Unlicensed Under Assault, or When Staff Attack!

This latest Notice of Proposed Rulemaking shows how far in the wrong direction the FCC has come on spectrum issues. Funny thing is, I don’t think FCC Chair Kevin Martin hates unlicensed or is in the pocket of the licensees. I think this is an example of WHEN STAFF ATTACK!!! (specifically the wireless bureau staff).

A year ago, the FCC was trying to figure out how to expand unlicensed spectrum use by sharing underutelized licensed bands. They opened the 3650-3700 MHz bands and started looking at sharing the broadcast band white spaces.

A year later, broadcast bands is stalled at the FCC (although it may get pushed on the Hill) and the 3650 Band is backup for grabs. At the same time, the FCC is considering numerous hand outs for licensees as part of the DTV transition, such as the one that raised my ire on expanding the reach of dtv licensees.

Now this notice of proposed rulemaking (NPRM), which asks the pressing question “How can we make life better for licensees in the 900 MHz band at the expense of the unlicensed users in the band?” For those not familiar with why the 900 MHz band is important, it is the only band with the “good” penetration characteristics that are in the bands from between 500 MHz and 1000 MHz (one gigahertz). To use a bad analogy, if spectrum were party food, the 900 MHz band for unlicensed is the little bit of ice cream we get as opposed to the modest supply of chips and salsa (2.4 GHz band) and the huge mound of rice cakes (5.3 and 5.8 GHz). [Note to self, do not write during lunch.]

Since 1989, the FCC has allowed unlicensed use in portions of the band. There are also federal users, industrial, scientific, and medical equipment (ISM) and amature radio folks (it’s a very useful band, so it is very crowded). In 1995, on top of all this, the Commission authorized something called the “Location Monitoring Service” (LMS) and Multilateral Location Monitoring Service (M-LMS). They auctioned off a bunch of these licenses in 1999, subject to all the limitations of existing users and with protections for the unlicensed users (which, even in 1995, was a reasonably big consumer device industry).

Since 1999, the LMS licensees have been having trouble making their money back on the auction. Unlike others who went bust when the internet bubble burst, the licensees can go whine to the FCC for some federal welfare in the form of free spectrum goodies. “Sure we knew it was a lemon when we bought it, but change the rules to make it more valuable for us, because that well ever so serve the public interest, efficiency, blah blah blah and why should we have to pay for our mistakes when the public can pay for us?” The licensees filed a petition in 2002, when Powell was in charge, but it just sat there and nothing happened.

Now, the wireless bureau has issued a proposal to “increase the flexibility” of the LMS licensees by seeing if it can relax protection for the unlicensed users. Oh sure, the NPRM pays proper lip service to the “importance of unlicensed” and that the Commission views this as an “opportunity to consider the spectrum access needs of multiple users and to evaluate any proposals that may improve access and use of the band by both M-LMS and Part 15 operations.” But the only changes proposed in the order are those that give “more flexibility” to LMS licensees while only trying to “minimize” any additional interference by unlicensed users.

Why the Commission should want to do this is unclear since, as the Commission observes in the NPRM, there are a number of other services (licensed and unlicensed) that do the same thing that LMS does, unlicensed broadband in the 900 MHz has become a big deal, and the LMS licensees knew all the restrictions when they bid. Nor are the LMS licensees going to pay more for the privilege. In fact, looking at the question of “how to better and more efficiently utilize spectrum,” the Commission would be much better off expanding the unlicensed use of the band and migrating these guys somewhere else.

So it’s all pretty wretched and means a lot of work ahead (comments are due May 30) to turn this battle ship around. But here’s the funny thing: I don’t think Kevin Martin is shilling for the licensees.

“Say what?” you cry. “Harold, have you totally lost you’re mind? How could he be any more in the licensed v. unlicensed camp.”

Answer: because it has to do with how institutions work.

Two things. First, I’m going to diverge from my friend and spectrum buddy Jim Snider. Jim tends to see things in terms of industry structure, and generally thinks industry is smarter andbetter coordinated than I think it is. I tend to look at these things from an admin/institutional side, and generally find instutional direction and structure more to blame for things than Jim does (these are shadings, btw, not absolutes). Read us both and you probably get a sense of why folks do stuff here.

Second, I’m entering into wild speculation not supported by any evidence but my general reading in public choice theory, admin law, and 10 years experience in this area. So I may be wildly off base here.

With those caveats, on with the show.

We tend to think of “the FCC” as if it were a uniform entity. It isn’t. The Chairman of the FCC sets the tone and influences operation by who he puts in charge of what, but the staff have their own opinions and their own relationships with the industry and with the rules. But even “staff” is too uniform. Each major bureau has a chief, accountable to the Chairman. That chief has offices, divisions, etc. staffed with career people.

The Wireless Telecommunications Bureau (WTB) has jursidiction over licensed spectrum services other than broadcasting. Oddly enough, they think licensing spectrum is super keen and that if you want anything important done, you need to have licenses and distribute them by auction. When pressed they will say sure, this unlicensed stuff had some uses, but, ya know, if you really want broad deployment, widespread adoption, and significant investment, you need the reliability and certainty of licensing.

