A small group of Senators sent a letter to their leadership yesterday urging that the FCC be given the flexibility to “set aside some spectrum in certain bands for unlicensed use.” The letter attempts to frame the debate in terms of the FCC’s flexibility to determine optimal spectrum use. The assumption underlying this notion is that the FCC is in the best position to make optimal decisions for the high tech industry. The House is apparently unwilling to take that leap of faith. The letter thus begs the real question: Do we believe the technology industry should have the flexibility to adjust spectrum use on the basis of market demand (the House approach)? Or, do we believe that the FCC should mandate how spectrum should be used on the basis of its technocratic expertise (the approach advocated in the letter)? We already know the answer: Experience has proven that maximizing the flexibility of the high tech industry to use spectrum in accordance with market demand maximizes innovation and consumer welfare.
The key phrase in the letter is the desire to “set aside” spectrum for unlicensed use. Once spectrum is set aside for use on an unlicensed basis, that set aside is permanent – as a practical matter, alternative uses of the spectrum become impossible. I acknowledge that the FCC’s rules say that unlicensed uses are not entitled to protection from interference, which in theory means that unlicensed spectrum could easily be converted to other uses. But when the FCC has been confronted with proposals that would result in interference to unlicensed devices, the FCC has chosen to protect the unlicensed use no matter what its rules say. If the FCC sets aside more spectrum for unlicensed use, it would preclude other potential uses of the spectrum for the foreseeable future.
Limiting the use of cleared spectrum solely for unlicensed devices would also fundamentally change our current approach to spectrum policy. Congress and the FCC have been moving away from prescriptive spectrum policies for more than a decade. The result has been an explosion in wireless innovation and consumer demand. The current FCC, however, has begun to reverse course. It has shown a tendency to impose its own views regarding optimal spectrum use via government fiat rather than allow the high tech industry to balance the tradeoffs inherent in wireless network design. Congress is more than justified in limiting the ability of the FCC to return to more prescriptive spectrum policies.
The letter says government-mandated use of spectrum for unlicensed devices is the “truest form” of free markets. In a free market, economic intervention and regulation by the state is limited to tax collection and enforcement of private ownership and contracts. The House bill would provide market participants an opportunity to decide whether spectrum should be used for unlicensed devices (a private commons) or for some other purpose, and if it were used for unlicensed devices, how the potential for interference would be avoided. The letter advocates government-mandated use of the spectrum by unlicensed devices pursuant to mandatory technical requirements. That is not a free market approach to spectrum policy.
The letter closes with an ironic appeal to “suppress our desire to be overly prescriptive” and allow the FCC to set the course because technology is “ever-changing.” The House bill would allow the high tech industry – the experts most capable of adapting to changing technology – to decide how spectrum is used. If the market is allowed to decide, it is possible the high tech industry will determine that the spectrum is best put to licensed use. The statements of FCC Commissioners leave no doubt, however, that if the FCC were allowed to decide, it would mandate some portion of the spectrum be put to unlicensed use irrespective of market forces. The fundamental choice before Congress is whether it believes the high tech industry or the FCC is better positioned to decide how spectrum should adapt to a rapidly changing technology environment. With due respect to the FCC, history suggests the high tech industry is the better choice.