Spectrum Allocation At Federal Communications Commission: Time For A Reset – Analysis

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109616aa8e31bfcfe76b99d4d3b2be76 Spectrum Allocation At Federal Communications Commission: Time For A Reset – Analysis

By Harold Furchtgott-Writer*

After years of deliberation, the Federal Discipline Commission on July 14, 2016 adopted the “Spectrum Front line” Order and Further Notice of Proposed Rulemaking only if new federal rules for the allocation and use of spectrum aloft 24 GHz, often considered the “frontier” of spectrum.2 In modern June 2016, however, just a few weeks earlier the Spectrum Frontiers final order was adoptive, the Boeing Company filed a new petition for rulemaking with the FCC in which the fellowship asked the agency to effectively alter the allocations and dynamism limits the FCC was about to finalize for high banding spectrum.3

While no one can fault The Boeing Troupe for pursuing all avenues to its advantage, this evolvement highlights several flaws in the FCC’s administrative analysis process for spectrum allocations. The FCC’s current modus operandi imperfectly tries to mimic market contrivance and in so doing, needlessly extends the time it grasp to move spectrum to its best and most unwasteful use.

High-frequency spectrum is indeed one of the remain frontiers in which to find useable spectrum to aid mobile broadband. Unlike the space front line of the fictional Star Trek, however, the front line of high-frequency spectrum are here and now.

We can keep at to allocate high-frequency spectrum on a case-meal basis as we have in the past. Or we can get down from past mistakes and rely on more select, more market-oriented mechanisms that despatch the process of allocating new spectrum. The economic consequences of deed more efficient use of spectrum from mart mechanisms are enormous. The consequences of not getting many efficient use of spectrum are both tragic and economically blind.

II. HIGH–FREQUENCY SPECTRUM IS THE Front line

The frontier: the very word evokes picture of explorers, from geographic explorers of centuries foregone, to Star Trek explorers of future centuries. An conspicuous frontier today has no specific geographic limit. It is not light years away on an intergalactic aim. It is part of the here and now, the very air we breathe and yet besides what we cannot breathe; it is part of the lighter we see and yet also the light we cannot see; it is the sound we listen as well as the sounds we cannot hear. It is spectrum.

In that the beginning of the 20th century, scientists and engineers include expanded knowledge of the boundaries and applications of spectrum. The spectrum control from the Berlin Conference of 1906 pertained to 500 KHz to 1 MHz.4 By 1922, the fed government regulated spectrum between 50kHz and 3MHz. Tod, the federal Communications Act has expanded to regulate spectrum ‘tween 9 kHz and 275 GHz.5

Commercially valuable applications of spectrum stir more slowly than the scientific front line of spectrum. Before 1914, commercially compelling applications were few. By 1934, spectrum under 2 MHz had some commercial value. By 1950, spectrum further down 1 GHz may have had commercial value. By 1996, nearly observers viewed spectrum below 3GHz and a few higher corps as having particular economic value.

Now, new technologies hold extraordinary promise for the augmenting of spectrum applications in many bands with highschool frequencies. The FCC consolidated several ongoing dockets with a new measure with a Notice of Inquiry (NOI) to look at a change of issues about how to regulate this higher oftenness spectrum above 24 GHz, particularly in six group.6 The FCC inquiry focuses on terrestrial mobile employment, particularly for new 5G wireless technologies. As the Commission explicit:

In particular, industry and technical groups are genesis to examine the use of higher frequencies sometimes published as millimeter wave (mmW) bands for mobile use. This scrutiny of the possible uses of the mmW bands for mobile use grips place within the context of broader striving to develop technical standards for so-called One-fifth Generation (5G) mobile services. In view of the discipline and marketplace developments outlined in this part, we seek to discern what frequency group above 24 GHz would be most worthy for mobile services, and to begin developing a document on mobile service rules and a licensing model for mobile services in those bands.7

The FCC Thereupon launched a Notice of Proposed Rulemaking.8 The NPRM included argument of new terrestrial wireless services. Among others, ambulatory services were proposed in the 37-40 GHz belt.9 In July 2016, the FCC adopted rules for ambulatory applications, for among other bands the 37 GHz ring and the 39 GHz band, spanning from 37-40 GHz.10 The Direction also adopted a further notice of planned rulemaking for the 50 GHz band, from 50.4 to 52.6 GHz.11 The FNPRM planned to authorize terrestrial fixed and mobile running in the 50 GHz band under the Part 30 Topmost Microwave Flexible Use Service rules.

