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we're here today with Kevin wbach
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Wharton professor of legal studies and
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business ethics to discuss the current
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debate over Wireless spectrum allocation
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and how it impacts businesses and
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consumers Kevin thanks for being with us
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today thank you for having me first of
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all could you just quickly Define
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spectrum what is it and how does it work
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spectrum is uh really the capacity for
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wireless communication the the best
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definition that I found of spectrum uh
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is uh attributed to Albert Einstein but
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uh he probably never said it and uh the
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story goes like this he said um imagine
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a really huge cat um that's so big that
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its head is in one part of the city and
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its tail is in another part of the city
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you squeeze the tail and all the way at
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the other end the cat meows he said all
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right that's wired communication that's
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like your your landline telephone
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Wireless which is what uses spectrum is
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exactly the same except there's no cat
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so spectrum is basically the the way
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that we make use of the airwaves uh the
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frequencies over the air for cell phones
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wi-fi garage door openers and so forth
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right and now we're Curr currently
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experiencing something of a wireless
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Spectrum crunch I understand now what
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are the different forces that have come
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together to create this problem there
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has been a tital wave of demand for
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wireless data you think about uh the
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iPhone the first uh really successful
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commercial smartphone only about six or
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seven years old um and last year
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something like a billion smartphones
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were sold uh and tablets like the iPad
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use even more data um the networks that
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we have today have to carry uh many more
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times the level of data traffic of the
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networks of a few years ago and the
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trends are even for more explosion of
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that data usage so basically everybody
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is taking even maybe just me on my
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iPhone I'm taking a tiny little piece of
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the pie and so is everybody else well
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it's the challenge is it's not a pie um
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because uh spectrum is it's not a wire
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you transmitting over the air and then
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another device is trying to receive over
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the air and the challenge is um the
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devices as they get smarter can use the
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Spectrum more efficiently because a
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really good device can can find a signal
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where another device didn't uh and there
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are different Technologies and
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approaches that can be used and also the
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government sets up the framework under
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which spectrum is accessed so yes
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generally the more people that are
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trying to use things the more uh uh use
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of data so for example video requires
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much more capacity than text uh and so
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all the streaming video that's happening
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is taxing networks but uh how much uh
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the demand affects the networks depends
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on all these other factors and so what
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is the current debate over spectrum
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allocation and what are the proposals on
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both sides we've had this debate for uh
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about the past decade but it's really
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coming to a head now uh traditionally
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the government allocated Spectrum
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through a command and control mechanism
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so they would say all right here's all
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the frequencies we'll divide them up um
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this spectrum is for television
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broadcasters will'll either give it to
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them or have some mechanism uh typically
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in recent years to auction it off this
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spectrum is for cell phone companies um
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and they would parcel out spectrum that
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way um the problem is that uh that
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doesn't use Spectrum nearly efficiently
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enough the the estimates are that the
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actual usage of spectrum is roughly 10%
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uh in other words roughly 10% of the
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spectrum if you looked at all of it is
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actually in use at any time um
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tremendous inefficiencies in the system
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so so um the debate has been about how
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do we improve that um and one view has
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been we just need to give uh more
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exclusive property rights uh to people
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that get the spectrum because the idea
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is then they'll buy and sell it and and
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use it more efficiently the other view
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which is really where I come down is
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that there are all sorts of technologies
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that now allow Spectrum to be shared so
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we don't need exclusivity um we can
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actually maximize use of the spectrum
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and that becomes even more important now
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as as demand increases now I was reading
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some of the you've written about this
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recently and you were saying that there
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actually is a surprising amount of
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sharing going on right now by even some
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of the really big names in this whole
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business and could talk a little bit
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about that and also why having more
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sharing would actually increase what
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these different businesses are able to
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do or even allow more people to use it
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yeah so this is what's changed in the
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debate although not everyone quite
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realizes it it used to be you had uh
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people favoring property rights on one
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side and people favoring what's called
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unlicensed use so things like Wi-Fi
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devices is the the access points you
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might use with your computer or your uh
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other device are are spectrum that is
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dedicated by the government for
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unlicensed use uh but what's happened
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increasingly is those have come together
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so for example you think about your
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iPhone it's got a cellular radio on it
