page image

CHAPTER X - Recommendations and Discussion

The AIRS participants divided into working groups to discuss what spectrum policies can advance overall communications policy goals—robust, reliable and effective communications with choice where possible. The specific issues addressed were:

  • The Rural Broadband Challenge. How can public policy incentivize broadband build-out in rural areas?
  • Public Services. How can the government create a spectrum policy that provides public safety services?
  • Competition. Spectrum choices for competition are largely about tradeoffs—which tradeoffs should the public care about most?

The Rural Broadband Challenge

Recommendation: The FCC or Congress should create a competition or trial—the Rural Broadband Challenge—to induce innovators to come up with a way to bring reliable, affordable wireless to rural areas.

  • Objectives:
    • The trial would include five to ten rural communities that are served by old DSL services and would attempt to determine if a wireless overbuild could be done that would satisfy consumers.
    • The solution would have to include wireless phone and broadband service.
    • After a period of time, there would be an assessment to see whether the users were satisfied and whether the service was a good substitute for wired.
    • The results would be used to inform whether future carriers would be allowed to only use wireless.
    • Of course, this type of trial or competition would require the support of the local communities.
    • Importantly, the trial must incorporate all the features of the old system and all legacy equipment must be supported through the new system.
  • Participants:
    • The trial would include a broad group of participants such as carriers, existing licensees, public private partnerships, lessees or any other interested party.
    • The participants would be free to incorporate diverse technologies such as LTE or white space and would receive forbearance of TV white space rules.
    • As an incentive to participate there would regulatory relief for those that were willing to participate and the relief would extend beyond the competition for the firm that most successfully substitutes wireless for wired.
  • Evaluation:
    • The trial would be evaluated by certain benchmarks set by a selected independent auditor and have FCC oversight. The benchmarks would include:
      • reliability
      • performance and speed
      • ubiquity
      • affordability
      • costs
      • functionality
    • Importantly the success of the trial would focus on residential and business subscribers, but there would be positive credit given for incorporating important anchor institutions such as schools, libraries and hospitals.
    • There would also be additional credit given for incorporating emergency services such as FirstNet and 911 into the wireless service.

There was resistance as to whether the Local Exchange Carriers and other incumbents would be assessed on the same threshold as large national carriers. There was also concern about whether Universal Service Funds would be shifted to a new entrant that can deliver the same service.

There was substantial discussion on who would fund, implement and assess the trial. There was general agreement that it should be funded by industry because the FCC would not likely secure the funds. Additionally, the FCC would not likely be the best auditor. There was also agreement that the FCC should have some oversight, but there was disagreement about how much involvement or oversight the FCC should have.

Finally, Blair Levin noted that in his experience working on projects relating to rural broadband:

The constraint has not been the power limit, it's been the equipment costs. And the government could play a much more significant role in helping accelerate that moment where the chicken meets the egg. But I don't think it's a power limit. What's really behind this, and behind a lot of things, is we have areas that aren’t bandwidth constrained, but bandwidth rich, and yet struggling to establish reliable, consistent connectivity for other reasons. In these cases, the government could essentially drive down equipment costs, which is the current barrier to the utilization of that kind of spectrum.

Public Services

The public services working group worked on possible solutions to bring broadband wireless services in education, health, economic growth, and emergency services.

Education: In the education sector, the group suggested two areas of focus: E-Rate and usage caps. The desired outcomes were to use E-Rate funds to fund devices for students, to fund access to broadband on campus and off campus and to fund student access and connectivity at all hours. With E-Rate, there were concerns that students would be using E-Rate funds to purchase devices that would most likely be used beyond the classroom and beyond the scope of the designated educational purposes. This use could have a negative effect on business models and the optics of such a program could be problematic. Additionally, there is concern with what role the federal government would play in the E-Rate process.

With respect to usage caps, the group noted that it wasn’t opining on whether usage caps were a good thing or bad thing, but rather to note their concern, if usage caps were imposed, and resulted in people using bandwidth less for education, healthcare or public safety. As Blair Levin explained:

If somebody was able to text a picture of a situation to 911 but didn't want to do it because she might blow her usage cap, that would be problematic. We don’t recommend the FCC actually do anything about usage caps, other than to monitor whether or not this is happening anecdotally. We see no signs that it's happening, however, and simply note that it would be an area of concern if it were.

Healthcare: Healthcare is unique because there are a lot of devices that would need to be delivered through spectrum. To make this happen there does not need to be a significant policy change. The essential elements to ensuring healthcare uses spectrum effectively are reimbursement and incentives. As long a public policy is able to align the incentives of those bearing the cost of the infrastructure, wireless could be a valuable substitute for wired applications in healthcare. The group did not address how reliability concerns would factor into the analysis of healthcare services.

Economic Growth: The economic growth discussion centered on two ideas—dedicated spectrum for specific purposes and a regulation-free Internet of Things. The dedicated spectrum would be set aside for an operable network such that industry groups could request to use the dedicated spectrum for specific purposes. Deregulating the Internet of Things would create an innovation friendly environment, which could create substantial consumer welfare gains.

There was disagreement about completely deregulating the Internet of Things. Some insisted that regulation to promote data security and privacy in the Internet of Things should be required. Others argued that there should not be data security and privacy regulation, but there should be transparency. They argued that a light touch is required during the early stages of development of the Internet of Things. As Rob Atkinson remarked:

If I buy a car and it's tracking me and sending it to the NSA, I'm not going to buy from that car company again. I think transparency is what you want there. But I don't think we know enough about security in these areas. If you really want the Internet of Things to work from a societal perspective, you start aggregating data in an automated way and you analyze it and I worry that if we go down the data/privacy regulation path too early we'll squash all of that innovation.

