Making matters worse?
That is tragic, and the FCC is determined to make matters worse. Since 2002, the agency has worked on a plan to impose a proposal by high-tech companies like Google and Microsoft. These firms have (at long last) noticed that most of the TV band consists of vacant channels. Instead of offering to bid on ownership rights and then managing these "white spaces," they want the government to do it for them by approving the use of "license-exempt" devices that (a) don't emit much radiation, like cordless phones or wi-fi routers, and (b) don't disturb Aunt Minnie's TV viewing by sniffing out broadcast emissions and then avoiding them.
In 2007, Microsoft's years-old prototype crashed in FCC tests due to a hardware malfunction. Microsoft's second "smart radio" didn't perform so well either. Recent tests have gone better, but broadcasters stand poised to challenge any authorization as creating "harmful interference." The FCC is scheduled to vote on the White Space proposal on November 4. Whatever results, the process is doomed. If some devices are allowed, there's a possibility that they might be hamstrung by power limits and technology restrictions. Government bureaucrats have no way to properly evaluate the complex economic trade-offs. Finding a device that can share the band does not, alas, solve the actual problem here—moving the useless neighbors out.
While the FCC sees its proceeding as a scientific expedition to the frontiers of wireless technology, mere politics will rule. Indeed, the interested parties are now urging allies to "write their Washington representatives" to pressure the FCC into approving—or rejecting—particular devices. The Congressman from Dogpatch is now a futurist.
Two alternatives loom. The FCC can extend the TV band debacle to generations yet unborn. Using the "white spaces" around TV stations for unlicensed devices guarantees that outcome, because once users buy equipment designed for such bands they become a new incumbent constituency poised to resist change. And because the spectrum rights they hold are small, dispersed, and non-exclusive, mutually beneficial trades are impossible. Indeed, if the policy were now in effect, the 700MHz auction, which in March generated some $20 billion for the use of 52MHz (7.5 TV channels' worth of bandwidth), could not have happened.
Alternatively, the FCC could seize on its success in liberalization, when it packed airwaves into competitive bundles allowing cellular licensees to figure out spectrum cohabitation rules. Today, millions of users and multiple voice and data networks intensely share these frequencies. Liberal property rights have induced massive infrastructure investment; over $200 billion has been sunk to create multiple nationwide networks, continuously upgraded with more advanced technologies and richer architectures. Chips used in mobile handsets, e.g., adjust 800 times per second to the minimum power levels needed to sustain calls, reducing interference so the network can host more traffic.
No one can safely predict what wireless applications will be most valuable to society, but profit-seeking spectrum owners are particularly wily in placing their bets. On the contrary, regulators—who directly capture none of the economic gains—are entirely overlooking a hugely productive opportunity.
Markets see such restructurings as routine. In 1989, as Europe began licensing digital personal communications services (PCS), the U.S. dithered. A band had been selected for PCS, but some 4,500 microwave stations were using it. Actual transmissions were light; other bands or fiber links could cheaply substitute. Yet, the incumbents howled in protest when regulators proposed they vacate. Years passed.
The impasse was resolved in 1995. The FCC auctioned PCS "overlay" licenses allowing high bidders (like Sprint) to use the allotted bandwidth while respecting existing operations. The new licensees could pay the grandfathered microwave stations, however, to accept more interference or to move out. Bargains were struck, PCS networks deployed, and today they host the majority of U.S. wireless phone traffic.
Food for thought
Thought experiment: Divvy the 49 channel digital TV band into seven licenses of seven channels (42MHz) each—about what T-Mobile now controls nationwide. Assign these licenses to high bidders who would then have use of the (excellent) bandwidth, subject to leaving existing TV transmissions undisturbed. Broadcasters could be paid to switch channels or go dark, though, distributing signals via cable, satellite, or broadband. Ad-supported TV might continue, but with an upgrade. Using MediaFLO, e.g., over 100 mobile channels could be pumped over a single 42MHz license.
The license auction would likely generate at least $60 billion in revenues, but that's peanuts. The real killing would be made by users and innovators. Networks and devices would pour into the airwaves. Microsoft's low-powered devices—now throttled by regulation—could be unleashed, for example, simply by Microsoft winning a license. Rival innovations would compete. May the coolest gadgets win.
The incentives of ownership and the discipline of competition will bring the adult supervision that these valuable frequencies so desperately need. The TV band could host a vibrant, robust marketplace were policy makers to give up the pretense that a content delivery system borne in the Coolidge Administration should be protected from the march of time. Video (and much more) we can have, in abundance, if only the regulatory rerun of broadcast TV would call it a season.