Posted by Barlow Keener

We are about to have a Presidential Executive Order that will change our world — at least our wireless, spectrum world. Ten years ago most of us would have said that mobile can not “change the world.”  Today we know mobile is changing the world and that a major future change to the mobile ecosystem will change our world again. Spectrum sharing has the potential to be that major change.

The spectrum sharing proposal, issued by the President’s Council of Advisors on Science and Technology (PCAST), is not without controversy and criticism. The report was prepared by private citizens with input from federal agencies. PCAST has been around since 1933 (another economic crisis moment) when President Roosevelt established an advisory committee of scientists, engineers, and health professionals.

The PCAST spectrum sharing report has the strong backing from the two primary corporate drivers of our world for the last two decades both of which had the highest level executives on the PCAST committee:  Google and Microsoft. Google’s Chairman Eric Schmidt and Microsoft’s Chief Research and Strategy Officer, Craig Mundie, served on the PCAST report committee. Both Eric and Craig were active members of the committee, participating in writing the report and in presenting the report at a White House ceremony to the President himself. In addition, Mark Gorenberg, Managing Director, Hummer Winbald Venture Partners, chaired the PCAST Spectrum Sharing Report (here) committee .

Mark Gorenberg and the PCAST team personally presented the report to the President at a July 20, 2012 White House event.

In addition, the report was summarized by Mark Gorenberg and the team and presented on May 25, 2012. A webcast of the excellent presentation can be found on TV Worldwide.com’s government video site (here)

The PCAST Spectrum Sharing Report, was titled “Realizing the Full Potential of Government-Held Spectrum to Spur Economic Growth,” suggesting that government assets could be used for private uses to boost the U.S. economy. Using publicly controlled spectrum for private use is not new. Both TV broadcast spectrum and the initial mobile phone spectrum licenses were provided by the government to private companies at no cost to the recipients. It may have looked like social welfare but at the time providing the spectrum licenses for free were done for the purpose of providing a new technology to serve the public good.

At the highest level summary, the PCAST Report urged the President to implement a policy of spectrum sharing for 1000MHz of government allocated spectrum. The spectrum sharing method for initially piloting the use of the new available spectrum would be the White Spaces database system. Unlike the FCC’s White Spaces requirements, the PCAST recommendation requires registration of all mobile devices using the spectrum to register in the database.

The report estimates that the economic value of opening up the rarely used spectrum to licensed and unlicensed use would be to generate $1 trillion and to create jobs:

The economy created by making spectrum abundant has the opportunity to provide societal value of over $1 trillion and millions of jobs for Americans in the coming decade.

The PCAST committee put together a great power point found on the PCAST site (here).

Richard Bennett, Senior Research Fellow at the Information Technology and Innovation Foundation (ITIF), criticized the report’s proposal that the spectrum auction process is unsustainable and called the concept “a thought experiment” not backed on empirical data. (here) (Richard will be speaking on PCAST in Austin at the Super WiFi Summit on Oct 3-5)

Richard’s argument is that the auctions of licensed spectrum have proven to be more effective than the unproven proposal to open 1000MHz of fallow spectrum to unlicensed use:

On the basis of this assertion, the PCAST report embarks on a thought experiment toward a new method of allocating spectrum which it terms “a new spectrum architecture and a corresponding shift in the architecture of future radio systems that use it [that] can multiply the effective capacity of spectrum by a factor of 1,000.” Claims of this magnitude should be supported by reams of empirical and analytical data, but the 162 page report offers no data at all to support its presumption that the auction system (which has been employed by the FCC only since 1994) is not “sustainable” or even to define the parameters of “sustainability.

While the point is made that opening up 1000MHz for unlicensed use is not yet proven to be effective, the counter point made by Mark Cooper in a thoroughly researched 58 page academic paper and footnoted in the PCAST report is that unlicensed spectrum could be worth currently $50 billion per year compared to the total cellular revenue of $141 in 2008.  The PCAST Report explained the estimated economic benefits of unlicensed spectrum:

One recent report estimated the value produced by unlicensed spectrum at $50 billion a year;another estimated the value of Wi­Fi alone at $52-99 billion a year.