The spectrum overhead 24 GHz is underutilized, but it is not entirely undeveloped or without discipline applications. More than 20 oldness ago, the FCC even auctioned licenses in several of these company;12 however, the applications for higher-strip frequencies have not, to date, been as commercially fortuitous as applications deployed on lower frequencies.

III. Place RIGHTS CONCEPTS ARE IMPORTANT FOR THE ECONOMIC Reward OF SPECTRUM, INCLUDING HIGH–Cardinal SPECTRUM

It is perhaps all too human nature to picket a claim to that which is new and which comes forth to be in one’s grasp. A child seeing a toy enter her inland might assume the toy is hers to decide how to use it, to drink in, and to discard when no longer wanted. On no occasion mind that the toy may be designated for another nipper. Kings in a bygone era may have viewed jurisdictional conquests much the same way as a child vigil a new toy. Never mind that the territory may gain individuals with other loyalties and otc claims and an entire set of property rights in accommodation. And so it is with spectrum.

There is a vast letters about the importance of property rights to confirm the efficient use of spectrum and the efficient transfer of regard in spectrum.13 While spectrum in the Combined States is not an unalloyed form of property,14 assorted property rights concepts have evolved encompassing it.15 Over the past 30 senility, property right concepts in spectrum, both accredited and unlicensed, have been at least a certain extent clarified at the FCC. In large part as a consequence, the monetary value of spectrum and spectrum-based help has exploded globally and in the United States.

Diverse economic studies have shown the worth of spectrum and spectrum-based services are ontogeny rapidly, more rapidly than the residue of the economy.16 These studies concede hundreds of billions of annual economic valuation of spectrum to the American and to the global economy. Notwithstanding there are major economic contributions from program and satellite services, the vast majority of esteemed in spectrum-based services is from tellurian services, both licensed and unlicensed. More and more, the distinction between spectrum-based usefulness and the remainder of the economy is blurred as practically all of the husbandry has become at least in part dependent on spectrum-supported services.

Spectrum and spectrum-based assistance have extraordinary economic value now. They have contributed substantially to the budgetary growth of America in the past few decades. Absolutely, there would have been arguably piddling if any economic growth in the United States terminated the past few decades without new wireless and Net developments.17 And yet, as explained here and gone, spectrum in the United States is not efficiently allocated with mart mechanisms. The potential economic benefits to the Coalesced States and the global economy from enhanced market-based spectrum allocations are solid.

While property right concepts in spectrum at the FCC and outside have increased over the past 30 second childhood, they remain weak and imperfect. Diverse studies recommend strengthening those dimethyl ketone rights concepts.18 There is no mistrust that clearer property right concepts in spectrum would burgeoning economic value further for all bands of spectrum, including those in the sky 24 GHz. The commission has collected a large file in the 14-177 docket, but there is no focus on rudimentary property right concepts in spectrum itself.19 Absolutely, the word “property,” much less “property deserved,” does not appear in the NOI. “Property” appears in the occasion of location of use of the 37 GHz band and indoor use of Stuff 15 devices in the NPRM. Property comes forth only once in the Order in the context moreover of the 37 GHz band, but not in the rules themselves. Unsurprisingly, well-nigh comments ignore property rights raw.

IV. LESSONS LEARNED FROM ILL–Advised ALLOCATIONS IN LOWER–FREQUENCY SPECTRUM

NTIA persist in a spectrum allocation chart using a semblance code to show the allocation in each circle of spectrum for both federal and non-federal consumer.20

The chart is a beautiful rainbow of colors, but it barely reflects a unique or efficient allocation. It comprise, for example, narrow channels in the 800 and 900 MHz company, vestiges of a time when narrow waterway had substantial value given the contemporaneous application. The NTIA spectrum allocation chart substitutes for allocations that may have once prepared sense, but which, just a few years afterwards, no longer did. It is impossible to believe that a reasoning system starting from scratch would glad eye the same. Nor is it possible to believe that the represent would look the same in a market-supported system where spectrum rights O2 could aggregate spectrum and could prefer the most beneficial spectrum uses in concordance with the Coase Theorem.

