Dead Air

Cell phones and the wireless industries of the future are snarled by
a critical shortage of airwaves–the result of decades of wrongheaded,
archaic regulations. A new band of wireless warriors is fighting to free the skies.

Cell phones and the wireless industries of the future are snarled by
a critical shortage of airwaves–the result of decades of wrongheaded,
archaic regulations. A new band of wireless warriors is fighting to free the skies.

Vanu Bose gazes at blue skies over Boston and dreams of filling them with a fantastic array of wireless services. He is building new radio receivers not out of wires but in software–smart communicators that can be programmed to transmit any sort of signal. Bose’s gear could spot empty airwaves and use them to send crystal-clear cell calls or blast data to a laptop across town.

The technology to do all of this exists, as does the airspace–most of the aerial spectrum over Boston is essentially devoid of any signals. The one thing Vanu Bose lacks is the right to use the empty air. Over the past century the federal government has carved up the airwaves and given them away to private and special interests ranging from television broadcasters and power utilities to universities and the Catholic Church. The result is that one of America’s most valuable natural resources sits paralyzed, consigned to uses that time and technology have long since passed by. Old technologies are swamped with excess airwaves they don’t use; newer technologies gasp for airwaves they desperately need; and promising industries of the future are asphyxiated.

It is the bitter irony of America’s skies: Open airwaves are everywhere, yet the people desperate to use them cannot.

Television broadcasters have controlled a huge swath of the airwaves (15% of the “prime” radio spectrum) for more than 40 years, yet today that big slice serves only 11 million U.S. homes; cable and satellite serve the other 88% and don’t use any prime spectrum to do it. Cellular carriers are assigned only half as much prime space but must serve 137 million customers. So while the vast majority of TV airwaves goes unused, rampant cellular crowding causes blocked, dropped and tinny-sounding calls. A huge band of spectrum doled out in the 1960s sits almost entirely idle, used on occasion to distribute videos to schools and similar fare–yet is twice as wide as the slice of airwaves shared by 20 million users of Wi-Fi, the hottest new wireless industry. Other airwaves serve such arcane uses as the tracking of caribou, flying toy airplanes and accommodating radio emissions from doughnut fryers. For newcomers like Bose, there is nothing.

“There’s no incentive to build new, flexible equipment because there is no flexibility in the rules,” says Bose, founder of upstart Vanu Inc. “It’s an egregious waste.” Kevin Negus, a member of the Tri-County Telephone cooperative in Basin, Wyo., who wants to use new “cognitive radios” to shoot fast Internet access to his neighbors’ ranches, adds: “The spectrum is completely, overwhelmingly, unbelievably underutilized. Yet it is illegal for us to do the logical thing.”

Such frustration has reached a boiling point in high tech, as today’s unprecedented pace of wireless breakthroughs–if combined with access to abundant, affordable spectrum–may offer the best hope for reviving a devastated business. The promise of freer skies is tantalizing. Intel just discovered how to build entire radios in silicon chips and vows to send wireless communications costs plummeting at the same rate as the price of computing power. Other wireless technologies with names like “cognitive radio,” “ultrawideband,” “software-defined radio” and “mesh networks” show equally stunning potential.

“Wireless technologies only work if they have spectrum to run on, but most of the spectrum is empty most of the time. It’s absurd,” says Dennis Roberson, Motorola’s chief technology officer. Intel’s top technology officer, Patrick Gelsinger, figures well over 90% of the airwaves go unused at any time. “If any other natural resource was this underutilized, it would be considered a national travesty,” he says.

America’s paralysis of the airwaves may, at long last, be cured. A new breed of wireless warriors, backed by powerful allies in Silicon Valley and in the Bush Administration, leads the fight. Many techies want to let the free market–not federal bureaucrats–decide how to use the spectrum. Another group crusades to create more of a public highway model, opening huge swaths of “unlicensed” airwaves to any and all users. This pincer movement may finally pry spectrum away from the powerful incumbents that grabbed it, free of charge, decades ago.

“It seems to me universally obvious that this current model will crumble,” says FCC Chairman Michael Powell. “Market forces must replace a laborious process of government command and control.” At his behest, an advisory panel is about to issue a policy paper recommending an overhaul of the entire antiquated system of regulating the airwaves.

Yet all this incipient innovation may get snuffed out by a government that prefers to use the spectrum’s artificial scarcity to sell slivers of air at mind-boggling prices. In recent years companies–mostly cell phone carriers–have bid over $30 billion for access to a mere 5% of the prime spectrum. It is a policy suitable to OPEC: Restrict output and try to run up the price.

