6 ms·

To understand the thinking find a copy of the 1959 paper "The Federal Communications Commission" by Ronald Coase. See https://www.jstor.org/stable/724927 https:

by wahern 7y ago

To understand the thinking find a copy of the 1959 paper "The Federal Communications Commission" by Ronald Coase. See https://www.jstor.org/stable/724927 https://www.jstor.org/stable/724927 (pay-walled). It's the thesis behind the modern property-rights spectrum regime, and has bled over into many other federal regulatory regimes. As interpreted by many modern, mostly conservative, regulators and scholars, the idea is that by giving private property rights in spectrum you incentivize not only more efficient usage through price signaling, but you incentivize research & development into more efficient technologies. There's plenty to critique, especially as it applies to spectrum. See, for example, the famous Salon.com article summarizing David Reed's arguments: "The myth of interference" (2003), https://www.salon.com/2003/03/12/spectrum/ https://www.salon.com/2003/03/12/spectrum/ But if you want to understand your adversaries' thinking, Coase's paper is the place to start.

ohazi 7y ago
> incentivize not only more efficient usage through price signaling, but you incentivize research & development into more efficient technologies. As with software patents, I think there's an argument to be made that this is no longer true. Digital modulation schemes are leagues more efficient than older analog techniques, both in terms of power and bandwidth. Spread spectrum schemes in particular are even reasonably resistant to being plopped on top of each other. The spectrum ownership scheme allows established players to sit around on their asses using loud, inefficient modulation schemes with huge dead zones in between channels because they don't need to do any better than that. I think radio technology would be better across the board if spectrum were open, and if people had to compete by using better, more efficient, more interference-immune modulation schemes, or risk getting stepped on by someone else. If we had a system like this, the noise floor would just slowly increase in heavily used parts of the spectrum, rather than what we have now, which is a whole bunch of legally mandated quiet zones punctuated by huge narrow carrier spikes. The technology to do this exists... you can go buy a broadband SDR and put together a system like this in GNU radio fairly quickly for experimental purposes, but it's not really legal to actually use this anywhere.
- namibj 7y ago
  The thing is, that the QoS and power efficiency of e.g. LTE isn't attainable if you have uncontrolled interference. It's a general issue with far-side crosstalk.
  - wahern 7y ago
    Interference is largely a property of the specific scheme. 5G schemes are better than LTE when comparing apples-to-apples (e.g. aggregate bandwidth on the same bands in the same geographic area), whatever comes after 5G will continue moving the ball forward, and the theoretical limitations on how much further we can keep kicking the ball are still out of sight. Thus the question isn't what regulatory regime is best for squeezing the most out of LTE, but rather what's the optimal pace of radio communications evolution and how to achieve it. That's a drastically different type of question that almost certainly has a drastically different answer, or at least a much more complex answer.
    - namibj 7y ago
      Then make it so that frequencies don't get blocked for this long. Make it so that a company has to re-bid every once in a while for spectrum. Instead of just giving it away or making it all free-reign.
- londons_explore 7y ago
  The ideal spectrum allocation scheme would be a by-the-minute rental. Whenever anyone wants to use spectrum, their device automatically bids and gets allocated whatever size slice of spectrum and transmit power they ask for. Then the device maker or the user pays the bill at the end of the year, perhaps with some minimum free amount each year per person, which could cover all except the biggest spectrum users. If you didn't like the government allocation scheme, you could rent your own block and do your own sub-allocations, for example some kind of packetized system with microsecond long packets wouldn't want to have to contact a government server for every 1 microsecond allocation. That gives a strong incentive to use efficient allocation schemes.
ethn 7y ago
Coase actually argues in that paper, in true UChicago fashion that the spectrum should be completely unregulated in a free market for private efficiency. He’s actually arguing against the FCC. As he also touches on in The Nature of a Firm. Read Section 5 of the paper you’ve linked.
- wahern 7y ago
  Yes. But the explicit premise in that section is that there are exclusionary property rights in the spectrum protected by traditional property and contract law, and that contiguous ranges of spectrum can be subdivided and sold exactly analogously to a piece of land. For example, he explains that while there are technical interference issues at the edges of spectrum bands whereby the user of one range could incidentally interfere with the user of another range, the same type of problems occurs with land (e.g. nuisance) and are similarly manageable with a traditional property rights regime. In Coase's view the government shouldn't be auctioning spectrum for limited times or with strings attached, as we commonly do now. (What the FCC does now is a quasi-Coasean spectrum regime.) In Coase's view spectrum usage would be most efficient by selling all spectrum (from 0-infinity) in a one-time auction to the single highest bidder. That bidder could (and, crucially, would in Coase's view) then subdivide and sell the spectrum according to market demand. Coase's logic is solid; it's the premises that are problematic. First, it ignores transaction costs, or at least assumes they're de minimis. Even before the Law & Economics field took off (which is the field Coase most influenced), it was understood that one of the purposes of legal rules was to minimize transaction costs. Sometimes a market is made more efficient by specifying a fixed rule, and even more often by specifying a fixed default rule, then by permitting perfect contractual freedom. Of course, this begs the question of when you can know whether to intervene. But that's the only legitimate question, not whether you should ever intervene. In Coase's time his argument was more practical as widespread independent and even individual broadcast usage wasn't a commercially realistic scenario; transaction costs would always be born by economic behemonths and therefore would be de minimis relative to their price. But that's not Coase's actual argument; his actual argument is categorical and absolute, and that's how most modern proponents (IME) apply it as well. Secondly, the notion of spectrum rivalrousness is contentious. If something isn't rivalrous, a property regime is unnecessary and usually strictly inefficient.[1] Without getting into the science (and I'm not an electrical engineer so I'd just make mince of things), as a practical matter spectrum usage is only partly rivalrous (rivalrous mostly deriving from the technical environment, not from the fundamental character of spectrum, as with physical goods and real estate). Your ability to enjoy maximal channel bandwidth between two physical points is limited by how sophisticated your transmitter and receiver, and ultimately by computational power, not by coincidental usage, per se. (Not unless someone is actively trying to screw you.) As WiFi has born out, we're all in an arms race for buying and using the latest, greatest gear. In one sense this is just a convoluted price signaling scheme--the people most in need of bandwidth just pay for fancier equipment--that might be less efficient than a simple property regime. But arguably in practice this process plays out slowly enough (especially with moderate power limits, carve outs for emergency use, etc) that these transaction costs are far less than the transaction costs we see in a market where we expect Verizon's or AT&T's spectrum usage rights to trickle down to ad hoc groups and individuals of spectrum users in the same way William the Conqueror's lands in England were slowly subdivided until every Englishman could build his own castle. Nobody will ever sell me rights to spectrum for use within a 10-meter or even 100-meter radius, even though it's possible and would open up a tremendous wealth of opportunities. Cordless phones (POTS, not cell) and WiFi could only have happened with unlicensed (i.e. unowned) spectrum, in contradiction to Coase's argument. [1] Exception--if food wasn't rivalrous because we all had free Star Trek-style replicators I imagine obesity would be an even worse problem than it is today, we'd be more sickly, and so we'd probably want to impose costs to maximize aggregate wealth. (See soda tax.) And if we did that we might want to make those costs transferable (e.g. carbon credits) rather than centrally figuring out the most efficient price for each individual.
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upofadown 7y ago
I think that in practice the idea of privately owned spectrum really came into its own with the original scheme used for analog cell phone service. The incumbent phone companies were given their own exclusive spectrum and the competitive cell phone company (originally there was only one) got their own exclusive spectrum. This A band, B band system actually worked fairly good compared to the sort of thing happening with the landline monopolies. Obviously the system couldn't be expanded to a market with more than two entities without causing a lot of inefficiency. The regulators did this expansion anyway and that led to the insanity we have today.