Parties oft petition the FCC to change spectrum allocations. What gos is often years of delay, if a reallocation is specious. The ultimate reallocation, if made by an administrative force considering a wide range of non-economic part, may not make economic sense, either at the age of the reallocation, or years in the future.

The challenge for the FCC is not to be wise of future technologies. That is impossible. Nor is the trial for the FCC to discern which among competing absorbed parties has a better and more accurate cliffhanger to tell about the future. That too is unsufferable. And yet, the Commission unwittingly and unnecessarily puts itself in this pose in allocation proceeding. The Commission makes arbitration about the use and allocation of an extraordinarily valuable plus, spectrum, based upon its judgment roughly future technology and the representations of interested reception.

The better solution is to devise spectrum allocations with clearer place rights principles to allow interested social gathering with an economic interest in spectrum to be adroit to shift and to change in accordance with ever-changing market conditions without reverting to the FCC for senility of reallocation proceedings. This would build in more flexible-use allocations that slenderize the necessity of formal reallocations. Indeed, the Spectrum Front line Order has some limited elements of spectrum tractability, such as allowing mobility in some body.21

V. COMPETING PROPOSALS FOR THE USE OF THE 40 GHZ AND 50 GHZ Platoon

The inefficiency of the FCC spectrum allocation process can be seen in the Spectrum Front line proceeding as well as in the Boeing Petition. The Spectrum Front line order adopted in July 2016 is the closing of various proceedings that have churned for deeper than a decade. Yet, a week before the move was about to draw to a close, a party filed a new Inquire for Rulemaking that impacts the very spectrum allocations the FCC addressed in its decades elongate proceeding. In June 2016, the Boeing Association filed its petition asking the FCC to enable “the allotment and authorization of additional uplink (Earth-to-period) spectrum for the Fixed-Satellite Service (“FSS”) in the corps 50.4-51.4 GHz and 51.4-52.4 GHz.”22 The additional uplink banding would then be paired with the 5 GHz FSS downlink belt at 37.5 – 42.5 GHz to provide the spectrum understructure for a new NGSO fixed broadband service.23 These modifications are not in the Spectrum Front line Order.

CTIA,24 Straight Pathway Communications,25 and others filed assorted documents in Docket GN 14-177 noting the difference between Boeing’s proposed use of the 40 GHz striation and the 50 GHz band for a satellite-based utility with terrestrial wireless services planned in the Spectrum Frontiers NPRM and Order. Boeing asserts that the protectorate and terrestrial services are incompatible.26

There is cramped in the record thus far to determine unambiguously the scientific issues about the compatibility of these at odds uses of high band spectrum. The FCC faculty be left to conduct its own tests or rely on the assay of other parties, many with vested attention in the outcome. There is even less, much nothing, in the record about the economics of the planned reallocation. The costs and benefits of the proposed reallotment, aside from qualitative cheers, are not in the file. The costs and benefits of Boeing or others victimization alternate bands of spectrum for specific help are not in the record either.

Thus, absent added multi-year effort to gather counsel that may or may not prove accurate, the Commission has no target on which to make an informed decision approximately the questions posed by Boeing. This is the point of the Commission’s problem with regard to its flow process for making spectrum allocation arbitration.

VI. VARIOUS MEANS OF RESOLVING DISPUTES FOR THE Routine OF SPECTRUM

I have no view about if Boeing or CTIA or Straight Path has the exceeding technical arguments about the compatibility or inconsistency of various services proposed for high-oftenness spectrum. Rather, the dispute between the celebration, as publicly recorded in a series of documents at the FCC, replace an economically inefficient, even irrational, design of resolving commercial disputes between cocktail. As noted above, more efficient spectrum assignation could and likely would have considerable benefits to the American economy.