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that uses license spectrum and it's got
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a Wi-Fi radio and also a Bluetooth radio
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uh that use unlicensed Spectrum uh and
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increasingly there are ways to do some
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of both um so for example the the
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president's science Advisory Board a
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group called pcast that reports to
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President Obama
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um looked at the challenge of federal
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Spectrum so there's tremendous amount of
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spectrum that is used by government
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agencies mostly the military but also
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the FAA and all sorts of other agencies
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and they use it really inefficiently and
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they don't necessarily need as much as
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they have whereas there's tremendous
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demand in the private sector um but the
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problem is they're still using it for
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things and the challenge is if you have
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this military radar that's only on part
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of the time in part of the country but
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that still serves some valid um defense
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purpose how do you make that Spectrum
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available the rest of the time to the
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commercial sector and it turns out that
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we can use these sharing mechanisms to
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do that give the government agencies the
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uh the protection they need but also
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allow other access um so increasingly
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what what we're seeing is these things
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are coming together right now another
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thing you had written about was about um
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white space like between channels can
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you talk a little bit about that and
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explain how that fits in one of the
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projects that the FCC has been
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shepherding for again roughly the past
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10 years is opening up the so-called
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white spaces around broadcast television
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channels so the way television is set up
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in terms of spectrum is based on the
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technology of the 1950s um and back then
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devices were really dumb so they had
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these guard bands that would say no one
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can transmit here so that the station on
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TV seeing the station on one side will
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be able to distinguish it from the
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station on the other because there's a
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big space in the middle well today's
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technology is so much more efficient
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that we can actually use that Tech that
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space in the middle have someone
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transmit there and the devices on either
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side won't see it um this is all uh
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being put into place while the FCC is
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looking at reallocating that television
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Spectrum so we've moved to Digital
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television in the United States um and
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now the FCC is doing what's called an
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incentive auction where they're trying
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to get broadcasters that aren't really
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using their Spectrum to give it back in
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return for a payment that comes from
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auctioning the Spectrum and the
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challenge is if the FCC does that in the
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wrong way way it will actually close off
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this white space it will basically only
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make Spectrum available to those who buy
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it at auction uh which doesn't leave a
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lot of room for experimentation for
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little players new players to come in
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people in rural areas who don't
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necessarily have those resources um and
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the whole massive industry that makes
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devices to come up with innovations that
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take advantage of that open white space
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um so so that's partly why I've been
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writing recently that the FCC has to
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decide this in a way that leaves open
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that capacity for sharing and Innovation
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so it sounds like I mean one of the main
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things that the industry and the
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government are grappling with is that
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you have a system that was created years
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and years and decades and decades ago to
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do something and now just the world of
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technology the world of broadcasting has
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completely changed really what we're
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grappling with is um our our failure to
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appreciate what spectrum is and the
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failure of our metaphors so we think
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it's like a resource we think it's like
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land say and there's so much of it and
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it gets used up and this parcel of land
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is here and that parcel of land is there
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doesn't really work that way um because
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everything is contingent uh whether
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there's what's called interference uh
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people think that it works like if I
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transmit here and you transmit here that
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the the signals run into each other
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actually they pass through each other
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they're just you know beams of energy um
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it's all a question of the devices and
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how they are able to interpret
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information um so what we really need to
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do is understand that that sharing is
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really part of spectrum no matter how we
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use it even in the so-called exclusive
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rights we're sharing by giving you one
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frequency and someone else another
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frequency um so we need to to have a
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broader perspective that uh this is not
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about say you know capitalism versus
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communism when we talk about sharing and
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property rights really we're talking
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about maximizing capacity we're talking
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about what
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configuration uh lets the Spectrum be
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used the most intensively um and you're
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absolutely right that that needs to be
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done in context of today's technology as
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opposed to Old outed assumptions now is
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there a point where we could eventually
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hit a wall and there is no more Spectrum
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or well see again uh the spectrum is
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always there and it's doesn't get used
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up if I transmit over the air with my
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device that Spectrum doesn't suddenly go
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away the moment I stop
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transmitting um it's clear again um so
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the issue is um how much can we make
