Broadband Review Newsfeed

Open Wireless vs. Licensed Spectrum: Evidence from Market Adoption

ashar — Mon, 04 Feb 2013 15:04:29 -0500

Abstract

The paper reviews evidence from eight wireless markets: mobile broadband; wireless healthcare; smart grid communications; inventory management; access control; mobile payments; fleet management; and secondary markets in spectrum. I find that markets are adopting unlicensed wireless strategies in mission-critical applications, in many cases more so than they are building on licensed strategies. If the 1990s saw what was called "the Negroponte Switch" of video from air to wire, and telephony from wire to air, the present and near future are seeing an even more fundamental switch. Where a decade ago most of our wireless capacity was delivered over exclusive control approaches-both command and control and auctioned exclusivity--complemented by special-purpose shared spectrum use, today we are moving to a wireless infrastructure whose core relies on shared, open wireless approaches, complemented by exclusive control approaches for special, latency-intolerant, high-speed mobile applications. The scope of the latter will contract further if regulation catches up to technological reality, and opens up more bands to open wireless innovation, with greater operational flexibility and an emphasis on interoperability

This final version of the paper uses more updated market data than the 2011 working paper, adds case study analysis of failures or anemic cases of open wireless allocations, the U-PCS, WMTS, ITS, and 3.65GHz bands (suggesting valuable lessons for future design of open wireless allocations), and adds an extensive literature review and rebuttal to some of the major academic critiques of open wireless approaches.

Green = open wireless; Orange = licensed

iPhone	iPad

Smart Grid Communications U.S. Market Shares by Firm

Market share source: Pike Research Smart Grid Deployment Tracker, 1Q12
Technology characterization: Author
* Itron purchased SmartSync in Q12012 and now offers both types; I characterize each here based on
its model as of Q12012.

AMI node shipments, Q1 2012

Source: Pike Research Smart Grid Deployment Tracker, 1Q12

Market share of wireless in healthcare

Source: Kalorama Information
Wireless Technologies in Healthcare, September 2011

Eighty percent of wireless healthcare; seventy percent of smart grid communications; and forty to ninety percent of mobile broadband data to smartphones and tablets use unlicensed strategies. Unlicensed technologies are entirely dominant in inventory management and access control. For mobile payments, current major applications use unlicensed, and early implementations of mobile phone payments suggest there is no particular benefit to licensed strategies in this space. Fleet management is the one area where licensed technologies are predominant. However, UPS, owner of the second largest commercial fleet in the U.S., has implemented its fleet management system purely with unlicensed wireless, suggesting that even here unlicensed may develop attractive alternatives. By contrast to these dynamic markets, secondary markets in licensed spectrum have been anemic.

Policy Implications
The evidence from the most dynamic and critical markets in wireless communications suggests that unlicensed wireless technologies have been underrated in the regulatory calculus. Future spectrum policy debates, in particular those surrounding TV band auctions and reallocation of federal spectrum, should secure an adequate development path for unlicensed technologies, devices, and services at least as much as they emphasize flexibly-licensed exclusive rights.

The most immediate policy implications are:

The economic value of bands dedicated to open wireless capacity is widely understated in present studies; the approach developed and implemented here, of analyzing verticals that use wireless capacity and measuring capacity share suggests that open wireless strategies have a much higher value across diverse applications than has been generally captured by existing studies.
To capture this tremendous economic value, as the FCC implements its incentive auctions authority it should use every flexibility open to it to expand the availability of as many, as contiguous, and as little-burdened as technically feasible bands for open wireless operations. Current plans to use guard bands, microphone bands, and channel 37 are steps in the right direction, but the Commission should generally aim to optimize on three, not two, dimensions, adding the opening of new open wireless allocations to its calculations in how to optimize the TV band auctions.
The NTIA should update its studies of bands available for sharing with civilian use to account specifically for how much, and how soon, could be turned over to open wireless devices, rather than how much, and how soon, can be cleared for exclusive use. Ultimate determinations should be made based on the comparison of the costs and benefits of these competing alternatives for reallocating federal spectrum to sharing with civilian uses.
One of the most promising dramatic increases in wireless capacity in the short term would be to facilitate opening up of every single (or as close to it) WiFi access point to use and sharing by any WiFi enabled device. This will require some work in coordinating standards, sign-on, sharing of the wired capacity, and security, but the near-mobile-nomadic capacity already deployed in the nation's existing wired gateway infrastructure, in homes, small businesses, and almost every other building in America, is a vast untapped reserve of "spectrum" that must be tapped, and can be tapped by coordination, with almost no major technical advances and little by way of new regulation.
Open wireless allocations should generally be designed to be as open and agnostic as feasible among technologies and applications, with minimal rules, minimal special-purpose designation, and a focus on open standards and interoperability. In intelligent transportation systems, for example, we have seen substantially more innovation and activity using the ISM bands than using the special-purpose, Intellegent Transportation Systems band in 5.9GHz. In medicine, WiFi and bluetooth have been more productive than the Wireless Medical Telemetry Service (WMTS) bands, although both are open wireless approaches, and both dominate the licensed cellular M2M approach in healthcare. WMTS has played an important role in remote patient monitoring, but most wireless healthcare applications depend on general purpose bands.
The focus on auctions and the revenue they produce severely distort the political economy of wireless policy. The capacity gains that innovation in WiFi has made over some of these bands has been roughly commensurate with Moore's Law--a doubling of capacity every 18-22 months. Efforts to raise revenue, whether through auction or through short term leasing, that hamper this innovation dynamic are penny wise, pound foolish for a society and economy that increasingly requires wireless capacity for growth and secure, robust communications systems.

