Spectrum Policy Battle: Licensed vs Unlicensed

An interesting analysis by Dave Wright about the data tsunami hitting China Mobile:

After my 4th cup of coffee for the day, it finally dawned on me that I could calculate the 2nd half numbers for the last few years as a derivative from the interim reports. That provides a bit more granularity in terms of how cellular (mobile) and Wi-Fi (WLAN) traffic has been trending over the last two and a half years. Below are 2 charts that tell an interesting story.

It appears that Wi-Fi will bear the load of data traffic moving forward. Not really a big surprise.

But it does underscore the need for thoughtful spectrum policy moving forward. Two recent papers on spectrum allocation policy highlight the need to re-evaluate the current U.S. approach to spectrum allocation between licensed and unlicensed frequencies:

First, by Yochai Benklar:

[…] we may need to reverse our orientation from one that assumes that licensed and auctioned spectrum is the core, and open wireless a peripheral complement, to one that sees open strategies as the core, with important residual roles for licensed services.

Auctions designed purely to maximize revenue operate as a tax on American consumers who subsidize carriers' deployment of mobile broadband

Dave Wright also provides a good analysis of the Benklar paper here.

Second, by Richard Thanki:

innovation has been at least, if not more, marked in applications that, while aiming at mass consumer markets, were nevertheless able to use the freedom of unlicensed spectrum to develop, test and refine uses that have enriched the communications experience of individuals and the commercial performance of businesses.

Our contention is that regulators and legislators have the option now to reinforce the level of innovation and advancement in communications by recognising and supporting the use of unlicensed applications in areas of spectrum that are being liberated by technological advance [...]

First, the economic analysis needs to establish the potential benefit that can stand alongside the benefits that could accrue from a more conventional licensing approach. Second, regulators and governments need to be convinced of the power of these arguments, such that refraining from licensing becomes an important tool in the maximisation of value in spectrum rather than an approach for spectrum for which no other use can be found. Third, international cooperation will be needed if we are to secure the highest value from this approach.

So, is the trade-off between short-term auction revenues of licensed spectrum to the highest bidder versus long-term economic growth through innovation in multiple industries that is enabled by the use of open unlicensed spectrum? It appears so.

What's better for our economy, a one-time revenue of ~$19 billion from spectrum auctions, or multiples higher in economic value created through unlicensed spectrum? Estimates range from $16 - $37 billion per year, and that's only including Wi-Fi in homes, Wi-Fi in hospitals and RFID.

Unfortunately, it appears that GOP members of Congress are unwilling to acknowledge the longer term benefit of unlicensed spectrum and simply want an immediate payday from licensed auctions.