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«Communications and Society Program Spectrum as a Resource for Enabling Innovation Policy William Webb, Rapporteur Spectrum as a Resource for Enabling ...»

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Communications and Society Program

Spectrum as a Resource for

Enabling Innovation Policy

William Webb, Rapporteur

Spectrum as a Resource for Enabling

Innovation Policy

William Webb


Communications and Society Program

Charles M. Firestone

Executive Director

Washington, D.C.

To purchase additional copies of this report, please contact:

The Aspen Institute

Publications Office

P.O. Box 222

109 Houghton Lab Lane

Queenstown, Maryland 21658 Phone: (410) 820-5326 Fax: (410) 827-9174 E-mail: publications@aspeninstitute.org

For all other inquiries, please contact:

The Aspen Institute Communications and Society Program One Dupont Circle, NW Suite 700 Washington, DC 20036 Phone: (202) 736-5818 Fax: (202) 467-0790 Charles M. Firestone Patricia K. Kelly Executive Director Assistant Director Copyright © 2013 by The Aspen Institute This work is licensed under the Creative Commons AttributionNoncommercial 3.0 United States License. To view a copy of this license, visit http://creativecommons.org/licenses/by-nc/3.0/us/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.

The Aspen Institute One Dupont Circle, NW Suite 700 Washington, DC 20036 Published in the United States of America in 2013 by The Aspen Institute All rights reserved Printed in the United States of America ISBN: 0-89843-584-6 13-007 1916CSP/13-BK Contents Foreword, Charles M. Firestone

executive Summary, William Webb

Spectrum aS a reSource For enabling innovation policy, William Webb Introduction


Innovation in Telecommunications

A Range of Spectrum Products

Overcoming Implementation Difficulties

Next Steps


appendix Roundtable Participants

About the Author

About the Communications and Society Program

Select Publications from the Aspen Institute Communications Policy Project

This report is written from the perspective of an informed observer at the Aspen Institute Roundtable on Spectrum Policy. Unless attributed to a particular person, none of the comments or ideas contained in this report should be taken as embodying the views or carrying the endorsement of any specific participant at the Roundtable.

Foreword Shortly after the presidential election, the 2012 Aspen Institute Roundtable on Spectrum Policy (AIRS), “Spectrum as a Resource for Enabling Innovation Policy,” met on November 14-16, 2012 to consider ways that spectrum policy in the coming four years should enter into the larger concern for improving the economy through innovation. That is, how can spectrum policies help create an environment that makes it easier for innovators to use spectrum as a resource for new technological goods and services?

The 32 leading communications policy experts who met at the Aspen Wye River Conference Center in Queenstown, Maryland began by assessing the state of spectrum in the United States. Considering the recommendations of recent reports from the National Telecommunications and Information Administration and the President’s Council of Advisors on Science and Technology, participants identified problems facing new entry and innovation today. They then recommended solutions, looking specifically at the interstices between licensed and unlicensed approaches, new measures to foster innovation, spectrum sharing/flexibility and new institutional arrangements to manage these solutions.

As the following report details, the discussions were lively, knowledgeable and at times, contentious. Throughout the report, the Roundtable rapporteur, William Webb, sets forth eleven recommendations that he gleaned from the conference dialogue to guide future spectrum policy development with regard to facilitating innovation.

While these recommendations generally reflect the sense of the meeting, there were some opponents to the viewpoints recorded and there were no votes taken. Accordingly, participation in the dialogue should not be construed as agreement with any particular statement in the report by the participant or his or her employer.

Acknowledgments I would like to acknowledge and thank the entities represented in this conference who have also contributed to the Communications and Society Program. They are Microsoft, Senior Partner; AT&T Services Inc.,

–  –  –

Comcast Corporation, Corporate Partners; Cisco Systems, Credit Suisse, Motorola Mobility, National Association of Broadcaster, Qualcomm Incorporated, Time Warner Cable, T-Mobile USA, Inc., Verizon Wireless and The Walt Disney Company, Corporate Associates.

I also want to acknowledge and thank William Webb for his extensive and informative account of the conference discussions and our participants, listed in the Appendix, for their contributions to these complicated topics. Finally, I want to thank Ian Smalley, Project Manager, for producing the conference and this report, along with the Communications and Society Program Assistant Director Patricia Kelly, who oversaw its editing and publication.

Charles M. Firestone Executive Director Communications and Society Program The Aspen Institute Washington, D.C.

February 2013 Executive Summary As we enter the fifth year of the financial crisis, with growth below trend levels and unemployment high, there are frequent calls for innovation as a way to spur growth and resolve societal problems.

Innovation in telecommunications has been strong in the last few decades, and growth in mobile data, apps and similar areas is extremely high, suggesting this is a promising area for the future.

All wireless communications require radio spectrum; this entry and growth barrier is often seen as a block to innovation. A group of experts met at the Aspen Institute in November 2012 to consider whether changes to spectrum policy might stimulate innovation and investment in wireless technologies, networks and solutions.

Innovation can be defined as the successful exploitation of new ideas.

The exploitation is often much more difficult than the generation of the idea, particularly where it involves regulatory change—this is an area where spectrum policy makes a difference. Innovations can broadly be characterized as incremental improvements or disruptive changes.

Incremental improvements typically happen within the existing framework—for example, these might include carriers deploying small cells to enhance their capacities. Disruptive change often happens outside of the conventional framework and can be facilitated by flexible and innovative spectrum policies. Recent spectrum policy initiatives have tended to concentrate on aiding incremental innovation—for example, by making additional spectrum available on a licensed model such that carriers can expand network capacity and upgrade technology to the latest generation of cellular standard. The work of this group focused on disruptive ideas that could better be served by changes to policy.

