The cellular industry has severe mood swings with respect to unlicensed spectrum. Presumably the cellular industry is the power behind the recent Spectrum Innovation Act of 2011’s Section 104, which, if adopted, would require an “unlicensed auction” for all new unlicensed spectrum. No one from any industry has spoken publicly in favor of this concept.

However, Thomas M. Lenard, president of the Technology Policy Institute has tried to explain its merits in a post entitled “Use the market to allocate spectrum” in another blog. While the intent of Mr. Lenard appears to be limited to spectrum related to the proposed incentive auction, the language in Section 104 would have made any future new unlicensed spectrum nearly impractical regardless whether it was exclusive unlicensed spectrum in the incentive auction spectrum or even secondary/“junk” spectrum use such as for Wi-Fi or U-NII.

But despite this industry “dissing” of unlicensed spectrum and the dogma that only exclusively licensed spectrum is efficient, the cellular industry has embraced unlicensed quietly in other contexts. In October Fierce Wireless reported,

AT&T said the number of connections to its Wi-Fi network nearly tripled year-over-year in the third quarter to 301.9 million. AT&T also said that the amount of data on its Wi-Fi network in the quarter more than doubled from the year-ago period.

The statistics reflect not only AT&T's growing use of Wi-Fi offloading for its cellular networks but also the wider trend within the industry to use Wi-Fi as a tool to manage mobile data traffic. Indeed, AT&T said that users are now making around 100 million Wi-Fi connections per month, more than the total number of connections made in all of 2009 and five times the total number of connections made in 2008. For now at least, neither AT&T nor any other U.S carrier counts Wi-Fi usage toward a subscriber's monthly data allotment.

AT&T's Wi-Fi hotspots now number 29,000 across the country, and AT&T said hotel locations account for approximately 40 percent of the carrier's total Wi-Fi network traffic.

Yesterday, the usually reliable GigaOM reported

In a sure sign that the cellular industry is getting serious about Wi-Fi, telecom networking giant Ericsson is buying BelAir Networks, adding its high-performance outdoor hotspot technology to its portfolio, sources told GigaOM. The deal could signal a big shift in the mindset of the big wireless vendors, which have always favored their own specialized and expensive cellular technologies to meet growing mobile data demand rather than more generic but much cheaper Wi-Fi technology. ...

As smartphone data usage explodes, consumers have begun turning to home, office and public Wi-Fi to bring their handsets online, taking advantage of fast speeds while bypassing the data caps on their mobile plans. There are some exceptions, such as AT&T, but most U.S. mobile operators have been reluctant to incorporate Wi-Fi directly into their networks, preferring instead to keep customers on their 3G and 4G networks, where they can collect data revenues and maintain control of the network connection. With big vendors like Ericsson on board, though, that attitude could be changing.

While your blogger was responsible for bringing a total of 5234.5 MHz into unlicensed use through the proposals he drafted and the decisions he helped draft in Dockets 81-413 and 94-124, he does not see unlicensed as a panacea for all the world’s spectrum problems. Exclusive licensed and unlicensed band both have positive points and both contribute towards an efficient telecom infrastructure.

It is unfortunate that many on both sides view the choice between licensed and unlicensed as a zero sum game with respect to the long term interests of the cellular industry. The continuing industry interest in Wi-Fi shows that the truth is more complex.

Tags: spectrum policy , unlicensed policy

What if they had an auction and no one came? This is basically what happened in the 2008 D block auction where FCC declared, “The provisionally winning bid for the D Block license, however, did not meet the applicable reserve price and thus did not become a winning bid.”

Of course in reality only one firm bid showing essentially zero interest in the package offered. Why? The basic reason was that the package that was up for sale was so poorly defined that a potential bidder with an MBA on his staff could not possibly estimate either potential costs or possible income. It was unclear what level of service the D block owner had to provide to public safety community and it was unclear if he would get any income from public safety use of D block spectrum that would, in effect, deny commercial use for a period. Could the licensee charge for public safety use of D block in excess of x% occupancy? At the time of the auction no one knew.

FireceWireless described the new legislation as follows:

The proposal to require unlicensed spectrum to be auctioned is drawing fire from the tech community. In essence, companies that might be interested in building products to work on unlicensed spectrum would be required to pay for the spectrum despite the fact that they wouldn't receive any exclusive rights to it. Confusingly, if the total value of all bids for such spectrum were to exceed the highest single bidder, the spectrum would then become unlicensed. If, however, a single bidder sought exclusive use of the spectrum and outbid other bidders wanting the spectrum to be unlicensed, the spectrum would then go to the single bidder. (emphasis added)

The proposed language in Section 104 of The Spectrum Innovation Act of 2011 is shown at the left. I believe that it is poorly drafted and like the FCC’S 2008 D block provisions provide no clear understanding of permissible business plans. Can an unlicensed auction winner charge all users of the band for use of the band in oder to recoup he auction cost? In the Unlicensed PCS (U-PCS) rules there was a provision, 47 C.F.R. 15.307, to effectively put “tax” on band users that was to be used to paying the clearing cost of the band. Perhaps the drafters of this legislation thought that this could be done for the Section 104 unlicensed auctions. The problem is that this did not so state in the legislation and there is a fundamental uncertainty about whether the payment implied by 47 C.F.R. 15.307 - but never clearly stated - is actually within the Commission’s present Communications Act jurisdiction. Given such ambiguity, why would anyone bid hundreds of millions of dollars for an unlicensed band if there was not legal certianty as to bsuiness pans?

People opposed to this provision also compare it to the Unlicensed PCS (U-PCS) rules the Commission adopted in 1993 and which were a dismal failure. Opponents blame the fiasco over the user fees for equipment in the band which would have been about $5/unit.

These rules, adopted at the request of industry that drafted them were amazing complex and included provisions for both “isochronous devices” and “asynchronous devices” as requested by the commenting parties. My personal view on the failure of these rules is that they were much too complex, totaling over 3800 words and the parties requesting them did not realize that once they were enshrined in 47 C.F.R. any changes to them were protected by both the full faith and credit of the APA and the Commission’s long standing near indifference to technical rulemakings - especially when it gets distracted by “sexier” things such as DTV and broadband. By comparison, the original ISM band rules that spawned both Wi-Fi and Bluetooth consisted of exactly 398 words! I think a key factor of U-PCS’ failure was the extreme complexity and inflexibility that was demanded by the petitioners and FCC acceded to.

Given that most unlicensed bands are “damaged goods” as previously stated, and that most unlicensed bands are really very specific provisions for narrow spectrum slivers, e.g. 15.233, requiring auctions for any new unlicensed band seems like regulatory overkill. On the other hand allowing such type of auctions and giving guidances of what considerations should be used in deciding on them might be constructive.

In the previous post I commented that the origins of Section 104 are confusing since no one has spoke in its favor on the public record that I can find. I then noticed that David Redl, coauthor of the July 13th Energy and Commerce Committee staff memo spent his whole professional carrier at CTIA before joining the committee staff. Thus even though CTIA avoided even mention of the concept in their testimony on the bill, perhaps CTIA is really the party at interest. I would gladly withdraw this claim if CTIA denies it publicly as I would also gladly credit anyone else who claims to favor this provision.

Tags: Unlicensed auction