Radio spectrum may be the most valuable natural resource of the information age, carrying every form of wireless communication, from FM radio to television to cell phone calls to Wi-Fi to military radar. The prime portion consists of the frequencies running from 30 to 3,000 megahertz, prized for their ability to penetrate buildings (which is why radios and cell phones work indoors) and transmit over long distances at low power (which lets batteries run longer and limits potentially harmful radiation). The “hertz” in question is a measure of how many times per second a wave oscillates. It describes not only where to tune a receiver to capture the wave but how much information-carrying capacity the wave has.

FM radio runs from 88 megahertz to 108 megahertz (the endpoints on your FM dial), so it takes up 20 megahertz of bandwidth, or 0.6% of the prime spectrum. Since radio waves die out as they travel farther, the same slice of spectrum can be reused in different locations–an FM radio station at 91.1 megahertz in San Diego doesn’t interfere with the one at 91.1 in San Francisco. Cellular providers expand their capacity by shrinking the cells and using the same frequency simultaneously in different parts of town. The artificial spectrum shortage is a main reason 131,000 cell sites now litter the country.

Guglielmo Marconi first used the spectrum to send a radio signal across the Atlantic 101 years ago. It astounded the world and in the century that followed advances in wireless communications consistently surprised planners who thought they understood the best uses for the airwaves and their limits.

The government first got involved in regulating the airwaves in 1912 after the sinking of the Titanic raised fears that congested airwaves couldn’t carry vital information in a time of crisis. Congress responded with the Radio Act of 1912, requiring all broadcasters to register with the government. Thus began an era in which the airwaves were seen as a scarce natural resource too important to be entrusted to the free market. Instead, federal bureaucrats would decide the best uses and hand out free licenses to worthy applicants.

Chopping up and assigning the airwaves began in earnest in 1927, when broadcasters successfully pushed for the creation of the Federal Radio Commission, which seven years later became the FCC. The subsequent giveaway amounted to the biggest handout of public assets since the land grants to the railroads. The railroads at least got freely transferrable land, so that over time there was nothing to inhibit the use of the land for its most profitable purpose. Radio spectrum, in contrast, is frozen in anachronistic uses. “What other system allocated scarce resources this way? The Soviet Union,” says Gerald Faulhaber, who was the FCC’s chief economist at the end of the Clinton Administration.

Almost immediately after Congress began to license the airwaves, broadcasting interests began gaming the system to block competition. In the 1920s, as the popularity of AM radio exploded, incumbents began worrying that the government might expand the band beyond its initial 1.07-megahertz width. More spectrum would yield more stations and choices for consumers–but also produce more competition. So the band was frozen. Incumbents have repeatedly used the FCC to delay or block new technologies, admits Powell. “Let me tell you something everyone already knows: Companies don’t like competition,” he says.

Cities began grabbing free spectrum in the late 1920s, prompted by the Detroit police department’s pioneering use of radios to help tail bootleggers in 1928. Today local governments use 72 megahertz of prime spectrum for police and fire dispatching and other uses, but they use it extremely poorly. Their analog radios are so archaic they typically swallow at least 10 times more spectrum per call than a modern cell phone does. The public networks are so inefficient that 80% of local governments turn to the crowded private airwaves for backup.

Built to be more reliable, public networks often are just the opposite. After the World Trade Center terror attack–when the New York Fire Department’s ancient network failed, contributing to the deaths of dozens of firefighters–the Bush Administration pushed for $240 million to give public safety workers priority access to cell networks. A better fix would be to change federal laws barring municipalities from selling their unused (and underused) spectrum to more efficient operators, says Martin Cave, a British economist who has studied the problem. “Both sides could benefit tremendously,” he says.

In 1945 the FCC accelerated the spectrum giveaway. It licensed the VHF television channels, numbering them 2 to 13, with each channel getting 6 megahertz of prime spectrum. In 1952, as broadcasters flourished, the FCC created the UHF spectrum, which now spans 330 megahertz on channels 14 through 69. What looked sensible then turned out to be terribly wrong later. Cable TV took off in the 1970s and today serves 70% of U.S. homes. In the 1990s satellite hit the scene and now serves 18% of homes.

Thus has broadcast TV become a through-the-looking-glass world where local stations beam their programming to cable and satellite systems directly; their over-the-air signals, used by only 11% of homes, have been reduced to a regulatory ritual. That is because TV stations persuaded Congress to pass “must-carry” laws in 1992 that force cable systems to carry every local VHF and UHF station that beams a signal into the air. (DirecTV and other satellite services must abide by similar fiats.) Ostensibly these rules were designed to protect local programming, but in practice they clutter the airwaves with unwatched signals. Pax TV, the nation’s largest broadcast group with 65 UHF stations across the nation, airs infomercials for salad shooters and other gadgets for much of the day. In the evening it runs low-budget fare such as Supermarket Sweep and Miracle Pets. And by law cable systems must retransmit all of it.