by wahern 7y ago

ohazi 7y ago

> incentivize not only more efficient usage through price signaling, but you incentivize research & development into more efficient technologies. As with software patents, I think there's an argument to be made that this is no longer true. Digital modulation schemes are leagues more efficient than older analog techniques, both in terms of power and bandwidth. Spread spectrum schemes in particular are even reasonably resistant to being plopped on top of each other. The spectrum ownership scheme allows established players to sit around on their asses using loud, inefficient modulation schemes with huge dead zones in between channels because they don't need to do any better than that. I think radio technology would be better across the board if spectrum were open, and if people had to compete by using better, more efficient, more interference-immune modulation schemes, or risk getting stepped on by someone else. If we had a system like this, the noise floor would just slowly increase in heavily used parts of the spectrum, rather than what we have now, which is a whole bunch of legally mandated quiet zones punctuated by huge narrow carrier spikes. The technology to do this exists... you can go buy a broadband SDR and put together a system like this in GNU radio fairly quickly for experimental purposes, but it's not really legal to actually use this anywhere.

namibj 7y ago
The thing is, that the QoS and power efficiency of e.g. LTE isn't attainable if you have uncontrolled interference. It's a general issue with far-side crosstalk.
- wahern 7y ago
  Interference is largely a property of the specific scheme. 5G schemes are better than LTE when comparing apples-to-apples (e.g. aggregate bandwidth on the same bands in the same geographic area), whatever comes after 5G will continue moving the ball forward, and the theoretical limitations on how much further we can keep kicking the ball are still out of sight. Thus the question isn't what regulatory regime is best for squeezing the most out of LTE, but rather what's the optimal pace of radio communications evolution and how to achieve it. That's a drastically different type of question that almost certainly has a drastically different answer, or at least a much more complex answer.
  - namibj 7y ago
    Then make it so that frequencies don't get blocked for this long. Make it so that a company has to re-bid every once in a while for spectrum. Instead of just giving it away or making it all free-reign.
londons_explore 7y ago
The ideal spectrum allocation scheme would be a by-the-minute rental. Whenever anyone wants to use spectrum, their device automatically bids and gets allocated whatever size slice of spectrum and transmit power they ask for. Then the device maker or the user pays the bill at the end of the year, perhaps with some minimum free amount each year per person, which could cover all except the biggest spectrum users. If you didn't like the government allocation scheme, you could rent your own block and do your own sub-allocations, for example some kind of packetized system with microsecond long packets wouldn't want to have to contact a government server for every 1 microsecond allocation. That gives a strong incentive to use efficient allocation schemes.