One argument in favor of ceasing the auction process (which is the primary difference between Richard’s assertion that auctions are good for society and the PCAST report) is that the delivery of the A block and B block licenses spectrum, 25MHz per license (a TV Channel is only 6MHz by comparison) were given free of charge, without an auction, to wireline carriers (the RBOCs) and to non-wireline carrier (various paging companies).

 

The FCC’s decision not to auction or sell the initial cellular spectrum resulted in our current mobile network. While these free cellular licenses were granted on an exclusivity basis, the idea for giving the licenses without cost was also based on a thought experiment because giving away such large blocks of spectrum to private companies had not been done in the past. 

WiFi and other unlicensed bands like 900MHz were also thought experiments predicted to have little use by the public.  But as we all know, these unlicensed bands have skyrocketed in use by consumers. Unlicensed bands are occupied by multiple types of devices for many, many creative services.  These services are for the most part the result of entrepreneurial efforts by small companies, and not by large, well capitalized mobile carriers.  As every one who owns an iPhone or Android device knows, WiFi, and not the mobile carrier, is the principal method of accessing data on the phones. 

This unlicensed spectrum has allowed mobile companies to significantly off-load data usage from the cellular network and onto the unlicensed WiFi network.  Thus, the PCAST report’s recommendation just makes good sense that we move beyond the auction method – a method which has been heavily debated as effective or not.   The PCAST recommendation to use the White Spaces database registration technology to accelerate the U.S. into the next phase of mobile service seems a logical, simple step for spectrum sharing.

AT&T also criticized the PCAST report on its AT&T Public Policy Blog (here). It should be noted that there were no representatives from the major carriers like AT&T on the PCAST committee.

AT&T’s Joan Marsh, VP Federal Regulatory stated that she is concerned about the company’s financial stability being effected by opening up spectrum for unlicensed use as recommended by PCAST:

Licensed spectrum offers a critical cornerstone of certainty on which billions of dollars of capex have been and will continue to be committed.

The concerns raised by Richard and by AT&T that the PCAST recommendations could be disruptive to the current mobile phone economic structure underscores the potential upside of the proposal.  Currently, there are only 4 (maybe 5) major nationwide mobile carriers. There is a crisis in data use by the consumers on all these carriers.  Most, not all, of the carriers have imposed data caps on users that would make your home broadband use seem tiny.   While LTE allows for much faster speeds of 5-12 Mbps, the carriers have implemented data caps at 2-5Gb. So what good is a phone if there is a data cap.  T-Mobile has a cap that if data is downloaded on unlicensed WiFi it does not count towards the cap.  Unlicensed WiFi spectrum, and not licensed exclusive spectrum, seems to be the primary method of using the mobile data in the U.S.  

Municipal Wi-Fi at Work in Brookline, Massachusetts

The major mobile companies have more than enough available licensed spectrum purchased through multiple auctions but the spectrum has not been utilized and much of it lays fallow. The 4G LTE caps alone are good proof that the problem is not just “spectrum scarcity” because with LTE the issue is not just a lack of spectrum.  The LTE data caps also underscore that the number of mobile competitors are much more limited than necessary. 

The PCAST recommendation could remove the competitive hurdle of spectrum rights, opening up the mobile world to true competition with multiple carriers providing service on “free” new unlicensed spectrum.  Wireline competition – with a duopoly owning the wires on the poles – has been a failure. However, with the PCAST report, the administration opens the doors for real wireless competition.  Opening the doors by using public spectrum will give the public lower mobile prices, higher bandwidth speeds, and may result in the end of  mobile phone data caps. Delivering such competition, granted, will take years but implementing the PCAST report is the first step in a long march.

On another note, almost all of the White Spaces industry players and experts and many PCAST experts will be gathered for 3 days (Oct 3-5) in Austin at the Super Wi-Fi Summit. Speakers include among others: Blair Levin (GiG.U.), Mark Gorenberg, Rick Whitt (Motorola), Aparna Sridhar (Google), Vanu Bose (VANU), Preston Marshall, John Malyar (Telcordia), Bob Nichols (Air.U.), Jim Carlson (Carlson Wireless), Mark Lowenstein (Mobile Ecosystem), and Paul Garnett (Microsoft). Attorneys include Marty Stern (K&L Gates), Steve Coran (Rini Coran), and me. Carl Ford, the conference organizer, has given us a discount code for attendees (KLG2012).  #PCAST #WhiteSpaces #SuperWiFi