Feedback can be sent to Yochai Benkler <yochai_benkler@harvard.edu>

[Book Talk] Susan Crawford on Captive Audience: The Telecom Industry & Monopoly Power in the New Gilded Age

djones — Fri, 14 Dec 2012 11:23:53 -0500

Next Generation Connectivity: Berkman Center releases final broadband study for the FCC

syoung — Wed, 24 Feb 2010 13:30:00 -0500

Radio Berkman 143: Fast, Cheap, and Everywhere

djones — Thu, 18 Feb 2010 12:15:19 -0500

David Weinberger interviews broadband study PI Yochai Benkler for "Broadband Strategy Week"

syoung — Wed, 17 Feb 2010 10:00:00 -0500

Next Generation Connectivity

syoung — Tue, 16 Feb 2010 11:00:00 -0500

The Berkman Center is pleased to announce that its independent review for the FCC, Next Generation Connectivity: A review of broadband Internet transitions and policy from around the world, has been finalized. The Final Report was submitted to the FCC today, February 16. For access to the report and a selection of primary data sets, visit:

http://cyber.law.harvard.edu/pubrelease/broadband

From Principal Investigator Yochai Benkler's Preface to the Final Report:

Our most prominent initial findings, confirmed and extended in this final draft, were that U.S. broadband performance in the past decade has declined relative to other countries and is no better than middling. Our study expanded the well known observation with regard to penetration per 100 inhabitants, and examined and found the same to be true of penetration per household; subscriptions for mobile broadband; availability of nomadic access; as well as advertised speeds and actually measured speeds; and pricing at most tiers of service. Our study further identified the great extent to which open access policies played a role in establishing competitive broadband markets during the first-generation broadband transition in Europe and Japan, and the large degree to which contemporary transpositions of that experience were being integrated into current plans to preserve and assure competitive markets during the next generation transition. [...]
The primary changes between the original draft report and the final are: the inclusion of a new, extensive, formal literature review of the quantitative and qualitative literature on open access, in particular unbundling, and broadband performance and investment; expansion of the price and actual speed measurement benchmarking, as well as a slight refinement of assessing 3G growth; a new, compact review of the critiques of penetration per 100 measurements and responses to them that replaces the original focus on the density critique alone; new extensive case studies of the voluntary models of open access in the Netherlands and Switzerland; and a variety of discrete responses to useful comments we received on specific country studies.

The full Preface, Final Report, and a selection of primary data sets are available at: http://cyber.law.harvard.edu/pubrelease/broadband.

Congratulations and thanks are once again due to the team who undertook this important research, and to everyone who contributed to the report.

Casting a Wider Internet: Yochai Benkler interviewed by the Council on Foreign Relations...

syoung — Sat, 23 Jan 2010 09:00:00 -0500

FCC "Workshop: Review and Discussion of Broadband Deployment Research"

djones — Tue, 19 Jan 2010 09:00:00 -0500

Updating the Berkman Center's broadband study for the FCC

syoung — Mon, 21 Dec 2009 16:00:00 -0500

On October 14, the FCC posted for public comment the Berkman Center’s draft study Next Generation Connectivity: A review of broadband Internet transitions and policy from around the world. Hundreds of pages of comments were submitted to the FCC, and some were very helpful in identifying useful additional analysis. In mid-January, the Berkman Center will submit the final draft of the report to the FCC.

Today we are making available a memorandum that outlines the most important updates we plan to include in the final report:
Memorandum Describing Intended Updates to the Final Report (PDF).
The updates reinforce our draft study’s findings.

