Wireless Progress – and the Challenge Not Yet Met

Lots is happening in the world of wireless telecommunications these days.  And lots is not.  First, let’s look at a couple things that are happening.

WiMax is poised to move forward as a significant new platform for broadband.  As TLFers know, “WiMax” is the popular name for the 802.16 wireless metropolitan-area network standard.  It’s like WiFi but can travel a lot farther.  It easily traverses the “last mile,” the complicated and expensive rights-of-way that create a high barrier to entry for competitors to DSL and cable.

Recently, Intel announced that a line of its chips will support WiMax.  It also invested $600 million in leading WiMax provider Clearwire.  Clearwire recently pulled back from an IPO, though, fueling speculation that Clearwire and WiMax are not all they’re cracked up to be.  Since then, Sprint Nextel has announced that it would spend up to $3 billion to build a WiMax network.  Nothing is certain, but WiMax looks pretty good right now for bringing more competition to broadband.

Here’s another thing happening: The Federal Communications Commission is amidst an auction of wireless spectrum.  In 1993, Congress gave the FCC the authority to use competitive bidding for allocating rights to use radio spectrum.  This beats comparative hearings and lotteries by a mile because companies that have paid good money for spectrum tend to be well focused on making good use of it.  This redounds to the benefit of consumers and the public through new, competitive wireless services.

But much more can be done to improve how this natural resource is deployed.  It is widely recognized that creating property-like rights in spectrum will foster secondary markets and help move spectrum to its highest and best use.  That work seems not to be happening very quickly, however.

And a report Cato released yesterday shows that much difficult work remains to be done if we are to have a property regime for spectrum, with all the benefits it entails.  In “Toward Property Rights in Spectrum: The Difficult Policy Choices Ahead,” University of Colorado professors Dale Hatfield and Philip Weiser, show why creating a property-oriented system for electromagnetic spectrum rights will not be easy.

“Even though the merits of the case for property-like rights in spectrum is beyond dispute, the details about how such a regime would work must still be defined,” Hatfield and Weiser point out.  Variation in the way radio waves behave means that simple geographic borders cannot define how rights to use spectrum are divided. Regulation of transmitter technology and power can not be replaced wholesale with enforcement of radio “trespass.”  Rather, ownership of rights to use spectrum must be defined and enforced with a model suited to the particular characteristics of radio propagation.

The study is a nice tour through radio for the technically uninitiated – you can find out why radio arguably has seven dimensions.  And it challenges readers (and hopefully the FCC) to think about the set of rules that will best divide and organize spectrum licenses so that Ronald Coase’s vision can be realized in the area where he did his early work.

[Cross-posted, with edits, from Cato@Liberty]

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