Silicon Flatirons Center, UC Boulder

Breaking the spell of Command and Control: Three spectrum reforms to maximize wireless value

Pierre de Vries Co-Director of the Spectrum Policy Initiative & Senior FellowSilicon Flatirons Center, University of Colorado, BoulderJohannesberg Summit, 12 May 2014http://johannesbergsummit.com/program-2014/, https://www.youtube.com/user/JohannesbergSummit

Video: https://www.youtube.com/watch?v=TQz3I-TeIPA

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Open

Wireless is wonderful! But current regulation is slowing us down– Society – and all the businesses here – benefit from wireless services

– and we need more, better wireless services, and need them sooner

– But: current regulatory regime prevents that

Phil Weiser and I have three interlocking proposals to improve matters:1. harm claim thresholds, that provide more clarity about entitlements to

protection from harmful interference

2. band agents, to address fragmentation of spectrum control that prevents successful win-win negotiations at band boundaries

3. more effective adjudication of interference disputes to support more efficient contracting between spectrum operators

Developed in US regulatory context; look forward to comparing/contrasting with European context in the Q&A

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Acknowledgments

Honor and privilege to be at Johannesberg Summit

Grateful to Jens Zander & program committee for invitation to present; sponsors for making it possible to attend; Jenny Minnema for help with logistics

Thanks to everyone who helped us develop the ideas

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“More better sooner”: Why and How

Value of wireless services keeps growing, and so demand does too

More demand for rights to operate radios means more services have to be packed together

But there are technical limits on ability of radios to operate close to each other in time, place and frequency

But not ultimately a technical problem: – engineering means costs

– costs have to be borne by someone

– which means rights, responsibilities & entitlements

– which entails lawyers & economists

– which takes us to regulation – that is, the design of institutions → the “Big G” (government)

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Is this actually a problem? Yes!

Could rehearse many examples of economic inefficiencies of interference disputes that have not be resolved in a win-win way, in a timely manner

Focus on GPS/LightSquared dispute – reveals all three frailties I’ll discuss in a moment– LSQ mobile satellite service licensee, got a waiver in 2001 to allow it to operate

terrestrial base stations (ancillary terrestrial component, ATC; complementary ground component, CGC)

– Focus of GPS concerns was OOBE; nobody seems to have thought about adjacent band blocking before 2010

– In 2010/2011, firestorm of objections because of harmful interference to GPS due to adjacent band blocking, tens MHz away, due to poor selectivity of GPS receiver filters

– FCC withdrew permission for CGC operations in 2012, LSQ filed for bankruptcy in 2013

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Root causes of LSQ/GPS dispute

1. Totally incompatible understanding by LSQ and GPS over the rights and responsibilities regarding harmful interference

2. Inability of LSQ to close deals with all fragmented GPS interests

3. The question of whether there was harmful interference was “adjudicated” in a very political process: intense lobbying of FCC, incl. invisible back-channel communications from NTIA, and Congressional hearings

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Causes of difficulties resolving interference disputes

1. Unproductive uncertainty about spectrum operating entitlements

– i.e. what are rights & responsibilities to protect others from harmful interference, and to protect oneself against reasonable interference

– means that parties hold wildly incompatible positions, very hard to bridge gulf in negotiations and get to a win-win

2. Collective action problems – most bands are fragmented among many licensees and many different services – too many players holding rights blocking negotiations

3. Shortage of efficient and trusted adjudication slows down dispute resolution and surely deters contracting – in US, disputes always end up as a rulemaking before Commissioners, often with Congress in the loop – not before a judge

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“This doesn’t scale”

Even if it works now, isn’t going to work in future as cheek-to-cheek sharing among constantly evolving services keeps growing

But it doesn’t work now – even uncontroversial changes take FCC years, and gets involved in minutiae

Need ways for regulators to delegate some powers and facilitate the decentralizing of negotiations

There are 3 key tasks that our proposal addresses:

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Task 1: Reduce the ambiguity over responsibilities for interference harm

Current spectrum policy focuses on transmitters and fails to address the important role of receivers – one lesson of GPS/LightSquared

Rather than have the regulator mandate receiver performance standards, we advocate harm claim thresholds that state the interference level that receivers have to tolerate, but leaves it up to system operators to figure out how to do deal with interference below threshold

Not one size fits all– HCT will differ between bands, depending on kinds of service being protected,

needs of incumbents, plans for future uses for neighboring bands, etc.