Literature review

These updates include, most importantly, a literature review of 57 articles on open access and its effects on penetration and investment. Fifteen of the papers we reviewed analyze the effects of unbundling on penetration. Of these fifteen papers, six papers find positive effects of unbundling on penetration; three find negative effects; and six have indeterminate findings (they find either no effect or both positive and negative effects). Twenty-three of the papers related to unbundling and investment. Of these twenty-three, two show positive effects of unbundling on investment by incumbents or entrants; one shows positive and negative effects; two report no findings; one reports negative findings. The remaining seventeen papers on investment are either conceptual or modeling exercises, rather than empirical studies, or have serious methodological flaws; the papers we categorize in this group are divided equally, eight and eight, between finding negative and positive effects on investment, and one that reviews the literature to 2006 and concludes: “Almost ten years have passed since the Telecommunications Act transformed telecommunications regulation in the United States and economists still do not have a thorough understanding (theoretically or empirically) of how local loop unbundling affects investment” (see update memo (PDF), page 5). The remaining nineteen of the 57 papers we reviewed were qualitative.

We note that twenty of the thirty-eight quantitative or theoretical papers we reviewed are self-published. At least sixteen of the thirty-eight are directly sponsored by a corporate sponsor with direct interest in the outcomes of the research. The papers on the effects of open access on investment exhibit this characteristic at a particularly high rate. Thirteen of twenty-three are sponsored by a party with direct commercial interest in the outcome. While these papers obviously need to be read on their merits, the sensitivity of econometrics to the model selected and the technique, coupled with their opacity to policy makers, counsel particular caution.

Of the nineteen qualitative papers or book chapters we reviewed, none were self-published, and three had industry sponsorship. Of these nineteen papers, ten identified open access policies as having positive effects on broadband deployment and prices. Two papers (both industry sponsored) identified negative or no effects where positive effects would be anticipated. One found both negative and positive findings. Six found no effect, or focused on the political economy rather than on the outcomes.

Given this state of the literature, the present unstated consensus in US telecommunications policy circles that open access is a theory in disrepute is without foundation in evidence. Quite the contrary, open access should be a continued subject of study, experimentation, and observation as one among the many tools in the toolbox of telecommunications policy.

Additional data analysis

We also briefly outline in the update memo results of additional data analysis we performed on both speed and price. The new research confirms our initial findings that US prices are low for the slowest speeds, at 768kbps, but rise relative to other countries so that by the time we reach contemporary speeds of 1.5Mbps or 2Mbps, they are higher, and for the highest speeds US prices are very high by global standards. We also added Akamai data to our original speed analysis that used Speedtest.net data and found that, even though Akamai tested in the network, rather than at the edges, using a different technique, both approaches gave highly correlated findings, and both place the US in 11th place in the OECD in terms of actual speeds measured.

The combined effect of our literature review and new data analysis is that our original conclusions are substantially strengthened.

Reviewing comments on the Berkman Center's broadband study for the FCC

syoung — Tue, 17 Nov 2009 15:30:00 -0500

Last night the period for commenting on the Berkman Center’s broadband study for the FCC came to a close. We would like to thank those who took the time to provide substantive feedback and also to respond briefly to reports that incumbent broadband providers were negative in their assessments of our work.

We came out with a draft report that provided a comprehensive and multidimensional study of how relatively advanced economies are doing on broadband, and what sort of prices and quality -- in particular as measured in speed -- consumers in these different countries are seeing. The results we found for the US were less than inspiring. This by itself was likely to elicit disagreement. Looking at current planning documents in other countries, we also found that a broad consensus has emerged that open access policies played a constructive role in their own broadband development. We then did an extensive study, looking country by country and firm by firm, to try to see what the basis of this belief is. We showed that when you looked at who the market players were, and how and when they entered and created more competitive markets, these other countries had a real basis on which to rely when they thought that open access played a role in their broadband development and that they need to adapt it to the next generation transition. Neither set of findings is congenial to the major incumbent broadband providers.

Looking at the comments, most of which accumulated yesterday, it seems as though our report created a mini stimulus act for telecommunications lawyers and consultants. Hundreds of pages of comments were filed. Obviously, it will take time to read through them all and respond to them appropriately and carefully as we finalize our study. On first read, they range in style and quality from comments that will advance the debate -- professional, detailed comments on the interpretation of the histories of broadband regulation and deployment in various of the countries, the advantages and limitations of different international benchmarking techniques, or econometrics techniques -- all the way to the usual ad hominem, "discredit the witness" type that, it seems, you must come to expect when you agree to contribute your time and effort to matters of public concern. Comments that try to muddy the water are regrettable but apparently a fact of Washington politics. We look forward to working through the serious comments, which will take time to do thoughtfully, and to continue the process of taking a good long look at the experience of the past decade, which is appropriate when the FCC is developing a national broadband plan.