Disruptive ideas are often introduced by new players. This phenomenon is sometimes characterized as the “innovator’s dilemma”1 in that the existing players are disincentivized toward changes that reduce their revenues and profitability. Previous successful new entrants include Nextel’s nationwide push-to-talk solution and Wi-Fi hotspots.

Unsuccessful examples include Northpoint’s idea of reusing satellite spectrum; ultra wideband as a new way of sharing licensed spectrum;

LightSquared as a new operator; and WiMax as a solution for mobile

viiviii Spectrum aS a reSource for enabling innovation policy

broadband. That there are failures should not be surprising. Many innovations fail, and a lack of failure often points to a lack of ambition.

These examples all include a mix of new companies, new spectrum access methods and new business models. Understanding the challenges they face can help determine where policy change would most likely reap benefits.

It may be difficult to attract the funding needed for disruptive ideas to compete with established ideas with proven track records, especially where it entails a change in infrastructure. It can be hard for an entrepreneur with a new idea to raise sufficient funding to successfully bid for prime spectrum against the more established players with previously demonstrated business cases. Instead, those with new ideas often seek innovative spectrum access methods that allow them low- to no-cost access to spectrum to reduce the barrier to entry. In some cases, provision of a new spectrum access method can stimulate companies to think up new ways of making use of that spectrum. There is evidence that this is happening with the TV white space spectrum.

Clearly the existing methods of auctioning exclusive spectrum are still needed to support incremental innovation in established markets.

But perhaps more can be done at a spectrum policy level to provide a wider range of spectrum products. Those with new ideas could then better match their spectrum access method with their needs and funding constraints. Broadly, the work of the group was to search for gaps in the existing models of spectrum access (such as licensed, unlicensed and experimental) for areas where innovation is not currently wellserved.

The recent President’s Council of Advisors on Science and Technology (PCAST) report recommended shared access to federal spectrum. The stimulus for the PCAST work was to find methods to liberate additional spectrum in response to calls for 500 megahertz (MHz) to be repurposed to mobile broadband. The PCAST report showed that repurposing federal spectrum is very difficult, but it also found that more rapid access might be possible on a shared basis. The report considers a range of sharing mechanisms and defines a range of new spectrum products.

These include unlicensed access to federal bands, secondary-licensed access, database access and the concept of licenses with lifetimes covering a wide time range—from months, to years, to decades.

Executive Summary ix The PCAST recommendations, when coupled with other policy initiatives including maintaining the clearance and auctioning approach, enable a “staircase” access to spectrum. This allows start-ups with limited resources to initially test their ideas using an experimental license.

They can then transition to early commercial service using free unlicensed access, perhaps in TV white space. Next, as business grows, they can move to shared licensed access to federal spectrum for a moderate fee. Finally, as the full potential of the business becomes clear, they can acquire spectrum at auction in a conventional manner.

While many of these concepts have previously been set out, the devil is in the details and similar ideas in the past have often stalled at the implementation phase. Hence, ways to facilitate implementation and practical suggestions as to how to move ahead in complex areas are needed. After all, it is pragmatism rather than idealism that tends to be at the core of the best innovations.

This report proposes the following eleven recommendations to facilitate the staircase function, make the final step of the staircase more flexible, ease the development of new technologies and deployment of networks through governmental initiatives, help commercial and government spectrum users to work more closely and transparently and move towards a better overall spectrum management framework.

Specific recommendations appear in the following chart.

x Spectrum aS a reSource for enabling innovation policy Spectrum as a Resource for Enabling Innovation Policy Recommendations to Guide Future Spectrum Policy Development

1. Review whether more can be done with the current experimental and short-term licenses. The goal is to enable innovative solutions to easily gain access to spectrum for initial testing purposes.

2. Establish predetermined “share-ability” characteristics of bands of federal spectrum that have commercial interest, including predicted time and location availability, any issues in implementation and potential receiver problems. This would help spectrum users readily assess whether any federal sharing might be suitable for them.

3. Continue to seek ways to clear the “undergrowth” of unnecessary restrictions within existing licenses.

4. Increase flexibility in secondary-market transactions by looking at new approaches, such as enabling parties to negotiate some changes to their licenses without the need for recourse to the regulator.

5. Develop and implement a wireless model city framework that can be tailored by city officials and innovators to facilitate initial deployments. Consider whether existing funds can be used to provide some money to assist deployment.

6. Divert a portion of Federal Communications Commission (FCC) fees to a research and development (R&D) innovation fund directed to applied research on the spectrum efficiency of federal systems.

7. Seek a set of practical ways for commercial and government users to work more closely together, sharing data about spectrum use as well as the spectrum itself.

8. Find ways to better align personal and departmental incentives for more efficient spectrum use, especially for government users.

9. Encourage and assist the FCC in implementing a Web-accessible receiver parameters database through their current dashboard (standards as well as actual receiver implementations).

10. Operationalize flexibility and sharing within the FCC and the National Telecommunications and Information Administration (NTIA).

11. Further explore methods that might help achieve an enhanced institutional framework for spectrum management across the commercial and federal spectrum.

Spectrum aS a reSource For enabling innovation policy

–  –  –

Introduction As we enter the fifth year of the financial crisis, calls for innovation as a vehicle to engender growth are stronger than ever before. Innovation is perceived as a way to create growth and jobs, both directly through new concepts and companies, and indirectly through improved productivity and other associated benefits.

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