ethn 7y ago

Coase actually argues in that paper, in true UChicago fashion that the spectrum should be completely unregulated in a free market for private efficiency. He’s actually arguing against the FCC. As he also touches on in The Nature of a Firm. Read Section 5 of the paper you’ve linked.

wahern 7y ago
Yes. But the explicit premise in that section is that there are exclusionary property rights in the spectrum protected by traditional property and contract law, and that contiguous ranges of spectrum can be subdivided and sold exactly analogously to a piece of land. For example, he explains that while there are technical interference issues at the edges of spectrum bands whereby the user of one range could incidentally interfere with the user of another range, the same type of problems occurs with land (e.g. nuisance) and are similarly manageable with a traditional property rights regime. In Coase's view the government shouldn't be auctioning spectrum for limited times or with strings attached, as we commonly do now. (What the FCC does now is a quasi-Coasean spectrum regime.) In Coase's view spectrum usage would be most efficient by selling all spectrum (from 0-infinity) in a one-time auction to the single highest bidder. That bidder could (and, crucially, would in Coase's view) then subdivide and sell the spectrum according to market demand. Coase's logic is solid; it's the premises that are problematic. First, it ignores transaction costs, or at least assumes they're de minimis. Even before the Law & Economics field took off (which is the field Coase most influenced), it was understood that one of the purposes of legal rules was to minimize transaction costs. Sometimes a market is made more efficient by specifying a fixed rule, and even more often by specifying a fixed default rule, then by permitting perfect contractual freedom. Of course, this begs the question of when you can know whether to intervene. But that's the only legitimate question, not whether you should ever intervene. In Coase's time his argument was more practical as widespread independent and even individual broadcast usage wasn't a commercially realistic scenario; transaction costs would always be born by economic behemonths and therefore would be de minimis relative to their price. But that's not Coase's actual argument; his actual argument is categorical and absolute, and that's how most modern proponents (IME) apply it as well. Secondly, the notion of spectrum rivalrousness is contentious. If something isn't rivalrous, a property regime is unnecessary and usually strictly inefficient.[1] Without getting into the science (and I'm not an electrical engineer so I'd just make mince of things), as a practical matter spectrum usage is only partly rivalrous (rivalrous mostly deriving from the technical environment, not from the fundamental character of spectrum, as with physical goods and real estate). Your ability to enjoy maximal channel bandwidth between two physical points is limited by how sophisticated your transmitter and receiver, and ultimately by computational power, not by coincidental usage, per se. (Not unless someone is actively trying to screw you.) As WiFi has born out, we're all in an arms race for buying and using the latest, greatest gear. In one sense this is just a convoluted price signaling scheme--the people most in need of bandwidth just pay for fancier equipment--that might be less efficient than a simple property regime. But arguably in practice this process plays out slowly enough (especially with moderate power limits, carve outs for emergency use, etc) that these transaction costs are far less than the transaction costs we see in a market where we expect Verizon's or AT&T's spectrum usage rights to trickle down to ad hoc groups and individuals of spectrum users in the same way William the Conqueror's lands in England were slowly subdivided until every Englishman could build his own castle. Nobody will ever sell me rights to spectrum for use within a 10-meter or even 100-meter radius, even though it's possible and would open up a tremendous wealth of opportunities. Cordless phones (POTS, not cell) and WiFi could only have happened with unlicensed (i.e. unowned) spectrum, in contradiction to Coase's argument. [1] Exception--if food wasn't rivalrous because we all had free Star Trek-style replicators I imagine obesity would be an even worse problem than it is today, we'd be more sickly, and so we'd probably want to impose costs to maximize aggregate wealth. (See soda tax.) And if we did that we might want to make those costs transferable (e.g. carbon credits) rather than centrally figuring out the most efficient price for each individual.

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upofadown 7y ago

I think that in practice the idea of privately owned spectrum really came into its own with the original scheme used for analog cell phone service. The incumbent phone companies were given their own exclusive spectrum and the competitive cell phone company (originally there was only one) got their own exclusive spectrum. This A band, B band system actually worked fairly good compared to the sort of thing happening with the landline monopolies. Obviously the system couldn't be expanded to a market with more than two entities without causing a lot of inefficiency. The regulators did this expansion anyway and that led to the insanity we have today.