David Reed has posted his usual brilliant and thoughtful analysis of Open Spectrum in a single comprehensive and wonderfully-footnoted document for the FCC. Thanks!

Comments for FCC Spectrum Policy Task Force on Spectrum Policy.

Now let's hope somebody over there is paying attention. (Michael Powell? Are you listening?)

I argue in this note that the foundation of a sound economic and regulatory approach to managing radio communications in the US and worldwide cannot and should not ignore fundamental advances in the understanding of communications technology that have been developed in the last few decades. Those advances are just beginning to reach the point where they can be fruitfully applied in the marketplace, at a time when the need for a huge increase in communications traffic is beginning to surge.

It will be crucial for the continued growth and leadership of the US economy, and for its security as well, to embrace these new technologies, and follow them where they lead, in spite of the potential negative impact that these technologies may have on traditional telecommunications business models. There is a “new frontier” being opened up by the interaction of digital communications technology, internetworking architectures, and distributed, inexpensive general purpose computing devices. This new frontier cannot be addressed by a model that awards the telecommunications operators exclusive rights (such as “spectrum property rights”) that can be used to “capture” the value yet to be produced by innovators in underlying technologies[1] or applications.

My argument is based on a simple but crucially important technical fact: the useful economic value in a communications system architecture does not inhere in some abstract “ether” that can be allocated by dividing it into disjoint frequency bands and coverage areas...

I argue in this note that the foundation of a sound economic and regulatory approach to managing radio communications in the US and worldwide cannot and should not ignore fundamental advances in the understanding of communications technology that have been developed in the last few decades. Those advances are just beginning to reach the point where they can be fruitfully applied in the marketplace, at a time when the need for a huge increase in communications traffic is beginning to surge.

It will be crucial for the continued growth and leadership of the US economy, and for its security as well, to embrace these new technologies, and follow them where they lead, in spite of the potential negative impact that these technologies may have on traditional telecommunications business models. There is a “new frontier” being opened up by the interaction of digital communications technology, internetworking architectures, and distributed, inexpensive general purpose computing devices. This new frontier cannot be addressed by a model that awards the telecommunications operators exclusive rights (such as “spectrum property rights”) that can be used to “capture” the value yet to be produced by innovators in underlying technologies[1] or applications.

My argument is based on a simple but crucially important technical fact: the useful economic value in a communications system architecture does not inhere in some abstract “ether” that can be allocated by dividing it into disjoint frequency bands and coverage areas.[2] Instead it is created largely by the system design choices – the choice of data switching architecture, information coding scheme, modulation scheme, antenna placement, etc.

The most important observation about the impact of systems architecture on economic value is this: there exist networked architectures whose utility increases with the density of independent terminals (terminals are end-points, such as cellular telephones, TV sets, wireless mobile PDAs, consumer electronic devices in the home, etc.) Network architectures provide tremendous gain in communications efficiency on a systems basis – I call this cooperation gain, because it arises out of cooperative strategies among the various terminals and other elements in a networked system. (It should be emphasized that cooperation gain is not available to non-networked systems at all). Cooperation gain is discussed below...

[1] New technologies such as spread spectrum, smart antennas, ultrawideband radio, and software-defined radios create more capacity that cannot be known accurately until there has been broad practical experience and an industrial learning curve that reduces their costs. The FCC has consistently tried to base regulation on accurate forward looking prediction of the economic value of new technologies and new services, but those predictions have been consistently wrong. That isn’t surprising given that the value is established decades later.

[2] The confusion that led pre-20th century physicists to postulate a “luminiferous ether” which carried radio and light waves has persisted in the economic approaches that attempt to manage communications capacity as if it were an “ether”. Just as Einstein pointed out, counterintuitively to most, that there need be no “ether” in formulating Relativity Theory, recent results in multiuser information theory show that counter to the intuition of spectrum economists, there is no “information capacity” in spectrum independent of the system using it.

Posted by Lisa at July 11, 2002 10:03 AM | TrackBack