

Fred Wilson, a VC in New York, states in his Blog:

"The fact is that wireless spectrum is not being used efficiently except in the unregulated bands (like the band that wifi runs in). We need open spectrum in this country and we need it now. If we unleaded entrepreneurs and engineers on the spectrum by opening it right now, we would solve the rural and urban access issues easily. It would take some time, maybe five years, maybe a bit more, but not much longer. We'd save the $7.2bn (it's too late to save that, it will be spent digging trenches and doing things the old way) and we'd get better, faster, and more reliable WIRELESS broadband."

He then goes to quote Tom Evslin, the former head of the now defunct ITXC, one of the VOIP carriers in the late 1990s. Evslin states:

"Ten years from now the idea of licensing swatches of the radio spectrum for private use will seem quaintly obsolete. Most spectrum will be available for any entity – including individuals - to use so long as the rules for the use of that spectrum are observed. Today almost all usable frequencies are licensed to private license holders or reserved for specified public uses."

Let us pause and consider some laws of physics. To anyone who knows the telecommunications and data business on the technical side, not financial or marketing types, but those of us who really did something, there are certain laws we adhere to. For example:

1. The Randomness of Traffic: In the old copper telephone system, a telephone at a home may be used 600 minutes per month. That is the old telephone. The cell phones on average, do not use a great deal more. Now there are 60 min in an hour, 24 hours in a day and 30 days in a month, or 43,200 minutes per month. Thus a phone uses the copper only 1.4% of the time. That copper is unused 98.6% of the time! What a waste of copper! Not really, this is the essence of communications traffic, it is Poisson in character, voice and data, with some twists now and then, and one builds a network for peak loads, not the average.

Thus we build a communications system which may be empty almost all the time but when needed it is there. The work we did on VOIP in the 1990s, yes we competed against ITXC, demonstrates some of these facts. Thus communications networks are designed for peak loads, not for average. Looking at average as ones where the carrier is just squatting is technically and operationally fallacious. Just imagine if we designed our highways to have zero space between cars, well we do in some cities, and traffic just stops!

2. Spectrum Sharing is Possible: We have developed many spectrum sharing schemes over the past twenty years. What is spectrum sharing? Simply it is the concept that there is a single owner of spectrum and that the owner is a public utility that provides access to the spectrum on some specific method of allocation. WiFi is a first come first serve type system. We argued that a Nano Auction system could be developed to actually monetize this for the FCC. In 1994 we presented a paper at TPRC which was the first fully detailed description of this approach. Thus this system functions by each using having a shared signalling channel as the process to bid for spectrum real time and the highest bidder get spectrum on an as needed basis. This then readily monetizes the use of spectrum and it also increase potential usage.

However, and this is a big "however", the problem articulated in the first point, namely you still have the laws of traffic engineering at play, cannot be neglected. The manager of such a shared network would default to a scheme similar to what we see in any of the current wireless networks! There is still a temporal hogging when the traffic drops. You cannot violate the laws of physics.

Here I agree with Wilson, although I suspect that I do so based upon facts and he upon belief, but that is an engineer versus a VC. The Evslin remark is a truism, namely as long as the rules are followed. The question is what rules and whose rules. At least I provided a few. The problem is that the FCC would have to agree and the powers that be would object. But there is a third issue.

3. Spectrum is a Property Right: Verizon and others paid good money for the spectrum. They own it and they have a property right in it. Well at least until the current Administration came along. We have destroyed contract law, we have destroyed corporate law, so why not try a turn at property law, all of the thousands of years of good old English law. Give it a whack guys. People are worrying about privacy while the main pillars of our society are slashed from under our feet. Verizon owns that spectrum, as do others, and they are economically profiting from it, as well they should, and they are not squatters in any way. They design the switches and cell sites to optimize coverage and performance, not squat on spectrum! Where in God's name did that idea come from, Oh yes, Washington lobbyists! Why am I not surprised.

To summarize;

(1) Spectrum is not being left fallow, it makes no sense economically or technically. Traffic is random and at times it is high and at times it is low! You cannot organize Mother Nature folks, Einstein in one of his 1905 papers on Brownian motion had shown that! As did I in my first Book (Stochastic System and State Estimation, Wiley 1972.).

(2) Sharing is Technically Possible but Legislatively Quite Difficult: I have been pitching this concept now for decades. Others have as well, such as Eli Noam and the spectrum Commons. I have designed and implemented it. Yet it is a political problem first and foremost. Do not expect a quick resolution.

(3) Property Rights MUST Not be Abrogated: We are facing a dramatic shift in how the law is applied and the first 100 days of the current Administration are not even over. I suspect that there will be a swing back again after the results are in. But the issue of property rights should be held sacrosanct. It was Locke who established the place of property in our legal system and it was the concept of property which was an anchor of our Constitutional Government. We have seen it eroded in the last 70 days in contracts and corporate law, we should not see it done here.

There is a land grab for the billions in Federal dollars for this broadband project. Why have the incumbents not delivered, because they cannot see an reasonable economic return. Thus why would any other new player be successful economically? We have argued that from the point of actually having tried. Other than franchises and the stupidity of public-private partnerships, this is nothing more that a grab for "our" money by those who could not make a business of it in a normal business environment. We, the taxpayers, unfortunately foot the bill, not and for generations to come!