Fierce Broadband Wireless reported this week about above titled spectrum study by Richard Thanki, formerly a senior associate with UK regulator Ofcom and now a PhD candidate with the University of Southampton, that was financed by Microsoft. FBW wrote

Thanki compares a license-based access regime, in which a user will need to obtain a license through a regulatory award or market-based negotiation, to a rule-based access regime, "in which the satisfaction of certain conditions, such as limited transmit power levels, checking with an online database and/or payment of an access fee permits spectrum access."

Thanki does an interesting comparison of licensed and unlicensed systems that you rarely hear int he DC policy community:

The successes of the narrow licence-exempt bands demonstrate the power of rules- based access to spectrum. In twenty years of operation licence-exempt technologies now account for:

• The majority of innovation in wireless communications – licence-exempt connectivity is near ubiquitous in smartphones, tablets and PCs and is rapidly growing in a vast range of consumer and industrial goods. The licence-exempt bands are also home to a diverse range of open standards which act as a platform for further innovation.
• The majority of wireless devices – in 2013 fewer than 2.5 billion devices will be sold that incorporate licensed connectivity and nearly all of these will also feature complementary licence-exempt technologies. However, at least 2.5 billion devices will be sold that use licence-exempt communication technologies exclusively. This disparity is set to increase.
• The majority of Internet data traffic delivered to consumers – Wi-Fi carries 69% of the total traffic generated by smartphones and tablets and 57% of total traffic generated by PCs and laptops. Overall the volume of Internet data traffic delivered by licence-exempt Wi-Fi exceeds that of cabled connections and licensed mobile networks combined.

Thanki includes the following interesting table on unlicensed innovation vs. cellular innovation:



As a pioneer in creating today’s unlicensed spectrum environment, your blogger was certainly gratified by the closing words of the Thanki paper:

The relatively small ranges of frequencies opened up for non-discriminatory access have quickly become home to the majority of wireless innovation, the majority of wireless devices and the majority of wireless data traffic. This has surprised many in the spectrum management community who expected tradable exclusive licences to be the focus of investment, competition and innovation…

Granting exclusive-usage rights – over frequencies or frequencies at particular times or in particular places – is likely to hinder efficient usage and innovation. Instead, rule-based access has generated a virtuous cycle in which rapidly increasing usage enables and is enabled by advances in technology that allow ever more interleaved, interference-resistant communication. This is creating an unprecedented boom in wireless innovation as innovators are voting with their feet and adopting the licence- exempt bands which offer a multiplicity of low-cost, reliable and globally harmonised standards. Instead of pushing against this trend with schemes such as LSA, whose justification lies in economic theory rather than achievements in practice, better regulation would focus on expanding rules-based access, whose current achievements are only an inkling of its future potential, to further and more varied bands of spectrum.

But life is not really this simple and BOTH licensed and unlicensed approaches have complementary benefits. Unfortunately the cellular community’s love/have relationship with unlicensed tends to obscure the issue. Also the unlicensed community also sometimes overreacts, perhaps in response to the cellular community’s hype, with statements seeing unlicensed as a panacea.

The possible sale of Vodaphone’s share of VZW implies that VZW has a net worth in the order of $200B. This value does not just come from “monopoly rents”, rather VZW and other carriers have make significant investment in infrastructure. Cellular service may be ubiquitous in urban areas and on most major highways, but rural area cellular coverage still has limitations and always will in a privately operated system without universal service-like subsidies for areas where coverage makes little economic sense. (By contrast, Japan uses revenues derived from a $5/year spectrum use fee on all cell phones and all other transmitters to subsidize wireless infrastructure that is noneconomic. Such a policy in the US would be controversial and is not advocated here.)

This nationwide buildout of infrastructure would have been unlikely in a pure unlicensed spectrum model. However, despite the denials by the cellular industry today’s ubiquitous broadband would have been impossible without the licensed/unlicensed synergy that the cellular industry denies or minimizes as they constantly “diss” unlicensed.

Perhaps what we really need today is consensus building between the cellular community and the unlicensed community to get a better mutual understanding of each other’s roles and the mutually beneficial synergy between the two communities.

Tags: Unlicensed policy