Below, I account four methods of resolving conflicting recommendation for the allocation and use of high band spectrum, from the about efficient to the least efficient. More than 30 eld ago, the FCC was primarily using the least efficient plan of allocating spectrum. Since then, the FCC has built spectrum allocation substantially, but still is far from victimization the most efficient approach it could use.

A. A simon-pure property rights concept approach
A virtuous property rights concept approach to breakdown disputes over the usage of spectrum would attribute spectrum rights of an entire band to a crowd much as a plot of land is assigned by a effort to a party. The FCC would reasonably regulate emissions and intrusion coming into the band or exiting the stria, but the Commission would not regulate these emissions or meddling within the band, such as between protectorate and terrestrial applications. The party with the allotted rights could sell or lease those rights to others for diverse purposes, and that party would be proficient to determine the interference conditions between the earthbound and satellite users, high-power and low-cause users, etc. The result would be what economists remit to as the Coase Theorem, whereby, in the absence of business costs, assets will gravitate toward their highest-valued use.27 Of grade, initial allocations affect the payments betwixt and among parties, but assets should end up with their maximal valued use. If any entity, including the Boeing Accompany or Straight Path, believes it has a higher precious use for spectrum in the 40 GHz and 50 GHz bands, it can and would way the entity that has the rights to those body and seek to acquire certain rights to use those body. That controlling party might take that only one of competing applications would be allowed, or that both would be allowed below conditions that it would determine by get. The primary role of the FCC would be limited to ensuring that f€te with interests in adjacent spectrum group are not affected by harmful interference. Another use of the FCC would be as the recorder of deeds for spectrum.28 I gain seen nothing to suggest that the FCC conceive of this approach to resolving the dispute above the usage of various spectrum bands.

B. The vendue approach
The second approach to resolving a spectrum scrap in a band would have two steps: (1) beginning, ascertain that the federal government save primary rights in the band and those rights carry not been allocated for a specific purpose; and (2) moment, auction off spectrum rights, consistent with 47 U.S.C. 309(j), evening for competing allocations. The advantage of the auction avenue is that it would reveal which company values the spectrum the most, independent of the coating or allocation. In practice, every band of spectrum is already allocated, normally for multiple purposes, and usually with contradistinct allocations for both federal and non-federal consumer. In theory, the federal government could restore lightly used high-frequency spectrum platoon for this auction purpose, but few if any bands of spectrum gain no incumbent use. I have seen nothing in the folder to suggest that the Commission is considering this road to resolve the disputes at 40 GHz or 50 GHz.

C. The decimal administrative state
The third approach to breakdown disputes over the usage of spectrum is what I would portray as a quantitative administrative state. Here the FCC would do the unquestioning calculations that should mimic the place-rights approach above.

  • Value of spectrum to apiece party and to the public The FCC would use quantitative ammo to assess the economic and financial merits of Everyone party to the dispute. The FCC would assess the net budgetary value of spectrum assignments to various social gathering as well a net consumer value of various spectrum giving out. As part of this economic calculation, the FCC would dream of potential uses of alternative spectrum body. Although Boeing has presented descriptive clue of the business plan of FSS broadband service, I let seen no cost-benefit analysis of the planned service, either to Boeing or the public. It is unreadable why this FSS service would succeed where others keep failed. It is also unclear why Boeing could not use additional spectrum bands, particularly where FSS aid are authorized. Given the general dominance in duration of terrestrial based services in almost every spectrum ring, it is difficult to see how based on quantitative information the FCC would close that the 40 GHz or 50 GHz bands would be contradistinctive. Historically, the FCC has allocated substantially swaths of spectrum to equipment use. Some satellite bands have proven quite profitable and publicly useful, patch many others have not.
  • Mutual exclusivity of avail The FCC would receive or would conduct decimal studies of the potential compatibility of various help in a band. This is the issue that the Boeing Gathering and Straight Path Communications are presenting to the Commissioning.
  • Past Commission experience The Boeing postulation involves new satellite services. Over the former three decades, the FCC has allocated many troop of spectrum to various satellite services. Any have been geostationary, and others include been low-earth orbit services. With the elision of direct broadcast satellite services, well-nigh if not all of these satellite services have struggled. In apportioning proceedings that consider past Committal experience, the Commission might reasonably deliberate the experience of allocations to the broader satellite business.
  • Separating allocations from assignments The Committee usually separates sequentially the allocation from the distribution process. The Boeing Petition appears to be after both reallocation of spectrum and use and license giving out within that new allocation, all apparently without an vendue. While there may be reasonable but rare fortune when the Commission should reallocate and publicize licenses in the same proceeding—an exemplar might be when a licensee seeks to extend service into an adjacent fallow stria of spectrum and where there is no practical alternate use of the spectrum—the burden of proof should be on the assemblage seeking assignments without an auction.
  • The Comission would combine these various decimal assessments to allocate spectrum. Presumably, these decimal assessments would be replicable.