The cockeyed federal laws have sparked an increase in the number of over-the-air TV stations filling the prime spectrum. In the past decade, as the number of antenna-only households fell from 33 million to 11 million, the number of UHF stations filling the sky with signals rose from 581 to 752. Congress and the FCC, far from being chastened by this sorry record, now are compounding the problem by handing broadcasters a whole new chunk of free spectrum for digital television.

Thomas Hazlett, a former FCC chief economist now with the Manhattan Institute, argues an easy solution would be to declare the obvious: that broadcast is dying, and the entire UHF portion should be put out of its misery. “After all, this is a product that 88% of the population pays money to avoid,” he says.

No way, says Lowell (Bud) Paxson of Pax TV, the self-styled leader of the broadcasters. In his view, the airwaves his 65 stations use belong to him. He compares himself to “one of the Beverly Hillbillies,” who found oil under his land and therefore deserves to become rich. “The free enterprise system is about people working hard and making money, or getting lucky and making money,” he says.

Congress in 1997 passed a plan to clear channels 52 to 69 (leaving broadcasters with 77% of their total spectrum) for new technologies.* But the muddled scheme lacked a meaningful deadline by which broadcasters must vacate the air. Paxson freely admits other people would put the spectrum to much more valuable use, and with his fellow broadcasters he has formed a “spectrum clearing alliance” to negotiate a turnover to new users. They insist on just one condition: They want to sell the spectrum at market prices and pocket the profit.

It would be all profit. Like almost all current spectrum users, Paxson never paid the government a dime for his licenses. Broadcast TV licenses expire after seven years and specifically state that they are not titles of ownership. But Paxson views such details as irrelevant, arguing that spectrum licensees have long had an “expectation of renewal.” Essentially, he wants to hold the air for ransom. “I’d love to see an act of Congress saying they were denying license renewal,” he says. “It would be in the courts for seven years.”

Other lucky licensees already turn their rights into ready cash. In the 1960s the FCC granted colleges, universities and nonprofit high schools the right to send out educational television programs on a 186-megahertz chunk of spectrum. Decades later some of them lease out airspace to carriers such as Sprint and WorldCom. The college lobbying group argues that renting out airwaves at a profit serves an important public function: “It creates valuable revenue for these schools, freeing up tax dollars for other purposes.” Unanswered: Why a public subsidy–even a worthwhile one–should be delivered by squatter’s rights.

The single biggest holder of prime spectrum is the U.S. military. The armed forces control roughly 500 megahertz for radar, battlefield radios, smart bombs and countless other uses. The military has exclusive access to much of its spectrum, so that slices used over Nellis Air Force Base in Nevada or Pearl Harbor in Hawaii are left empty in every city from Cody, Wyo. to Boston–even though the military doesn’t make use of them. Assistant Secretary of Defense John Stenbit says civilian access would interfere with important training exercises.

But FCC Chairman Powell counters that, while such concerns are at times legitimate, “often it is a huge red herring that really masks the objection to the basic principle that anybody would have to share ‘my stuff.’ It’s important to remember it’s the public’s stuff.” He adds: “We have had a major ideological struggle this year with very different constituencies, the Department of Defense and others.”

The military’s stance strikes many radio engineers as silly. While the FCC can stop Americans from transmitting on certain frequencies at home, it can’t control what happens overseas, where wars tend to be fought. The spectrum most of the world will use for next-generation cell phones, for instance, is spectrum the military insists on keeping to itself in the U.S.

“If a military radar stops working when someone turns on their wireless local area network, what happens in a war?” says Kevin Kahn, a senior Intel executive. “You can’t run out onto the battlefield and ask the enemy to turn their network off.” He also points out that the military is unmatched in its ability to deal with intentional radio interference, let alone consumer gadgets.

While this decades-old mess finally may hit a breaking point, a solution has been around since 1959. Economist Ronald Coase, who would go on to win the Nobel Prize, studied the matter and proposed a simple idea to Congress: Let free markets, not bureaucratic dictates, govern spectrum. Treat spectrum licenses like patents or other intangible private property, he argued, and markets can take care of the rest. “Is this all a big joke?” FCC Commissioner Philip Cross famously asked Coase at one hearing back then.

Coase’s heresy is now economic orthodoxy: He won the 1991 Nobel Prize in economics largely for his idea that well-defined property rights will lead to an efficient allocation of any resource, including spectrum, so long as the cost of negotiating deals is reasonable. Last year a group of 37 economists, including six former FCCchief economists and Coase himself, urged the commission to remove sclerotic regulations and create spectrum markets. They decried a torpid system ruled by licensees and pliant regulators: “Unnecessary restrictions prevent beneficial uses of spectrum. Over time these regulatory rigidities can discourage innovation altogether.”