Good progress on this idea: – PCAST, then white paper by FCC Technological Advisory Council last year;

– generally positive response to Public Notice;

– FCC’s proposed rules for the 3.5 GHz sharing band include harm claim threshold-like rules for interference between Priority Access services

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Task 2: Overcome the drawbacks of excessive fragmentation

40% (1.3 GHz) of US spectrum 400-3700 MHz in bands that each contain four or more services AND where either or both adjacent bands are similarly fragmented; each service hundreds, often many thousands, of licenses/assignments

Existing proposals insufficient– Abolish fragmentation by “every band has exclusive licenses” – we’re not going to get

there overnight – if ever

– Sharing isn’t a panacea: even with sharing, still need to have way to renegotiate operating rules at band boundaries, including making side payments

Introduce band agents: entities that could represent large groups of operators (licensed or unlicensed) in negotiating changes in operating rights with neighbors, especially across band boundaries

Band agents are “band managers or frequency coordinators on steroids”: not only manage interference within a band, but can negotiate changes in operating parameters across band boundaries

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3 ways to implement band agents

Regulators build on existing institutions, such as frequency coordinators, band managers, by extending their powers– E.g. in US: 800/900 MHz frequency coordinators, federal band managers (NTIA, or

Dept of Defense and Federal Aviation Administration) become band agents

– negotiate deals, accept payments (assuming necessary changes in legislation are made for DoD, FAA)

Re-use ideas from commercial law:– Licensees appoint the band agent in the same way that shareholders appoint

managers to act on their behalf

– Majority of bond holders appoint someone to negotiate with bad borrowers using collective action clauses

FCC explicitly allocates alteration rights– e.g. in unlicensed, a spectrum sharing database could negotiate changes in operating

rights with neighbors on behalf of millions of unlicensed devices that use that database

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Task 3: Improve the reliability and efficacy of dispute resolution

We propose1. moving to more fact-based adjudication process using judges with

expertise in spectrum policy

2. allowing parties to take action against each other directly, without the regulator in the loop

In US, two complementary paths3. FCC empowers ALJs to resolve disputes, rather than solve problems

by Commissioners rulemaking

4. Congress establishes a Court of Spectrum Claims• Alternative venue to FCC, hedge against FCC failure to act

• Handling disputes where federal government is a party, e.g. resolve fed/non-fed disputes – peculiarity of US spectrum, split governance with no common venue

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Links between Proposal

Regulators can’t keep up – need to delegate, decentralize to facilitate efficient contracting– To delegate need clearer entitlements to interference protection

since can’t go back to regulator to check all the time → HCT

– But clear entitlements won’t lead to optimizing negotiations if there are high transaction costs → band agents

– But even if initial negotiations succeed, still need backstop/recourse for contracting → adjudication independent of the political process

– But for court, even specialized, helps to have clarity on key concepts to find facts → HCT

To learn more, go to http://bit.ly/unlockingspectrum

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Close

For all the fuss and bother about licensed vs. unlicensed polemic (most recent incarnation, clearing vs. sharing), most spectrum is still under command & control

Main challenge is to move away from command & control, and get to a more decentralized and dynamic spectrum management regime

Three proposed changes regulatory regime would – Accelerate this transition

– make it easier for parties to figure out among themselves how to reach mutually beneficial outcomes for themselves, and society at large

In this way will can unlock more of the wonderful potential of wireless for producers, consumers, and government users