    D. The qualitative administrative native land
    The fourth approach to resolving disputes terminated competing uses of spectrum is what I would portray as a qualitative administrative state. Here, the FCC would conclude on allocations of spectrum, including reallocations of spectrum, supported on factors that are difficult to quantify or repeat. These qualitative factors might be tagged “public interest” even though impartial individuals might differ on how to assess these qualitative particular. An example would be the rules the FCC devised for the contemporary incentive auction involving set asides and additional attempts to specifically advantage some fellowship over others.

    VII. CONCLUSION

    High-cardinal spectrum is part of one of the last frontiers. To the space frontiers of Star Trek, the front line of high-frequency spectrum are here and now. They are not body of knowledge fiction; they are the reality that scientists and inventor are rapidly developing.

    The Commission will hang in to be confronted with petitions to reallocate spectrum. Any will have merit; others Testament not. Current practice is for the Commission to take age to decide through laborious proceedings that prophesy future technologies and economics only to be proven exactly wrong.

    We can continue to allocate altitudinous-frequency spectrum as we have in the past. Or we can drink in from past mistakes and rely on fitter, more market-oriented allocation machine.

    The economic consequences of getting more thrifty use of spectrum from market mechanisms are huge. The consequences of not getting more efficient use of spectrum are both tragical and economically irrational.

    About the author:
    *Harold Furchtgott-Writer,
    Director, Center for the Economics of the Internet

    Provenance:
    This article was published by the Hudson Plant.

    Notes:
    1 Director, Center for the Economics of the Net, Hudson Institute. The views expressed in the gazette, and any errors contained herein, are entirely my own. ↝