The military and other government entities that control spectrum today could participate in the market for spectrum along with private companies, says economist Martin Cave, who headed a study on spectrum reform for the British government. The U.K. has experimented with a system that charges agencies a price for the spectrum they use and increases their funding to offset the new cost. “Then if you can economize on spectrum, you can keep the difference,” Cave says. Says David Wye, chief of spectrum policy at AT&T Wireless: “[Cities] have to buy police cars. They have to buy fire trucks. They have to buy the gas that powers those vehicles. Why don’t they have to buy the fuel that powers the radios?”

The early 1990s saw the first glimmering of a market in spectrum as Congress auctioned off licenses for just over 100 megahertz to the cell phone industry. In many ways the auctions were a huge success. The slivers of prime bandwidth that were sold off are used hyperefficiently. But the auctions also saddled companies with huge debts and addicted Congress to milking its newfound “free” source of spending money.

Bidders contributed to the problem; fights over the specks of spectrum led to a speculative frenzy. In 1999 blocks of spectrum 10 megahertz wide–or 0.3% of the total prime spectrum–that had originally been sold to newcomer NextWave were reauctioned by the FCC for $17 billion after the company foundered. (It had filed for bankruptcy protection, and the company successfully sued the FCC to block the resale; this prime slice of spectrum sits entirely fallow as a result.)

The cell industry has since sobered up, but the artificial shortage persists. Prices pose an insurmountable barrier to wireless crusaders like Kevin Negus and the Tri-County Telephone cooperative. Their budget for superfast wireless Internet access service could never accommodate a multimillion-dollar FCC license. “It’s terribly inefficient and grossly unfair to rural America,” Negus laments.

One way to free up more spectrum is to dispense with the notion that licenses must grant exclusive rights at every minute of the day. Piggybacking on someone else’s spectrum when it is idle for a minute or an hour could vastly increase the supply of airwaves and send prices plummeting. Vanu Bose, the software radio pioneer, envisions a time when devices sense congestion and bid for the right to use other airwaves from minute to minute. The FCC spectrum policy task force is pushing a similar vision in which airwaves now left idle much of the day may be traded to other users. It also wants to allow smart radios to use bits of spectrum in ways that won’t cause traffic jams.

While privatization picks up momentum, another wing of the reform movement wants to take unused spectrum and throw it open to public use. They point to Wi-Fi as evidence of what happens when the exorbitant price of air and incessant regulatory delays are removed. Wi-Fi can blast an astounding 11 megabits a second, ten times as fast as a cable modem, for a range of 300 feet–a limit imposed by the FCC, not by the technology itself. Business and consumers will install 7 million Wi-Fi “access points” this year. Microsoft runs 3,400 Wi-Fi stations worldwide, linking more than 20,000 of its workers to the network. FedEx uses Wi-Fi it to track packages. Many colleges, including Dartmouth, Carnegie Mellon and the University of Minnesota blanket their campuses with Wi-Fi.

But Wi-Fi must share its sliver of spectrum with everything from microwave ovens to baby monitors to cordless phones, and as more users pile in to share this public space, “it will stomp all over your network,” says Pierre DeVries, a product development director at Microsoft. Economists call this the “tragedy of the commons.” David Reed, formerly the top technologist at Lotus Development, and other scientists argue that new technology will overcome overcrowding. Others vehemently disagree. But almost everyone–from Silicon Valley to the FCC to spectrum economists–agrees that the current system is a disastrous waste. Everyone, that is, except the lucky souls that Congress long ago endowed with free spectrum.

And that’s what make the spectrum rebels’ blood boil. “You get all this fuss and noise about there not being enough spectrum,” says Chris Gilbert, chief executive of a Silicon Valley startup called IPWireless. “That’s rubbish. It’s just in the wrong hands.”


New wireless technologies have great potential-and a bleak future-unless Washington frees up underused airwaves.

Today’s wireless devices jam up when they come across other signals. Cognitive radios can sense interference and jump to an empty frequency.

SOFTWARE-DEFINED RADIO.

Most radios can receive and transmit one type of signal at one range of frequency. New gadgets can build basic functions out of software-a cell phone could regear to tap an incompatible network, and then turn itself into a garage-door opener or TV remote.

ULTRAWIDEBAND.

By transmitting very low power radio signals across a huge range of frequencies, new gear can do an array of cool tricks, such as peering through solid objects (without the X ray’s radiation issues). Earlier this year the FCC passed new rules allowing limited use of ultrawideband devices.

MESH NETWORKS.

This approach relies on cognitive radios to intelligently adapt networks, depending on how many people are onboard. As more users join in one area, their gear would cooperatively pass along signals to cut congestion.

RADIO-ON-A-CHIP

Intel just unveiled the ability to make full radios-from antennas to amplifiers-out of the same silicon wafers used for microchips. Intel hopes to have a radio in every chip it makes in five years.

Author: Scott Woolley

News Service: Forbes.com

URL: http://www.forbes.com/technology/forbes/2002/1125/138.html?partner=newscom