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Spectrum use more efficient um and again
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it all depends on the on the
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infrastructure so for for example you
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take a cellular network like your your
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typical cell phone system um they can
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create more Spectrum by putting in more
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Towers because they're basically
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subdividing it more so you're only
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connecting to a local area as opposed to
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a much wider area but that costs money
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and there are other trade-offs there the
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same thing with the sharing there are
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you know there are tradeoffs in terms of
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efficiency um and and so forth with
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these different mechanisms so at some
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point yes there's a theoretical limit we
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actually don't know what it is um there
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there are many practical limits um but
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but again if you look at um all the
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capacity that's out there we're not
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using most of it so so potentially we've
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got a long way to go so tell me like I
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guess in terms of like for the average
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consumer the average business I mean why
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why is this debate so important like how
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does the outcome of what is decided
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about Spectrum allation impact me the
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iPhone owner or just a business that's
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trying to offer a Wi-Fi network or other
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stakeholders like that who maybe don't
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think even think about it much yeah it
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means a few different things one one
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thing it means is will there be enough
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capacity for these devices so uh will
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you be able to get good quality at
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affordable prices and will service
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providers be able to continue de
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developing and deploying new kinds of
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Innovations especially uh video things
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that that use high amounts of capacity
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as well as what's called The Internet of
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Things all of these wearable devices and
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sensor-based devices all throughout the
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world U it's a question of whether
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that's actually going to work and be
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available or is going to run into limits
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of spectrum
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um or it's also a question of whether
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that will be an open space for
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Innovation um or will really only be
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limited to the companies that buy the
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Spectrum at auction and therefore can
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control it and and price it and so forth
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um certainly there's value in companies
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having that exclusive control um but it
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needs to be in an environment that
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allows for open Innovation um so it's
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not that your your iPhone is going to
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shut off tomorrow uh but it's really a
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question of whether this space will
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continue to be a fountain of inovation
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going forward um and also it's important
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for example in in urban areas um and in
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rural areas um where typically there
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isn't access to the same Broadband
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capacity some of these Spectrum sharing
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mechanisms are really well suited um to
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uh reaching those areas because again
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they don't depend on a company paying
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billions of dollars at an auction and
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then be able to monetize the service so
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now I guess with urban areas I can see
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how the capacity issues that there's a a
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lot of people tell me what the issue is
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with with rural areas you've mentioned
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that a couple times that there there are
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people that could potentially benefit
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from this the issue in rural areas is
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it's not uh necessarily economical for
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companies to serve them uh they don't
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have the same level of broadband
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capacity because they don't have the
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density and it's expensive to build
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these traditional networks um but
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there's lots of open capacity so for
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example this wh space technology that
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again Works in between television
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channels works really well well in rural
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areas because there are not that many TV
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stations um and and those are the areas
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again where there's there's potentially
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great demand because they're not served
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by the existing networks and now for
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people who are I mean are interested in
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this issue or watching this issue I what
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are some of the I guess sort of big
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things coming up to watch for or some of
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I guess things that need to happen in
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order for more sharing to occur which it
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sounds like what you're advocating is
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kind of a system where we doing some
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sharing but there's also some
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exclusivity there so so the government
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has a series of decisions to make the
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the Federal Communications Commission is
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is moving forward this process that the
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so-called incentive auction they just um
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recently did a status report the auction
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is supposed to happen in 2015 but
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there's a a series of steps that the FCC
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will be announcing along that process um
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and then similarly the FCC as long as as
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well as what's called nitia which is a
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Technology Group within the Commerce
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Department um are managing most of this
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process of repurposing Federal Spectrum
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um so again it's a set of decisions
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Congress is following along and and
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potentially helping or potentially
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pushing in the other direction so I
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think it's it's something definitely
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where where members of Congress are
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going to be speaking out and introducing
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legislation and and there's a real
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danger of again this being pushed in a
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direction that squeezes out the sharing
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just because people don't appreciate U
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the value that it brings great Kevin
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thanks so much for being with us today
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thank you
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[Music]
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oh
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[Music]
