Rapidly advancing technology and strong investment has meant that mobile technology use has exploded around the world in the past 5 years. This technology has brought substantial benefits to rich and poor users alike, and has also been a key factor in small and medium-sized business growth.
Coase and WiFi: The Law and Economics of Unlicensed Spectrum
In 1959, economist Ronald Coase argued for innovative and needed change to the system of spectrum allocation, challenging the prevailing “command and control” model in favor of one based on property rights and auctions. Today, many continue to not only rely on Coase’s insights to support spectrum auctions over command and control, but also invoke Coase’s writings as almost sacred texts opposing any use of spectrum for unlicensed purposes. We believe that this is an inappropriate reading of Coase and that his economic insights provide strong support for unlicensed, as well as licensed, spectrum. Indeed, Coase was primarily attacking a model of governmental command and control that was in dire need of modernizing. But Coase surely never intended his work to be used to support rigid and doctrinaire thinking about spectrum.
This paper examines the support for a new interpretation of Coase, concluding that a mix of both unlicensed and licensed spectrum is well grounded in Coase’s economic pragmatism. There is a wide range of possible ways to define rights in spectrum use; we should craft those rights in such a way that minimizes the costs of arranging the most socially beneficial outcome. Given the tremendous benefits of both licensed and unlicensed applications, we need a spectrum policy grounded in Coasean pragmatism, not Coasean doctrine.
Policy makers should not take an overly-narrow focus on one particular type of efficiency (allocative efficiency) of one particular input (radio spectrum). Using this to focus only on auctions gives short shrift to the obvious and growing value of unlicensed services all around us. Services utilizing unlicensed spectrum are valuable contributors to the economy and should not get short shrift based on misunderstood doctrine.
It is common to think of unlicensed as a gap-filler, as an efficient way to fill guard bands with low-power devices that are unlikely to cause interference to licensed services. While this can be a great opportunity to maximize the use of spectrum, offering up only narrow slices of spectrum is not what unlicensed services deserve. Policy makers should consider new, dedicated unlicensed bands where possible.
The potential for economic growth through new unlicensed platforms, services, and devices is greatest when large, contiguous blocks of harmonized spectrum with simple service rules are available. Wherever possible, we should avoid creating specialized rules to protect particular incumbents from interference, allowing for simpler, cheaper equipment. All and all, this offers the best potential to maximize spectrum use, which is what professor Coase was really after.
The Miraculous Cell Phone
Far from crowding out discretionary spending, rapid technological growth and stable prices make cell phones an incredible deal for consumers. The ability of modern cell phones to serve as substitutes for consumer goods ranging from flashlights to personal computers and gaming systems, to say nothing of traditional land lines, and the proliferation of mobile technology falsely implies an uptick in consumer prices. However, only the staying success and tremendous value offered to consumers through cell phones earn them the demarcation of "basic goods" in the first place. Indeed, adjusting for inflation and market volume changes, the price of cell phones has stayed remarkably stable throughout the years.
ITIF Files Amicus Brief in Google v. Joffe Supreme Court Petition
ITIF has filed an amicus brief supporting Google's petition to be heard by the U.S. Supreme Court in the Google Inc. v. Joffe et al case. In that case, Google is accused of illegally intercepting transmissions from open WiFi networks during its Street View project. ITIF believes that the Ninth Circuit Court of Appeals needlessly treats modern digital communications different from old analog communications, creating confusion and uncertainty for innovators and IT security professionals and warranting review by the Supreme Court.
The Wiretap Act generally allows anyone to listen to radio communications that are not secured to be made private. However, the Ninth Circuit Court of Appeals has concluded that WiFi transmissions are not considered "radio communications."
ITIF contends that the Ninth Circuit was incorrect in holding that only "predominantly auditory broadcasts" like AM/FM radio are considered "radio communications." The court's reading is contrary to the plain meaning of the term "radio communication" and difficult to square with the rest of the Wiretap act. The law has a difficult enough time keeping up with technology without the introduction of arbitrary distinctions based on outmoded radio technologies. We should generally favor policies and interpretations that treat similar technologies alike. When WiFi access points are not encrypted, the communications it sends are available to the public using off-the-shelf equipment similar to a CB radio or walkie-talkie. The Supreme Court should clarify that these radio technologies are treated the same under the Wiretap Act.
What “radio communication” means is an important question of federal law because the narrow definition adopted by the court of appeals calls into question the legality of standard techniques used by IT professionals across the country every day to secure and optimize wireless networks. The lack of clarity that results from the court of appeals’ decision makes it harder for IT professionals to secure wireless networks, threatening the security of our nation’s wireless infrastructure.
View ITIF's amicus brief on Google v. Joffe filed with the U.S. Court of Appeals for the Ninth Circuit.
A Communications Act Update Should Continue to Liberalize Spectrum Management
ITIF filed comments with the House Energy and Commerce Committee making a number of recommendations related to spectrum policy under a Communications Act Update. ITIF recommended an Update continue down the path of liberalizing spectrum management and attempt to decentralize interference mitigation to licensees. Numerous other recommendations included an expanded role for unlicensed in higher spectrum bands that can accommodate user-controlled devices, and that the Committee work towards a structure to incentivize more efficient use of federal spectrum, favoring relinquishment where economically feasible.
Channel Sharing Pilot Holds Promise
Two Los Angeles television stations have volunteered for an experimental pilot to share infrastructure and spectrum for their broadcasts. Such channel sharing is potentially a valuable tool to ensure a successful incentive auction, helping transition to more valuable uses of spectrum.
Post-Sandy Telecom Melodrama
An AP story is making the rounds about an 85 year old heart patient who can no longer connect his pacemaker to his doctor from his home in Mantoloking, N. J. because Verizon has replaced his wired telephone service with a wireless equivalent. The kernel of truth in the story is that Verizon is not going to replace the copper telephone wires. Copper telephone wire is an obsolete technology that costs an awful lot to replace.