The Public Airwaves and Nationwide Wifi

Andy Kessler has a really good post in the New York Times on a potentially revolutionary FCC auction later this year. Kessler runs down the way the public airwaves are managed (badly and for the benefit of monopolists), and discussed something called the 700 auction, which is a huge chunk of awesome spectrum coming free in two years.  There are lots of bidders, but one group is being left out.  Us.  

Wifi is a great example of what happens when individuals can innovate around a monopoly.

But the telecomopolists can't have some clown sitting in a Starbucks writing an opinion piece bypass their for-pay infrastructure, so they always insist on ownership of spectrum in separate licensed bands. For their use only. Ownership. Until the 1990s, most of the licenses were given away. But the F.C.C. and their European counterparts, thinking there might be a free market model of bandwidth management of the future, started auctioning off spectrum. Third generation, or 3G, licenses raised $150 billion or more for governments, that's real money, and the auctions were considered a success.

But 3G ain't free -- the winners, AT&T, Verizon, Orange in the U.K., and the like just passed along the costs as higher prices to customers. It was just a game of having the deepest pockets to outbid mere mortals. Customers would eventually pay. It was hidden tax on us peons - damaging economic growth instead of promoting it. And not coincidentally, 3G uses spread spectrum technology so callers can share the airwaves without interfering. So why exactly does someone have to "own" this spectrum?

That's why auctioning off this 700-MHz block is so last century. The lower the frequency, the further signals can travel without degrading, better to penetrate homes and offices. This is a desirable chunk of spectrum. But why not just make it an unlicensed band? Entrepreneurs will come up with more interesting services than cellphone operators who think text messaging is somehow worth 10 cents a pop.

F.C.C. Chairman Kevin Martin has asked for free market proposals for use of the spectrum. Recognizing that police and fire departments with 500,000 radios operable in this band are going to have an important say, one proposal from Hundt and his company, Frontline Wireless, offers a mixed use of the spectrum, with public safety getting priority during emergencies. This is the same guy who triggered the largest misallocation of capital in history with his Telecommunications Reform Act of 1996. Hundt has backers in uber-C.E.O. Jim Barksdale (Netscape, FedEx) and uber-venture capitalist John Doerr. An ex-bureaucrat may be clueless, but these Silicon Valley vets should know better. Owning this spectrum would be great for them and a Frontline I.P.O., but not for the economy.

And use by first responders? Easy. Engineer in an emergency switch, controlled by, heck, the same emergency broadcasting system screeching in our radios. During an actual emergency, it could throttle back data speeds for civilians. Downloads of "Fear Factor" can wait while the flood or fire rages.

Can this be true? An avowed free-market capitalist advocating a "let's all own it together" approach to communications? That's right. Despite their façade as public companies, telecom monopolists (that's you, AT&T) are government blessed anti-competitive entities whose idea of innovation is call waiting. We, the people, can do so much better. In fact, Wi-Fi has already begun to unleash the creative chaos of entrepreneurs. We shouldn't allow behemoths to bid on virtual shackles of our airwaves.

This is real.  The public airwaves are sitting there waiting to be reclaimed from the dropped call monopolists.  Even Tom Friedman gets it.

I've been thinking of running for high office on a one-issue platform: I promise, if elected, that within four years America will have cellphone service as good as Ghana's. If re-elected, I promise that in eight years America will have cellphone service as good as Japan's, provided Japan agrees not to forge ahead on wireless technology. My campaign bumper sticker: "Can You Hear Me Now?"

I began thinking about this after watching the Japanese use cellphones and laptops to get on the Internet from speeding bullet trains and subways deep underground. But the last straw was when I couldn't get cellphone service while visiting I.B.M.'s headquarters in Armonk, N.Y.

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Why You Can't Get Your iPhone

I'm on break, but I want to highlight this editorial from the LA Times on a coming spectrum auction that is the next stage of the net neutrality fight.  Here's the deal.  Right now, dropped calls, high hidden charges, bad phones, poor and costly wireless internet and roaming costs are all symptoms of a wireless monopoly held by a few big cell phone companies.  Essentially they don't care about you moving to another competitor with better service because you really just can't.

Verizon and AT&T run a digital plantation where they don't let phones and features on their network they can't control. It's a permission system - if you want to use your phone on a Verizon network, you have to get permission.  It's a lot like cable operators, and if it's not theirs they don't want it.  This is why wireless service is expensive, why it sucks with dropped calls and why you can do things in Europe and Japan like pay for sodas with your phone but you can't do them here.  It's also why roaming charges are so high.  There's effectively a wireless monopoly, which means that you can only get an iPhone if you use AT&T wireless.  And if you are a non-profit that wants to let people text you money at a rally and have it go on that person's phone bill, Verizon and AT&T will happily grab half the cash meant for you and take 180 days to get you the balance.  So, at say, Obama's 20,000 person rallies, there are high barriers to having supporters get involved at the rally since everything the campaign wants to do has to be approved either directly or indirectly by Verizon or AT&T.  This is true at every single music concert or public event in the country.  An entire mobile economy is going unused here because of this predatory corruption, though in the rest of the world the mobile economy is racing ahead.

Here's why this could soon change.  The FCC is about to auction off a whole lot of really nice spectrum that could completely blow the lid off this system.  It's possible that if the FCC is fair, we could get a wireless broadband wholesaler, which would simply rent their network to whoever wants it for whatever purpose they want it.  You'd be able to plug your phone into your computer and get broadband.  Cell phone and broadband service would be instantly cheap and universal, getting around redlining that denies broadband to poor and rural areas.  There would be fewer dropped calls.  Roaming charges would drop dramatically.  You could pay for things with your phone (or any mobile device you can invent).  You could use any phone for any network, and download ringtones easily.  And the big national telcos would actually have to compete with all of this.

Silicon Valley is buzzing about the potential here, as are media reform groups (and smaller wireless companies).  This is all part of the move to take back public airwaves from the people that give Imus-types privileged positions in public discourse.  This is genuinely revolutionary stuff, and the FCC is going to rule on it soon.  Hopefully we can get Ed Markey and John Dingell to hold hearings and force Chairman Martin to open up the spectrum.  

There are real allies here, just as there were in the net neutrality fight.  In fact you can consider this part of the net neutrality fight, part of protecting and expanding the digital commons.  And because of the anti-redlining and cost reduction components, there is a much larger coalition that could be formed here.  Every non-profit in the country has an interest in open access.  And so does every cell phone user who had a dropped call, or who wants wireless broadband for low cost.

After all, these are the public airwaves, our airwaves.  However much he doesn't like it, they don't belong to Verizon CEO Ivan Seidenberg.

UPDATE: In related news, Verizon is patenting the internet.

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