    2 FCC, 16-89, Reputation and Order and Further Notice of Proposed Rulemaking, Use of Spectrum Company Above 24 GHz For Mobile Radio Aid, July 14, 2016. Several dockets, including one that elderly from 1997, formed the foundation of the Line. ↝
    3 ↝
    4 For a review of early spectrum edict, see H. Furchtgott-Roth, “The Economic Fee of Property Rights Concepts in Spectrum, Both With and Without Permit,” unpublished manuscript, 2016. ↝
    5 Ibid. ↝
    6 FCC, Ticket GN 14-177, Use of Spectrum Bands Above 24 GHz For Walking Radio Services, Notice of Inquiry. See exceptionally paragraphs 46-87. ↝
    7 FCC 14-154, Docket GN 14-177, Observance of Inquiry, October 17, 2014, paragraph 1. ↝
    8 FCC, 15-138, Card of Proposed Rulemaking, Use of Spectrum Bands Supra 24 GHz For Mobile Radio Services, Oct 23, 2015. ↝
    9 Ibid. paragraphs 35-53. ↝
    10 FCC, 16-89, Composition and Order and Further Notice of Proposed Rulemaking, Use of Spectrum Body Above 24 GHz For Mobile Radio Usefulness, July 14, 2016. ↝
    11 Ibid., paragraphs 418-423. ↝
    12 See in specific the 24 GHz band, the 39 GHz band, and the LMDS banding. ↝
    13 Two of the most influential papers on the caliber of property rights and efficient economic allotment began with the example of the inefficient apportioning of FCC radio licenses. Coase, Ronald H. (1959). “The Fed Communications Commission.” The Journal of Law & Economics, 2, 1–40. Retrieved from protocol://www.jstor.org/stable/724927 See Coase, Ronald H. (1960). “The Crunch of Social Cost.” The Journal of Law & Economics, 3, 1–44. Retrieved from protocol://www.jstor.org/stable/724810. See also fn 4 supra. ↝
    14 In language predating Professor Coase’s chore, federal statute prohibits the private possession of spectrum. 47 U.S.C. 301. But federal edict, in language from 1993, requires the auctioning of allow for mutually exclusive applications that are baggage of blocks of spectrum transferred from the fed government to the private sector. 47 U.S.C. 309(j). ↝
    15 See H. Furchtgott-Writer, unpublished manuscript, 2016. ↝
    16 For the accumulation in demand for licensed spectrum, see, e.g., Coleman Bazelon and Giulia McHenry, “Substantial Accredited Spectrum Deficit (2015-2019): Updating the FCC’s Motile Data Demand Projections,” June 23, 2015, advance for CTIA, at http://www.ctia.org/docs/dereliction-source/default-document-library/clatter_350MHz_licensed_spectrum.pdf,. For the increase in need for spectrum not subject to licenses, see Cisco, “Visual Networking Listing: Global Mobile Data Traffic Prognosticate Update, 2015–2020 White Article,” February 1, 2016, at http://www.cisco.com/c/en/us/finding out/collateral/service-provider/visual-networking-table of contents-vni/mobile-white-paper-c11-520862.html See furthermore Roger Enter, “The Wireless Business: Revisiting Spectrum, The Essential Engine of U.S. Monetary Growth, April 2016; GSMA, Valuing the Use of Spectrum in the EU, Jun 2013; Harold Furchtgott-Roth, (2009). The Radio Sector: A Key to Economic Growth in America, reputation prepared for CTIA. ↝
    17 See, e.g., H. Furchtgott-Writer and Jeffrey Li, With Jeff Li, “The Part of the Information, Communications, and Technology Sector to the Growing of the U.S. Economy: 1997-2007,” August 2014, Naturalist Institute, at http://hudson.org/research/10545-the-part-of-the-information-communications-and-technology-sector-to-the-extension-of-u-s-economy-1997-2007. ↝
    18 See H. Furchtgott-Writer 2013 and 2016. ↝
    19 As of November 30, thither were 862 posted comments for the Schedule 14-177 in the FCC’s ECFS database. Many and comments were filed earlier in early dockets. ↝
    20 https://www.ntia.doc.gov/case/ntia/publications/2003-allochrt.pdf. ↝
    21 See, e.g., wandering rights in LMDS. Spectrum Frontiers Trail, paragraphs 37-42. ↝
    22 FCC, Boeing Gathering, Petition for Rulemaking, Allocation and Authorization of More Spectrum for the Fixed-Satellite Service in the 50.4-51.4 GHz and 51.4-52.4 GHz Troop, June 22, 2016. ↝
    23 Ibid. ↝
    24 Mail from Scott K. Bergmann, Vice Prexy, Regulatory Affairs, CTIA, to Marlene H. Dortch, Assistant, Federal Communications Commission, GN Docket No. 14-177 et al, at 3 (Jul. 7, 2016) (“CTIA The middle of summer 7 Letter”). ↝
    25 Letter from Davidi Jonas, CEO and Chairman, Straight Path Communications, Inc., to Marlene H. Dortch, Escutcheon, Federal Communications Commission, GN Docket No. 14-177, at 4 (Jul. 7, 2014) (“Straight Method Written Ex Parte”). ↝
    26 Correspondence from Bruce A. Olcott, Counsel to the Boeing Gathering, to Marlene H. Dortch, Secretary, Federal Discipline Commission, GN Docket NO. 14-177, July 8, 2016; Trade of the Boeing Company, September 30, 2016; Come back Comments of the Boeing Company, October 31, 2016; Backhand Ex Parte Notice of the Boeing Company, Nov 21, 2016. ↝
    27 See discussion in Furchtgott-Writer, 2016. ↝
    28 It is unclear, which crowd, if any, has a claim to control either the 40 GHz or 50 GHz corps. ↝
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