Emergency Services: Focusing on emergency services—specifically 911 emergency calls—the working group generally agreed that there was a need to redefine the nature of 911 because the current model is outdated. The 911 today looks very similar to the way it did 50 years ago. Part of the problem with emergency services is there is a separation in authority. There are federal rules but the money to fund the emergency services comes from the states. Additionally, there are also jurisdictional differences between police departments and fire departments.

Getting customers to use digital equipment is not a significant problem because most consumers are switching to smart phones that use contemporary technology. The public safety ecosystem, however, has an embedded cost that makes upgrading very difficult.

The working group also discussed developing a trial or competition for new emergency services. The main goal of the proposal would be to have companies competing to incorporate the robust types of services that are being offered through creative innovation, like mapping, into emergency service. The key to this would be providing regulatory relief for those regulations that are currently hampering innovation in emergency services.

The trial would involve holding current regulatory requirements constant for some period of time. During the transition there would be a value-added unregulated zone. That is, anybody can add services, charge any amount they want for it, develop new functionalities, etc. The trial would also allow the states involved in the process to accelerate the timetable or provide a way to create unique rules that allow experimentation at the state level. After the transition period, there would be no requirement for any service provider other than total transparency, both as to the device and as to the service. As long as the customer knows exactly what they can do with the 911 services and what they cannot do with the service they select.

Competition and Wireless

Roundtable participants who examined competition and wireless suggested that competition should not necessarily be the goal, but that it should be a means to an end. Instead the end goal should be efficient delivery of wireless to consumers. Members of the group agreed that, while there are several things you can do around competition in this space, the most important relate to spectrum.
The group presented three potential spectrum policy frameworks to think about how to address spectrum policy for wired/wireless competition:

  • The first option is to use spectrum policy to maximize competition wholly among wireless competitors.
    • Maximizing competition here would entail licensing all of the spectrum and seeking to ensure that all bidders have reasonable opportunities to reach competitive scale.
  • The second option is to create an environment to encourage wired networks to compete with wireless.
    • Maximizing competition here would entail creating a robust system of unlicensed spectrum both in the higher bands and the lower bands so that you have much more ubiquitous offloads.
  • And the third option is to create an environment to encourage wireless networks to compete with wired.
    • Here again maximizing competition would entail expanding licensed spectrum.

A plurality of the participants agreed that the second option was the most significant.

This approach to spectrum policy and competition analysis would be a significant and valuable break from past practice. To date, all spectrum policy discussions, and all FCC analysis of spectrum transactions have turned entirely on competition solely among wireless companies and in a “wireless market.” Shifting to a conception of competition and spectrum policy that affirmatively takes account of inter-modal competition would effect a significant improvement.

The group’s specific recommendations were to:

  • Allow power variability and use of unlicensed spectrum in rural areas.
  • Allow sharing of spectrum above 5 GHz.
  • Remove all spectrum use restrictions as long as there is no interference.
  • Limit the ability of cities/municipalities to restrict tower siting or other kinds of small cells, and reduce or eliminate cellular build-out requirements.
  • Allow others to make unlicensed use if licensed spectrum remains fallow for a sufficiently long amount of time.
  • Direct some federal spectrum money back to agencies to have them to buy more spectrally efficient equipment.

The group also discussed the relationship between licensed and unlicensed spectrum. Given the scarcity and nature of the licensing rights, there is opportunity for bargaining to occur between firms as to the use of certain spectrum bands. This could also increase consumer welfare as Coasean bargaining drives down costs. Additionally, in a world of zero transaction costs there could be much higher efficiency and innovation. Utilizing unlicensed spectrum would minimize transaction costs (because bargaining, at least over spectrum, wouldn’t occur at all), whereas licensing spectrum has high transaction costs. At the same time, as at least one participant (Geoffrey Manne) pointed out:

Decision-making authority will be vested somewhere, even if spectrum is unlicensed. The relevant question becomes whether the benefits of minimizing transaction costs in bargaining over spectrum outweighs the costs of bargaining over other controls on the uses of unlicensed spectrum (such as device standards, for example). Tchoice between licensed and unlicensed is not just a choice between controlled and open access; it is a choice between two different models of controlled access, where the locus of control shifts from spectrum licenses to device standards.[32]

Finally, removing the regulatory barriers enumerated above is crucially important. Doing so can entice new entrants to compete with incumbents. When this occurs, there is increased consumer welfare through greater access to broadband services. The benefit to consumers comes from greater access, and not necessarily through competition. For this reason, removing regulatory impediments is beneficial to consumers.

[32] It is also important to note that “[J]ust as important as who may use spectrum is how they may use it. Indeed, current FCC licenses define not just who may transmit over a certain channel, but what technology they may use, what content they may transmit, and even what business model they may employ. Even if transmission were open, authority to set rules about what kind of equipment is allowed to transmit—in government or private hands—is control over how the spectrum may be used because any decision in favor of one type of equipment or technology necessarily excludes others. Whoever has the power to set and enforce rules stipulating how all or a portion of the radio spectrum can be used is the de facto, if not de jure, controller of that spectrum.” Jerry Brito, The Spectrum Commons in Theory and Practice, 2007 Stan. Tech. L. Rev. 1 (2007), available at

Share On