Spectrum Policy 2.0 White Space, the Internet and the Public Interest By Mitchell Shapiro © 2008 Spectrum Policy 2.0 White Space, the Internet and the Public Interest Executive Summary ........................................................................4 Part 1: From Broadcast to Broadband ..........................................11 The Evolution of Spectrum Policy .............................................................................11 Spectrum scarcity and the First Amendment................................................................ 11 How to serve the public interest? ................................................................................. 13 The shift to spectrum auctions...................................................................................... 14 Expanding the unlicensed model.................................................................................. 16 Unlicensed wide-area networks.................................................................................... 19 Critiques of auctions..................................................................................................... 20 Spectrum sharing and the First Amendment ................................................................ 25 Slow progress on unlicensed white space .................................................................... 27 Moving Toward the Negroponte Switch....................................................................30 A vast spectrum wasteland? ......................................................................................... 30 Fewer homes served by TV spectrum .......................................................................... 31 Broadcasters as content providers ................................................................................ 32 Charging for carriage.................................................................................................... 33 The shift to end-user control......................................................................................... 34 New advertising models ............................................................................................... 35 White space and a Negroponte “migration”................................................................. 36 Part 2: Broadband Internet Demands New Policies .....................38 Telephone, TV & the Internet ....................................................................................38 Old regulatory models grow obsolete........................................................................... 39 The 1996 Telecom Act ................................................................................................. 40 The squeeze on new entrants........................................................................................ 42 “Neutrality” and “Internet Freedoms”.......................................................................... 44 U.S. a broadband laggard...........................................................................................45 Broadband penetration.................................................................................................. 46 Broadband availability.................................................................................................. 47 Bang for the buck ......................................................................................................... 51 Time to rethink universal service? ............................................................................... 52 Economic & Policy Issues ...........................................................................................52 Cost structure and competition..................................................................................... 53 The issue of market power ........................................................................................... 57 The role of IMS ............................................................................................................ 61 Market power in wireless ............................................................................................. 63 “Neutrality” and “externalities” ................................................................................... 66 The Internet and New Growth Theory......................................................................68 Ideas vs. objects............................................................................................................ 70 The Internet, ideas and economic growth..................................................................... 71 A networked non-market growth sector....................................................................... 72 The value of neutral, symmetric networks ................................................................... 78 2 Part 3: Key White Space Issues.....................................................80 First Report and Order and FNPRM........................................................................80 Interference issues .......................................................................................................81 Protecting broadcasters................................................................................................. 81 Interference protection options..................................................................................... 85 Adjacent channels......................................................................................................... 86 Wireless microphones .................................................................................................. 89 Public safety and channels 14-20 ................................................................................. 90 Cable also seeks protection .......................................................................................... 93 A spectrum grab by incumbents? ................................................................................. 94 Personal/Portable Devices...........................................................................................96 FCC Testing Will Be Key............................................................................................98 Licensed or Unlicensed?............................................................................................100 The benefits of unlicensed.......................................................................................... 100 License advocates make their case............................................................................. 102 Part 4: The White Space Opportunity .........................................108 The Broader Policy Context .....................................................................................109 Internet access and the public interest........................................................................ 109 The Internet, spectrum & free speech......................................................................... 110 Internet-era economics ............................................................................................... 112 A clash of models ....................................................................................................... 115 Market power & power politics.................................................................................. 116 21st century spectrum policy....................................................................................... 118 “Public Interest IP” (PIIP) Spectrum......................................................................122 Maximizing value, minimizing interference .............................................................. 123 Extending PIIPs via end-user LANs........................................................................... 128 The value of universal access..................................................................................... 129 Synergies with public safety....................................................................................... 131 “Smart grid” utility applications................................................................................. 137 Phasing in fiber PIIPs ................................................................................................. 137 Incumbents’ response ................................................................................................. 141 Impact on incumbents’ revenue.................................................................................. 143 Incumbents as allies?.................................................................................................. 148 3 Executive Summary The Federal Communications Commission is in the final stages of deciding if and how to authorize use of the TV broadcast “white space,” which it could make available by early 2009, when broadcasters are scheduled to return their analog channels and switch to all- digital transmission. The so-called “white space” is comprised of channels in the broadcast band that were historically set aside as unused “guard bands.” This was done to avoid interference with stations transmitting on adjacent channels in the same market and broadcasts on the same channel in nearby markets. The Commission’s current proceeding reflects a growing belief that, thanks to modern technology, these channels can be made available for unlicensed use without causing harmful interference to licensed broadcasters. Should the Commission open up the white space for unlicensed