Why Spectrum Policy Matters

by publius

There's a school of thought in the telecom world that the fight over wireless spectrum is overblown. At the end of the day, they argue, wires will always be better than wireless. The policy implication is that, rather than trying to build crappy muni-WiFi on the cheap, we should be digging holes and putting super-fast fiber lines in the ground.

The million dollar question then about wireless broadband is whether it can ever evolve into a full-blown substitute to wireline broadband. Right now, it's a complement. You don't "cut the cord" when you get an iPhone. You have a cable/DSL line in addition to your nifty new smartphone that you think is cool, but is actually absurdly slow. That's why people are concerned about spectrum consolidation -- Verizon and AT&T arguably have less interest in making wireless broadband a substitute. They'd be just as happy to sit on the spectrum if the market would allow them to.

Interestingly enough, Sprint has a new product that (while probably destined to fail) shows at least the vague contours of a what a true substitute service would look like. Basically, it's a USB modem that connects to either to a WiMax or a 3G network. The catch is that it's only available in Baltimore, for a decent chunk of change.

I don't know if Sprint is long for this world, but the service shows how the future may look. Lots of people of course have mobile broadband cards now, but they suck. Sprint's limited WiMax offering rivals the speeds of many people's landlines. And if wireless speeds are reliably the same, there's no reason not to abandon wires completely (which current wireless card subscribers haven't done). Looking ahead, the move to full-blown 4G networks promises (promises being the key word) much faster speeds -- game-changing faster speeds. But we're not there yet -- and may not be for a long time.

The reason we're not there is that the only people really capable of building a national 4G network at the moment are Verizon and AT&T, due both to their capital assets and massive spectrum holdings. Unless a cable company buys and revamps Sprint, the future of American wireless broadband is Verizon and AT&T. Period. There's no real way to stop it at this point.

Accordingly, we need to craft spectrum policy with an eye to this reality. The goal of spectrum policy in the near-term should be to make sure AT&T and Verizon have the proper incentives to fully develop this invaluable, scarce national resource.

Indeed, this broader goal ties together lots of individual progressive spectrum policies. For instance, net neutrality ensures that AT&T and Verizon wireless provides a truly equivalent service to wireline broadband. Wireless Carterfone would promote these same goals. Better white spaces policy (where the FCC has taken some key, if limited, strides) can lead to "super WiFi" that would expand competitive choices in rural areas, and make muni-WiFi much easier (which in turn would put competitive pressure on the big boys). States and municipalities should also be free to subsidize their own networks, etc. etc.

There's a lot more detail to all of this obviously, but the big point is that spectrum policy is at a true crossroads. The choices we make now will determine whether wireless broadband lives up to its promise (and leads to enormous productivity gains and positive externalities), or whether it remains a complementary service confined to neat phones that do neat tricks, but fail to provide a truly substitute service.

Comments

[ed_finnerty]

Doesn't the FCC whitespace decision mean that it will soon become absurdly cheap to implement a WiMax like service. Isn't Google likely to do this while providing essentially free phones (via IP telephony) in exchange for you having to look at advertising.

[TJ]

Enormous productivity gains? I'm not seeing where, exactly. Especially in the coming (near)depression.

[hilzoy]

Thanks for this -- I love these posts. I don't have anything interesting to say about them, but I love them.

[jonnybutter]

What Hilzoy said. Just because people aren't commenting doesn't mean we aren't reading!

[low-tech cyclist]

What I don't understand about spectrum policy is why broadcast television continues to hog such a big chunk of it.

Already, people like me who don't have a cable or satellite TV subscription are down to < 1/8 of American households. And of course most of that 1/8 has cable running to their houses, but don't subscribe.

If the government brokered some sort of deal requiring the cable companies to set a reasonable price to charge broadcast TV stations to provide their channels for free to subscribers and nonsubscribers alike, the TV stations could pay that fee to the cable companies instead of having to maintain broadcast equipment, and there'd be hardly anyone left who was dependent on the broadcast spectrum for their TV.

So you've got this huge chunk of spectrum effectively servicing a vanishingly small piece of the population. It makes absolutely no sense at all.

That spectrum could of course be used for many things - make available a big chunk of quality spectrum, and people will come up with all sorts of ways it can be used - but wireless broadband is the obvious one: if you can pluck the Internet straight out of the air, then you can get most other telecom-style services via the wireless Web.

[Rory Conaway]

The government needs to continue to release more unlicensed spectrum. Private sectors took 2.4GHz from stereos to city-wide deployments with ridiculous technical limitations. Imagine what would happen if they government gave the private sector frequencies in the 700MHz band or allowed the 5.4GHz band more power, etc... Good lord, the cost of deployment would go way down. Triad has taken the cost municipal wireless down to less than $5000 per square mile. Hmmm, lets compare that with the cost of a cell-tower and the subsequent billions it cost to get the frequency license.

[Miriam]

I actually haven't read this entire post. I stopped at the point you said Sprint's wireless service is good only in Baltimore. Well, I don't know about the system you are talking about, but I am using a Sprint system right now that is basically a wireless modem stuck in a USB port. I don't know what it is called but it works really well and is very fast. One of the nice things about it is that I can be on the internet while I am driving (well, actually being a passenger) down the highway just about anywhere in the US. I actually haven't found a spot yet that it doesn't work. I bought the modem at Best Buy and pay a fairly modest monthly fee for the service. (I don't remember how much it is, but I know it is comparable to ATTs DSL.)

Just FYI.