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Playing by the Rules: The Success of Unlicensed Spectrum

Richard Thanki
3/7/2014
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For over a century, wireless services using licensed spectrum have profoundly shaped our lives. It’s difficult to imagine a world without the influence of radio, television, satellite links, and mobile telephony.

However, during the last 15 years, communication using the unlicensed bands of spectrum has witnessed an explosion in usage and utility that rivals, and in many ways eclipses, the licensed experience.

  • Unlicensed spectrum has allowed unprecedented innovation in wireless applications and technology. Multiple standards, such as WiFi, Bluetooth, and ZigBee, have enabled a dizzying array of connected devices. In addition many of the most pivotal recent innovations in wireless technology, from multiple antenna techniques to advanced modulation, first found widespread deployment with unlicensed technologies.
  • Unlicensed networks carry most of the world’s Internet traffic. WiFi networks carry more Internet traffic from end-user devices, including PCs, tablets, and smartphones, than Ethernet cables and mobile networks combined. Even in the case of smartphones, more Internet data traffic is carried on WiFi than on 3G and 4G networks.
  • The majority of wireless devices shipped use unlicensed bands to communicate. More devices are shipped each year that use unlicensed technologies such as WiFi and Bluetooth than those that use the licensed bands.
  • The Internet of Things will consist almost exclusively of unlicensed wireless devices. By 2020, around 100 billion devices will be connected, with more than 95 percent using unlicensed technologies to communicate. The idea of SIM cards for every device is simply not coming to pass.

This flowering of innovation and industry has also generated immense economic value. Multiple economic studies have demonstrated the substantial economic value generated by unlicensed wireless technology. A recent analysis by Raul Katz, Adjunct Senior Research Scholar at the Columbia Institute for Tele-Information, suggests that in the US alone the value from unlicensed spectrum is $140 billion per annum . As wireless connectivity further permeates every aspect of everyday life, commerce, and industry these benefits will grow commensurately.

Perhaps the key to its success is that potential participants in the unlicensed spectrum bands simply have to follow a set of rules with no need to either obtain permission from a spectrum "owner" or acquire such a title themselves. These two approaches, access by rules and access by title, are used by societies to manage access to a number of limited-capacity resources.

For example, we use rule-based access to enable access to our road networks and justice systems and title-based access to manage access to most land. Professor Brett Frischmann, affiliate scholar at the Center for Internet and Society at Stanford Law School, provides a succinct explanation of why rule-based systems (those following a "commons management principle") can generate greater benefits in some instances than title-based access:

    The general value of commons as a resource management principle is that it maintains openness, does not discriminate among users or uses of the resource, and eliminates the need to obtain approval or a license to use the resource. As a general matter, managing infrastructure resources in an openly accessible manner eliminates the need to rely on either market actors or the government to “pick winners” downstream. In theory, at least, this facilitates innovation in the creation of and experimentation with new uses. More generally, it facilitates the generation of positive externalities through the downstream production of public goods and non-market goods that might be stifled under a regime where access is allocated on the basis of individuals’ willingness to pay.

The unlicensed bands display these characteristics in spades. Freedom to access the spectrum has prompted the creation of a range of standards that act like public goods: empowering any manufacturer -- from the very smallest to the very largest -- to create compatible devices that can be sold directly to a global market of end-users.

The pace of change in unlicensed spectrum isn’t slowing down. In coming years we will see new bands of unlicensed spectrum coming into widespread use, opening further avenues for innovation and industry.

— Richard Thanki is a former Ofcom economist and a current PhD candidate at the University of Southampton.

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AJ Allred
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AJ Allred,
User Rank: Light Beer
3/16/2014 | 3:18:29 AM
Re: Thanki's "Playing by the Rules"
Ironically, communist and primitive systems can sometimes get things done more efficiently than our 'democratic' dual-squeeze of land title and permit hurdles.

No wonder China and Africa are advancing with relative speed in wireless - - they don't have to step over so many zoning people who are protecting the "view scape".

As a former planner myself, I can attest that planning uses tools of the past to prevent the present from ever reaching the future.

If we want our phones to work, then we should stop hating the cell tower.
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
3/10/2014 | 9:19:09 PM
Re: Thanki's "Playing by the Rules"
Here's something I learned recently: Today's system of licensing developed during a humanitarian crisis. Legislators were reacting to the perception that unlicensed amateurs were swamping the signals from the US Navy and other authorized providers who were attempting to send assistance to the victims of that disaster.

The disaster was the sinking of the Titanic. Yes, the current regime is THAT OLD.

And even then the licensing system was unnecessary. The problem wasn't unlicensed amateurs -- the problem with the Titanic was that the ship radio operator was a fool.
Richard Thanki
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Richard Thanki,
User Rank: Light Beer
3/10/2014 | 8:02:25 AM
Re: Thanki's "Playing by the Rules"
It's interesting that in land, as in many other resources/infrastructures rule-based operation (zoning laws) co-exists with a system of titles and licences (land ownership)!
Richard Thanki
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Richard Thanki,
User Rank: Light Beer
3/10/2014 | 7:59:04 AM
Re: Thanki's "Playing by the Rules"
Licensing will be necessary for the foreseeable future, especially for services where the costs of infrastructure deployment are relatively very high and link budgets need certainty. Certainly the case for mobile and satellite.

 

However, for the vast majority of new connectivity applications the market will choose unlicensed technologies - the performance to cost/hassle ratio is too high to ignore. Even mobile operators are likely to plump for unlicensed for small cell backhaul.

 

This situation will become even more pronounced as increasingly sophisticated radios, antennas and processing are able to eke ever more performance out of unlicensed bands.
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
3/7/2014 | 5:30:01 PM
Re: Thanki's "Playing by the Rules"
Is there a case to be made against unlicensed spectrum? Is there a case to be made for the continuation of licensing spectrum, given technology advances that make that framework unnecessary.
AJ Allred
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AJ Allred,
User Rank: Light Beer
3/7/2014 | 1:22:52 PM
Thanki's "Playing by the Rules"
Richard Thanki's piece "Playing By the Rules" is good stuff.  In the USA, wireless carriers have to clear hurdles in both the "rules" and "title" realms:  zoning permit constraints can be major hurdles by themselves (rules realm), and may encourge excessive land purchase or leasing revenue expectations by constraining market options (title realm).

Consumers might do themselves a favor by pushing their municipalities to ease-up a bit on zoning constraints that are often out-of-date and/or based too much on fuzzy aesthetics.  Licensed spectrum ought not to a too-easy target for out-of-touch land planners. 

 
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