Wi-Fi competition at Logan

by on November 3, 2006 · 9 comments

Yesterday the FCC ruled that the Massachusetts Airport Authority cannot prevent Continental from putting up a Wi-Fi antenna in its Logan Airport lounge. Some folks, such as Julie Ask of Jupiter, have see this ruling as validating the “no one owns it” character of unlicensed spectrum. As I’ve argued before, unlicensed spectrum works in part because it is used consistent with physical property rights. This is why Ask goes on to say that she “dread[s] the day that a Muni network is overlayed or my neighbors set up 802.11n.” This particular case is actually about property and competition.


It’s an analog to a case where an apartment building’s landlord (who gets a cut from the cable company) puts in his leases a clause prohibiting satellite dishes. There’s no point to that clause except to stifle competition, and that’s why Congress told the FCC to promulgate the OTARD rules under which the Logan case was decided. One interesting question is whether such a rule is even necessary in a competitive environment. If you have a competitive market for apartments, then presumably you’ll get the right mix of restricted and non-restricted leases. Another interesting question is whether Logan Airport is subject to sufficient competition to justify such a rule.*

One thing I do know is that this ruling will spur competition. Glenn Fleishmann writes,

This ruling may have little effect in airports outside of Boston-Logan, because I am unaware of any other situation in which the airport authority set up an adversarial approach to the extend of spending what must have been hundreds of thousands of dollars pursuing action on the public’s dime against privately owner airlines, which are also the airport authority’s tenants. In the airports I know something about, the development of a comprehensive Wi-Fi system was undertaken with the involvement of airlines and other tenants to provide the right services in the right places. In some airports, different entities, including airlines, run their own distinct systems without any conflict that’s been documented.

I think it will have an effect. Take T-Mobile, which files in favor of Continental in this case. It has a partnership with Starbucks to put hotspot service in its stores. Just about every airport has a Starbucks. Even if other airports are not as hostile as Logan, T-Mobile/Starbucks now doesn’t have to find out by testing the waters at each one. It can go ahead and deploy Wi-Fi at every airport without asking for permission and without fear of litigation (well, little fear). Hopefully this will mean lower prices across across the board. What about free ad-supported wi-fi from Google? All it has to do now is find a tenant partner at airports.


*I know some are going to say that without the rule Massport would have a “monopoly” over internet access at Logan. But that’s like saying that the owner of a movie theater has a monopoly over the popcorn concession and that’s why they charge high prices. However, when you buy a ticket to a movie, you’re buying a bundle of services, including the option to buy popcorn at a certain price. Movie theaters are competitive and compete on concession prices as much as anything else. If we had “open access” rules for popcorn at movie theaters, you’d see ticket prices go up. The question is whether Logan faces competition from other airports. I don’t know.

  • http://www2.blogger.com/profile/14380731108416527657 Steve R.

    First, let us acknowledge a positive FCC ruling. I realize that this may be a little difficult to accept :).

    To me the central point (victory) of this decision is “the commissioners also dismissed Massport’s argument that Continental’s service would cause it economic harm by taking away revenue from the airport’s own Wi-Fi offerings. (quote from the Cnet article). In brief, the attempt by Massport to extort “ownership” is a continuation of the attempt today of corporations to “create” property rights to guarantee a revenue stream for themselves. A free market system is based on competition, NOT the establishment economic territories that use figurative “tollbooths” to collect revenue simply because you are in that territory.

  • http://www.blogger.com/profile/14019452 Steve R.

    First, let us acknowledge a positive FCC ruling. I realize that this may be a little difficult to accept :).

    To me the central point (victory) of this decision is “the commissioners also dismissed Massport’s argument that Continental’s service would cause it economic harm by taking away revenue from the airport’s own Wi-Fi offerings. (quote from the Cnet article). In brief, the attempt by Massport to extort “ownership” is a continuation of the attempt today of corporations to “create” property rights to guarantee a revenue stream for themselves. A free market system is based on competition, NOT the establishment economic territories that use figurative “tollbooths” to collect revenue simply because you are in that territory.

  • http://blog.pff.org Patrick

    I agree, Steve R., it is a bit unnerving to agree with the FCC! Of course, we can fault them for taking nearly two years to issue a ruling that seems pretty obvious based on OTARD rules.

    Jerry, as to the necessity of OTARD rules, you may be on to something, not just due to competition forces, but technology. In your movie theater example, one can smuggle in popcorn. In an airport, I can use my Treo and check e-mail, use the browser, etc. A subscriber to an EVDO-like service can go online in an airport as well. Neither use Wi-Fi. Denying Wi-Fi just shifts users to other technologies.

    This is, of course, unlicensed spectrum we’re talking about here. Hard to talk about markets and property in this artificial commons where everyone is forced to share through non-interference rules. Now if the airport owned some spectrum and Continental tried to put up a competing service in that owned spectrum, I’d go to the mat for Massport.

  • http://blog.pff.org Patrick

    I agree, Steve R., it is a bit unnerving to agree with the FCC! Of course, we can fault them for taking nearly two years to issue a ruling that seems pretty obvious based on OTARD rules.

    Jerry, as to the necessity of OTARD rules, you may be on to something, not just due to competition forces, but technology. In your movie theater example, one can smuggle in popcorn. In an airport, I can use my Treo and check e-mail, use the browser, etc. A subscriber to an EVDO-like service can go online in an airport as well. Neither use Wi-Fi. Denying Wi-Fi just shifts users to other technologies.

    This is, of course, unlicensed spectrum we’re talking about here. Hard to talk about markets and property in this artificial commons where everyone is forced to share through non-interference rules. Now if the airport owned some spectrum and Continental tried to put up a competing service in that owned spectrum, I’d go to the mat for Massport.

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