Unleashing the Potential of Wireless Broadband

Perspectives

REED E. HUNDT

Unleashing the Potential of Wireless Broadband

Over-the-air TV broadcasting is an obstacle to the faster growth of technologies and services that could produce great economic and social benefits.

Broadcast TV, once vilified by former Federal Communications Commission (FCC) chairman Newton Minnow as a “vast wasteland,” can now also be characterized as a vast roadblock—specifically, a roadblock to the rapid expansion of digital wireless broadband technologies that could produce great economic and social benefits for the United States. In a nutshell, TV broadcasters have thus far been reluctant to vacate highly desirable parts of the electromagnetic spectrum that were lent to them by the federal government in the 1930s and 1940s in order to broadcast TV signals over the air. But the broadcasters no longer need this analog spectrum, because most Americans today receive TV signals from cable or satellite. Meanwhile, purveyors of services using new wireless broadband technologies are locked into inefficient parts of the spectrum that are severely hindering their development. These new technologies are capable of delivering data, video, and voice at vastly higher speeds than today’s cable or DSL connections and consequently could speed the development of a wealth of new applications that could transform society. They also could help reignite the telecommunications boom of the 1990s and create billions of dollars of value and thousands of new jobs. It is time for Congress and the FCC to take the steps needed to free up suitable parts of the spectrum—starting with the spectrum used to broadcast analog TV signals—to pave the way for the expansion of digital wireless broadband.

To understand the issue of spectrum allocation, it is important to understand what spectrum is. Electromagnetic waves all move at the same speed, at least for all purposes relevant to daily life and business activity. They oscillate, however, at varying frequencies. When the FCC sells or gives away spectrum, it actually is granting a license to use certain frequencies, either exclusively or in conjunction with other users.

All waves can be interrupted and modified in various ways. These changes in waves, like the tapping of a key connecting to a telegraph, can be used as a code that conveys information. The code can be music, as in the case of radio; or pictures, as in the case of broadcast and satellite TV; or email, as in the case of a Blackberry; or anything at all that can be appreciated by the eyes or ears. The senses of taste, smell, and touch are not well evoked by code, as of this writing.

Waves of different frequencies have different propagation characteristics. At some frequencies waves can travel without being absorbed or distorted by material objects; in other words, they go through buildings. Broadcast TV and radio use such waves. By contrast, most cellular telephones use waves that do not easily pass through walls.

The best reason to have the government grant licenses for frequencies rather than to treat them like water, which one can scoop up or drill for or collect from the skies without government permission, is that if two people make machines that emit waves at the same frequency, the waves can cancel each other out so that neither succeeds at transmitting its coded content. Some argue that those who interfere with each other can go to court or negotiate their conflict, just as neighbours may sue each other or compromise out of court concerning irritating behavior, such as the use of a leaf blower. But the transaction costs that would ensue are high, and on balance it seems practical to have a license regime.

However, in order to promote competitive markets and permit freedom of expression, it makes sense for government to grant as many licenses as can be issued without creating intolerable conflicts of use. For those who wish to emit messages (for example, to send broadcast TV or enable cell phone calls) there is a cost to using a frequency. The frequencies that penetrate buildings (which are lower on the spectrum) are particularly valuable because it is less costly to use them to send messages than it is to use the frequencies that do not penetrate buildings as well. Broadcast TV and radio have the best spectrum for most commercial purposes.

In the 1930s and 1940s, the federal government gave those media that spectrum because of the historical accident that they were developed before the microprocessor and digitization made the modern cell phone possible. No one ever decided that TV was more worthy than cellular telephony and especially that it was more important economically or socially than wireless broadband access to the Internet. Indeed, it is now the case that TV is less important than wireless broadband by any measure. The imperative for policy now is to translate the hierarchy of value into the frequency license allocation decisions of the government. In brief, government’s job is to take the frequencies for analog TV broadcast and give them to wireless broadband or any other use a truly efficient market would demand.

You would think that this would be an easy mission, principally because Americans make little use of broadcast TV today. Instead, about 90 percent of all households resort to cable or satellite TV to watch video. No rational person can disagree that the economic purpose of communications policy is to promote the welfare of our citizens, and making the most productive use of the electromagnetic spectrum provides benefits to all. Increased productivity translates into decreases in the price of transmission and increases in the amount of information moved per second from place to place.

This story played out in the mobile communications market in the 1990s. Voice communication over wireless networks generated many new firms, hundreds of thousands of new jobs, and billions of dollars of consumer benefits. Multiple users of spectrum have taken advantage of the absence of retail price regulations and of cheap interconnection mandated by government. Mobile communications firms created a market that delivers high growth, high usage, high penetration, and a high rate of technological innovation.

