FCC Chairman Julius Genachowski noted in his recent speech at the Brookings Institution that the Internet is such an incredible engine of innovation because its architecture allows “anyone to contribute and to innovate without permission.” He said:
Historian John Naughton describes the Internet as an attempt to answer the following question: How do you design a network that is “future proof”—that can support the applications that today’s inventors have not yet dreamed of? The solution was to devise a network of networks that would not be biased in favor of any particular application. The Internet’s creators didn’t want the network architecture—or any single entity—to pick winners and losers. Because it might pick the wrong ones.
Yet permission from the commission is exactly what entrepreneurs must acquire before they are allowed to innovate in the wireless sector. Without spectrum–the raw material of wireless networks–there can be no innovation or increase in broadband penetration. Yet spectrum is not readily available on a market. It’s availability is artificially constrained by policy. To get some spectrum, you have to ask the FCC.
Earlier this week CTIA, the wireless carrier lobby, filed a letter with the Commission making that obvious point and asking for more spectrum. “Specifically, CTIA urges the commission to commit to identifying and allocating a significant amount of spectrum—with a goal of at least 800 MHz—for licensed commercial wireless services,” the letter stated.
Like land, you can’t make more spectrum, but the FCC sure can make more of it available. Jerry Ellig and I explained this to the FCC in a comment we filed earlier this week. Most of the spectrum available to the private sector today is limited by its license to a particular use. A television broadcaster can’t decide to shut down its doors and move into the wireless broadband market, even though 90 percent of Americans pay to get TV by cable. Make spectrum licenses flexible and tradable and you’d free up a wealth of spectrum. The United Kingdom is doing it. It has begun a process to reallocate to allocate about 70 percent of the bandwidth below 3 GHz to flexible use by 2010.
Another place good spectrum is hiding is in the hands of federal agencies. Over 20 percent of the prime spectrum in the United States is state controlled. The Department of Defense alone controls over 500 MHz. Government actors do not internalize the benefits of innovation as well as a private actor might. As a result, federal agencies that control spectrum have little incentive to manage it well or deploy more efficient technologies that better exploit bandwidth. Congress needs to mandate a massive reallocation of spectrum from federal to private hands. And they have a great incentive: the billions of dollars of auction revenues that would come their way!
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