The Office of Engineering and Technology (OET) does the FCC’s certification of equipment, including any equipment certified under Part 15 of the FCC’s rules for unlicensed use. For the last few years, they have been (lathough not uniformly so) very gung-ho on unlicensed. It’s neat! It’s revolutionary! It’s cheap to deploy! It’ll bring us broadband, smite our enemies, and whiten our teeth! And, while licensed of course has its uses (genuflec in the direction of WTB) and no one wants to interfere with television broadcasting or cell phone use, we can use the spectrum a ton more efficiently with smart radios, ultra-wideband, and unlicensed underlays.

Powell was a huge believer in spectrum, both licensed and unlicensed. He channelled this institutional rivalry by putting two really strong advocates in charge of the respective offices (John Muelleta for WTB, Ed Thomas for OET) and invited them to make their respective cases. Occassionally, he would call in Bob Pepper, the head of the FCC’s internal think tank (the Office of Strategic Plans and Policies, or OSPP) to play tie breaker. When matters implicated both licensed and unlicensed services (such the 3650-3700 MHz proceeding), Powell required the WTB and the OET to consult each other and come up with a compromise.

When Powell left in March 2005, his bureau chiefs, (like Muelletta, Thomas, and Pepper) all cleared out as well. That’s pretty standard. The idea is to let the new Chairman have his choice of people and set the tone of the agency.

Martin has a different style than Powell. Martin does not appear to want strong personalities advocating different positions with Powell acting as judge between the two. Martin has generally selected for smart, competent people he knows and trusts and who stress teamwork and coordination. There is nothing inherently “better” or “worse” about this approach per se, but it means the bureau chiefs are much less likely to be enthusiasts for any particular approach.

On top of that, Martin has moved very slowly to fill vacancies. The WTB still has an acting Chief. OET is even more unstable, with no new appointment since Ed Thomas left a year ago and the recent acting, Bruce Franca, leaving to go to Maximum Service Television. This leaves staff carrying on routine business without clear direction from the Chairman or his appointee. It also leaves them free to act quietly on their institutional biases without direct supervision by the Chairman’s appointee.

Finally, as I have written before, there is no longer any “Champion” for unlicensed in the administration generally or at the FCC particularly. Michael Powell and Michael Gallagher of NTIA have left. Ed Thomas has left. Tate has yet to make her feelings known, and Commissioner-designate Robert McDowell also remains and unknown. The Democrats have supported unlicensed items in the past, but have had other issues they champion (media ownership limits, network neutrality, and, in Adelstien’s case, payolla). Furthermore, the Democrats have no power to set the agenda or move items forward. As a result, focus on spectrum at the FCC and NTIA has turned back largely to conventional thinking, such as clearing federal spectrum for auctions.

Which brings us back to Kevin Martin, who is in many ways the polar opposite of Michael Powell. Powell was a technophile (I might even say technodeterminist) and Libertarian ideolog. He loved betting on disruptive things like unlicensed, especially as it justified his deregulating media ownership, telecom and cable broadband on the presumption of future competition. Powell loved economic “gaming” experiments and neo-conservative theory, and was untroubled by the fact that cable, telco and broadcast incumbents maintained market share and generally acted in reality like they lived in the world of market power rather than competition.

Martin, on the other hand, is a pro-competitive pragmatist. He fought for the CLECs in 2002, pitting himself against Powell and earning the scorn of the Wall St. Journal editorial page for daring to defend the need for regulation to promote competition. When he was overruled by the DC Cir., however, he accepted his defeat and moved on. He has tackled the issue of cable market power by suggesting that consumers would benefit from a la carte. He insists on getting real world data in both the Adelphia transaction and the cable competition report, rather than echoing Powell’s policy of not listening to any contrary evidence.

But Martin’s pragmatism leads him to bet conventionally rather than trust in the promise of technology. When it comes to spectrum, Martin has focused on mergers such as Sprint-Nextel and auctions (such as the advanced wireless service auctions). That doesn’t mean Martin hates unlicensed, but it does mean Martin is unwilling to invest a lot of agency resources and political capital betting on possible miracles from unlicensed.

In this kind of environment, it is easy for staff to move things in accordance with their institutional biases. With OET in disarray, no strong champion for unlicensed in the administration, and no signals from the Chairman that unlicensed is a priority, why shouldn’t WTB try to move their position forward with a “technical” rulemaking? No doubt the WTB staff explained that, “this will protect unlicensed operations, absolutely sir. We’re just trying to improve spectrum efficiency sir. Don’t worry about the technical details sir. See, we said up front we recognize the importance of unlicensed users in the band. Totally uncontroversial, benefits some licensees, doesn’t hurt other users significantly, and serves the public interest, sir.”

So I don’t think this is part of a general plan by Martin to stamp out unlicensed spectrum. I don’t think Martin “hates” unlicensed or is a wholly owned subsidiary of the Cellular Telecommunication Industry Association. But I also think that, absent a strong countervailing force, he is willing to expand licensee privileges to improve overall spectrum efficiency and isn’t terribly interested in exploring possible unlicensed alternatives.

Which means, if I am right (a big “if”) that while we have a lot of work ahead, we should not throw up our hands in despair either. With enough evidence, I believe Martin can be convinced that unlicensed is not a speculative wish on a technological star. It represents a real chance to get wireless broadband services and new types of wireless services to people cheaply and abundantly. The good part of pragmatism is being open to evidence. Now it is up to us in the unlicensed community to deliver.

Stay tuned . . .

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