In fact, the original licenses for cellular telephony, granted in the 1980s, were repurposed UHF TV licenses. However, Congress and the FCC did not have the vision or the political courage to favor the emerging cellular industry over the existing broadcast industry. Therefore, the additional licenses auctioned for mobile communications were at a much higher frequency than those allotted for broadcast TV. The consequence is poorer performance, greater energy consumption, and higher network cost. However, because voice communication requires much less bandwidth than does video or Web browsing, the penalty for using higher frequencies has not much thwarted the development of a robust mobile communications market.

However, wireless broadband—access to the voice, video, and data of the Web through electromagnetic waves traveling over the air with sufficient capacity to carry many megabits of information per second—will incur much greater cost if it develops in higher frequencies than if it were to use the lower frequencies now used by broadcast TV. According to a number of studies, including one done by the Brookings Institution, the total cost of providing wireless broadband access could be five times higher if the optimal spectrum is not used by the new communications devices soon to reach the market. Of course, manufacturers need to select radios tuned to the frequencies permitted by government. The burden on government then is to act quickly to inform entrepreneurs in big and small companies what frequencies they can use in their wireless broadband designs.

The good news is that government decided in the early 1990s to move all analog broadcasting to digital broadcasting and to shrink greatly the amount of spectrum allocated to the broadcasters. Key decisions to this effect were made in Congress and at the FCC while I was chairman. The bad news is that so far in this century, Congress and the FCC have not taken adequate steps to make this move away from the analog broadcast spectrum actually happen.

TV broadcasters simply say they need more time to complete the move from analog to digital broadcasting, because they do not want to abandon any users who have only analog TV reception. But this would allow them to hold on to their spectrum indefinitely, because there will always be people who, for whatever reason, won’t switch to digital reception.

Speeding the transition

A number of ways exist to expedite the move from analog to digital broadcasting. Indeed, government could simply buy for every household a digital converter box that would make it possible to view a digital broadcast on an analog TV set. Then there would be no reason at all for analog broadcasting to continue. Moreover, the new boxes could be designed to also be compatible with cable and telephone networks, giving consumers significant choices for Internet access. Indeed, the new boxes could be personal computers that underpin home entertainment and communications services. Presumably, a modest government voucher, coupled with a defined date for the termination of analog broadcasting late in 2005, would suffice to move the country en masse from analog to digital broadcast access. In fact, probably not more than 10 to 20 percent of the country would even notice, given that so many depend on cable and satellite for video delivery.

The FCC needs to adopt a clear and systematic approach for spectrum currently available and to set forth an immutable policy for the treatment of spectrum that will come to the market in the future.

The FCC needs to adopt a clear and systematic approach for spectrum that is currently available and to set forth an immutable policy for the treatment of spectrum that will come to the market in the future. In November 2002, the FCC’s Spectrum Policy Task Force issued a report that said the commission should generally rely on market forces and gave an outline for how to increase the amount of spectrum in the market and how to use market forces to govern the use of spectrum and to increase flexibility. That report did not go far enough in its ambitions for spectrum management. Therefore, the Bush administration should now issue an executive order creating an independent commission charged with developing alternative solutions, including the one cited above, for clearing analog broadcast spectrum. That commission’s recommendations should be passed by Congress and implemented by the FCC in 2005.

Currently, the FCC is considering auctions of various blocks of spectrum as well as designating certain bands for unlicensed operations. It is possible to put this spectrum on the market at the same time and to facilitate the clearing of incumbents.

Although the FCC should auction spectrum, the current plan lacks specific dates for auctions and in general is an inadequate smorgasbord of spectrum offerings. No method appears to lie behind the auction madness. Indeed, it is not even clear that the FCC understands that its goal should be to be auction so much spectrum so quickly that the price goes down. The most important goal is not to maximize auction income for the government but to open as much spectrum as possible to the productive uses that will have a ripple effect throughout the economy.

After all, people do not consume spectrum; they do not eat electromagnetic waves. Spectrum is an input into other services. The highest and best current use of waves below 1 gigahertz, where TV broadcasting occurs, is wireless broadband. Consequently, Congress and the FCC should make that spectrum available on a defined date and thereby permit firms to make the investments that the market will bear.

People familiar with politics see spectrum issues as invariably bound into Gordian knots of special-interest pleading. One outcome of single-party government ought to be that the White House has a sword that can cut any political knot. With U.S. technological leadership in the Internet at stake and hundreds of thousands of new jobs to be created, that sword should be wielded to clear broadcasters out of analog spectrum.


Reed E. Hundt chaired the FCC between 1993 and 1997.