Spectrum NIMBYs and the Return of FCC Beauty Contests?

by on July 23, 2015 · 0 comments

The FCC is being dragged–reluctantly, it appears–into disputes that resemble the infamous beauty contests of bygone years, where the agency takes on the impossible task of deciding which wireless services deliver more benefits to the public. Two novel technologies used for wireless broadband–TLPS and LTE-U–reveal the growing tensions in unlicensed spectrum. The two technologies are different and pose slightly different regulatory issues but each is an attempt to bring wireless Internet to consumers. Their advocates believe these technologies will provide better service than existing wifi technology and will also improve wifi performance. Their major similarity is that others, namely wifi advocates, object that the unlicensed bands are already too crowded and these new technologies will cause interference to existing users.

The LTE-U issue is new and developing. The TLPS proceeding, on the other hand, has been pending for a few years and there are warning signs the FCC may enter into beauty contests–choosing which technologies are entitled to free spectrum–once again.

What are FCC beauty contests and why does the FCC want to avoid them? From the 1930s to the 1990s (aside from a few short-lived spectrum lotteries), the FCC handed out valuable spectrum licenses for free to applicants who showed they would benefit the public with their planned services. TV broadcasters, taxicab dispatchers, satellite communications companies, medical facilities, and others lobbied to claim their stake when new spectrum became available.

These time-consuming proceedings became known as beauty contests, reflecting the subjective nature of giving away an input often worth tens or hundreds of millions of dollars to “deserving” applicants. The inefficiency, delay, and predictable corruption of beauty contests were widely criticized, but it wasn’t until the 1990s that Congress permitted auctioning spectrum. Allowing markets to allocate spectrum greatly improved the chances spectrum would go to the firms that had financial incentives to put it to good use, rather than the firms that had the most persuasive insiders.

But not all spectrum is auctioned today. Decades ago the FCC realized that short-range, innovative new services could be deployed without expensive and time-consuming licensing. The agency decided to authorize low-power devices in certain bands of spectrum. Essentially, any device maker could freely deploy technologies in these bands as long as they complied with a few basic FCC rules, the Part 15 rules. The FCC left technology choices to the device makers, who share the spectrum with other–sometimes interference-prone–device makers and users. While wifi technology is the most popular and most economically significant user of unlicensed spectrum, there are many other technologies coexisting in unlicensed bands. Today, hardware companies make dozens of short-range technologies like toy RC cars, wireless speakers, Bluetooth earpieces, baby monitors, garage door openers, cordless phones, and wifi routers.

Unlicensed spectrum has downsides for device makers, however. As the FCC said in a recent proceeding, “As a general condition of operation, Part 15 devices … must accept any interference that may be received from [licensed users] or other Part 15 devices.” Operators like AT&T, Sprint, and Dish pay millions or billions of dollars for their licensed spectrum at auction. In return, however, they can exclude other wireless operators from using their spectrum assignments. In contrast, using free unlicensed spectrum means you have no protection from interference from other unlicensed and licensed users. This is intended to create an environment of permissionless innovation, where wireless entrants can be free to try new services.

In theory, this means unlicensed users cannot object when other unlicensed users deploy new technologies. In practice, however, now that unlicensed spectrum is occupied by services like Bluetooth and wifi-delivered Internet, new entrants often modify their technology to be “good neighbors.” The potential for interference also motivates established players to prevent entrants like TLPS and LTE-U from using the bands.

Richard Bennett has a good explanation of the LTE-U engineering issues before the FCC. TLPS has slightly different issues. After a few years of testing, TLPS may be approved soon, but not without a fight. TLPS is a novel wireless technology that uses a channel of spectrum that straddles unlicensed spectrum and licensed spectrum. The licensed portion is currently used by Globalstar for satellite communications but the FCC generally wishes to get away from mandating certain services–like satellite communications–and to allow licensees to use their spectrum for whatever service is demanded by consumers. For that reason, the FCC has sought, since releasing the 2010 National Broadband Plan, to make this relatively unproductive “satellite spectrum” available for land-based wireless broadband use. Knowing that the FCC is willing to be flexible to meet growing consumer broadband needs, Globalstar saw an opportunity to merge its licensed spectrum with a portion of the free, adjacent unlicensed spectrum. With this wider channel, some of it shared with existing unlicensed users, wireless broadband delivered via TLPS technology became feasible. As TLPS approval nears the finish line, however, some unlicensed users are objecting that TLPS will interfere with their services.

The FCC proceedings reveal a technical debate about interference measurements. These claims distract from the larger issue: Either the Part 15 rules mean what they say–unlicensed users have no interference protection–or the FCC is increasingly back in the business of beauty contests and deciding which services are entitled to free spectrum.

Henry Goldberg, a communications lawyer who represented Apple years ago in getting more unlicensed spectrum allocated, predicted these fights at a 2008 Information Economy Project conference.

[I]f you are a company or a municipality or a port authority or a university who has invested in unlicensed spectrum to provide a WiFi services for a fee, you’re not so sure you want someone using unlicensed spectrum to compete with you. Such players may try to use contractual rights, lawsuits, etc. to seek to limit additional entry to what has become “their” spectrum. If a “not-in-my-back-yard” dynamic takes over, the very essence of Part 15 is compromised. Vigilance is needed to fight Part 15 NIMBY.

It’s this growing Part 15 NIMBYism that concerns many spectrum policy watchers. No one wants the return of beauty contests and the FCC picking winners among different technologies.

But Goldberg has a discouraging addendum to his prescient warning against NIMBYism in unlicensed bands:

Supporter of unfettered grazing rights that I am, it doesn’t offend me to have the town permit grazing by sheep and cows, but forbid elephants.

Herein lies the problem. The FCC is being pressured to declare that TLPS is an elephant that should not be allowed in the commons filled with wifi sheep and Bluetooth cows. LTE-U will be the next target.

If the FCC encourages these kinds of complaints, the result will be customary law that is destructive to innovation in unlicensed bands. Firms will sink investments in technologies and business plans that comply with the rules, and only later learn they are violating unwritten rules.

The bigger problem is that the FCC is entering beauty contest territory once again. Even if the FCC someday prohibits “elephants” in unlicensed–current Part 15 rules say unlicensed users have no protection against others–the agency has to determine what that means. The FCC does not want to go back to the bad old days of beauty contests, specifying, in the face of intense lobbying, that only certain technologies were allowed on certain frequencies in certain places.

As firms find ways to intensely use free unlicensed spectrum, more conflicts like these may arise. Unfortunately these fights politicize FCC decisionmaking and could stymie new wireless innovations.

It may be that NIMBYism in unlicensed is inevitable. If interference in unlicensed is a regular problem and the FCC finds itself picking winners, the FCC needs to be much more cautious about allocating unlicensed spectrum. It’s worth noting that auctioning spectrum removes the temptation to engage in the ad hoc dispensations of spectrum that plagued the agency for decades. In any case, the results of the TLPS and LTE-U proceedings will have ramifications beyond the approval or denial of those technologies.

Related Reading:
Super Wifi and Unlicensed Spectrum: “Spectrum Condos”
How the FCC Killed a Nationwide Wireless Broadband Network

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